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Towers Watson Delaware Holdings Inc. – ‘424B4’ on 10/11/00

On: Wednesday, 10/11/00, at 1:17pm ET · Accession #: 912057-0-44400 · File #: 333-94973

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/11/00  Towers Watson Delaware Holdi… Inc 424B4                  1:344K                                   Merrill Corp/FA

Prospectus — Rule 424(b)(4)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B4       Prospectus                                           110    553K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Adjustment (loss) on disposal of discontinued outsourcing business Business Capitalization Charles P. Wood, Jr Common Stock Purchase Arrangements Before Public Offering Corporate Reorganization David B. Friend, M.D Depreciation and amortization Description of Capital Stock, Certificate of Incorporation and Bylaws Dilution Discontinued operations Dividend Policy Experts General and administrative expenses Income from affiliates Index to Consolidated Financial Statements Interest expense Interest income Legal Matters Long Term Incentive Plan Management Management's Discussion and Analysis of Financial Condition and Results of Operations Net income Net income (loss) Notes to the Consolidated Financial Statements Occupancy, communications and other Offering, The Professional and subcontracted services Prospectus Summary Report of Independent Accountants Revenue Risk Factors Salaries and employee benefits Security Ownership of Management and Others Selected Consolidated Financial Data Selling Stockholders Shares Eligible for Future Sale Special Note Regarding Forward-Looking Statements Stock incentive bonus plan The Offering Transactions with Management and Others Underwriting Use of proceeds Use of Terminology Watson Wyatt Where You Can Find More Information
1	1st Page - Filing Submission
2	Prospectus Summary
"	Watson Wyatt
4	The Offering
7	Risk Factors
14	Special Note Regarding Forward-Looking Statements
"	Use of Terminology
15	Use of proceeds
"	Dividend Policy
16	Capitalization
18	Dilution
19	Selected Consolidated Financial Data
21	Management's Discussion and Analysis of Financial Condition and Results of Operations
23	Discontinued operations
"	Revenue
24	Salaries and employee benefits
"	Stock incentive bonus plan
"	Professional and subcontracted services
"	Occupancy, communications and other
"	General and administrative expenses
25	Depreciation and amortization
"	Interest income
"	Interest expense
"	Income from affiliates
"	Net income
27	Net income (loss)
32	Business
46	Management
47	David B. Friend, M.D
49	Charles P. Wood, Jr
53	Long Term Incentive Plan
54	Transactions with Management and Others
"	Common Stock Purchase Arrangements Before Public Offering
55	Corporate Reorganization
57	Security Ownership of Management and Others
58	Selling Stockholders
71	Description of Capital Stock, Certificate of Incorporation and Bylaws
76	Shares Eligible for Future Sale
77	Underwriting
80	Legal Matters
"	Experts
"	Where You Can Find More Information
82	Index to Consolidated Financial Statements
83	Report of Independent Accountants
84	Adjustment (loss) on disposal of discontinued outsourcing business
88	Notes to the Consolidated Financial Statements

424B4 1st Page of 110 TOC ↑Top Previous Next ↓Bottom Just 1st
[LOGO]

5,600,000 Shares

Class A Common Stock

This is the initial public offering of Watson Wyatt & Company Holdings. We are
offering 2,800,000 shares of our class A common stock at a price of $12.50 per
share. Selling stockholders are offering an additional 2,800,000 shares of our
class A common stock at a price of $12.50 per share. We will not receive any of
the proceeds from the sale of these shares.

Prior to this offering, there has been no public market for Watson Wyatt's
common stock. Our class A common stock has been approved for listing on the New
York Stock Exchange under the symbol "WW."

SEE "RISK FACTORS" BEGINNING ON PAGE 6 TO READ ABOUT FACTORS YOU SHOULD CONSIDER
BEFORE BUYING SHARES OF OUR COMMON STOCK.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

[Download Table]

PER SHARE TOTAL

Initial public offering price $ 12.500 $ 70,000,000
Underwriting discount $ 0.875 $ 4,900,000
Proceeds, before expenses, to Watson Wyatt $ 10.750 $ 30,100,000
Proceeds, before expenses, to Selling Stockholders $ 12.500 $ 35,000,000

We have agreed with the selling stockholders to reimburse the underwriting
discount for their shares. The proceeds to us and to the selling stockholders
have been adjusted accordingly.

If the underwriters sell more than 5,600,000 shares of common stock, the
underwriters have the option to purchase up to an additional 840,000 shares from
selling stockholders and us at the initial public offering price less the
underwriting discount.

The underwriters expect to deliver the shares to purchasers on October 16, 2000.

DEUTSCHE BANC ALEX. BROWN

BANC OF AMERICA SECURITIES LLC

ROBERT W. BAIRD & CO.

PROSPECTUS DATED OCTOBER 11, 2000.

424B4 2nd Page of 110 TOC 1st Previous Next ↓Bottom Just 2nd
PROSPECTUS SUMMARY

THIS SUMMARY IS QUALIFIED BY MORE DETAILED INFORMATION APPEARING IN OTHER
SECTIONS OF THIS PROSPECTUS. THE OTHER INFORMATION IS IMPORTANT, SO PLEASE READ
THIS ENTIRE PROSPECTUS CAREFULLY.

WATSON WYATT

Founded in 1946, Watson Wyatt & Company is a global human capital consulting
firm. We help our clients enhance business performance by improving their
ability to attract, retain and motivate qualified employees. We design, develop
and implement human resources strategies and programs through our closely
related practice areas, the Benefits Consulting Group, HR Technologies Group and
the Human Capital Group. We also offer our clients web-based technologies that
transform the way they implement and deliver HR programs and improve
communications with their employees.

We provide human capital consulting services to many of the world's largest
corporations as well as emerging growth companies, public institutions and
non-profit organizations. Our clients include General Electric Company, General
Motors, IBM and Lockheed Martin Corporation. Many of our client relationships
have existed continuously over several decades. We generated approximately
$624.6 million in revenues during the twelve months ended June 30, 2000, with
net income of approximately $18.5 million during this same period.

The growing demand for employee benefits and human capital consulting
services is directly related to the size, complexity and rapid changes
associated with human resources programs. Employee salary and benefits costs
represent a significant component of worldwide corporate spending. In recent
years, several industry trends have emerged that have increased the demand for
our services, including:

- growing strategic importance of human capital;

- a technology revolution in HR programs as the Internet, intranets and
other e-business tools enable companies to manage their HR function more
efficiently and effectively;

- changing workforce demographics, such as a shortages of talented employees
and an unprecedented aging of the workforce;

- growing importance of employer-sponsored benefits programs due to limited
baby boomer retirement savings, uncertainty of government-sponsored
programs, and rising healthcare costs;

- record levels of global mergers and acquisitions that require the
integration of diverse corporate cultures and HR programs quickly and
effectively;

- continuing globalization of economies, which requires corporations to
retain human capital consultants with global resources and local
expertise; and

- complex and changing government regulation of employee benefits programs.

Historically, Watson Wyatt & Company has been an employee owned company.
Immediately following this offering, approximately 83% of the stock of Watson
Wyatt & Company Holdings will be held by our existing stockholders,
substantially all of whom are associates of Watson Wyatt & Company.

424B4 3rd Page of 110 TOC 1st Previous Next ↓Bottom Just 3rd
OUR GROWTH STRATEGY

Our strategy is to expand our competitive position by providing
comprehensive, value-added human capital consulting services that help our
clients solve their human resources challenges. We plan to pursue growth by:

- expanding our relationships with existing clients by identifying and
serving their growing needs for integrated HR services throughout the
world;

- creating innovative web-based, or eHR-TM-, programs for delivering HR
services to our clients;

- developing new client relationships by capitalizing on our recognized
brand name, reputation for quality service, extensive and widely-cited
research studies and eHR-TM- methods for implementing HR programs; and

- pursuing strategic acquisitions that will expand our human capital
consulting capabilities and provide us with additional geographic
execution capabilities.

424B4 4th Page of 110 TOC 1st Previous Next ↓Bottom Just 4th
THE OFFERING

[Enlarge/Download Table]

Class A common stock offered:

By Watson Wyatt & Company Holdings......... 2,800,000 shares

By selling stockholders.................... 2,800,000 shares
Total.................................... 5,600,000 shares

Common stock to be outstanding after the
offering:(a)

Class A.................................... 5,600,000 shares

Class B-1.................................. 13,403,606 shares

Class B-2.................................. 13,403,606 shares
Total.................................... 32,407,212 shares(b)

Use of proceeds.............................. We estimate the net proceeds to us from this
offering to be approximately $29,400,000.

We expect to use these net proceeds for
capital expenditures, working capital and
other general corporate purposes, which may
include the retirement of existing
indebtedness, if any, and possible strategic
acquisitions. We will not receive any
proceeds from the sale of the class A common
stock by the selling stockholders.

NYSE symbol.................................. WW

Risk Factors................................. See "Risk Factors" for a discussion of
factors you should carefully consider before
deciding to invest in shares of our common
stock.

UNLESS WE SPECIFICALLY STATE OTHERWISE, THE INFORMATION IN THIS PROSPECTUS
(1) GIVES EFFECT TO OUR CORPORATE REORGANIZATION, AND (2) ASSUMES THAT THE
UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED.

------------------------

(a) Our class A common stock, class B-1 common stock and class B-2 common stock
are identical except for the transfer restrictions applicable to the
class B-1 common stock and class B-2 common stock.

(b) The number of shares of common stock to be outstanding after the offering
excludes (1) options to purchase approximately 1,800,000 shares of class A
common stock to be granted concurrent with this offering at an exercise
price equal to the public offering price, and (2) 2,700,000 shares of
class A common stock reserved for issuance upon exercise of options that may
be granted in the future under our long term incentive plan.

424B4 5th Page of 110 TOC 1st Previous Next ↓Bottom Just 5th
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table summarizes the consolidated financial data for our
business. You should read the following summary consolidated financial data
together with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our consolidated financial statements and the related
notes beginning on page F-1 of this prospectus.

[Enlarge/Download Table]

YEAR ENDED JUNE 30,
---------------------------------
1998 1999 2000
--------- --------- ---------

CONSOLIDATED STATEMENT OF OPERATIONS DATA (A):
Continuing operations:
Revenue.................................................... $ 512,660 $556,860 $624,583
Costs of providing services:
Salaries and benefits.................................... 268,611 298,915 332,339
SIBP (b)................................................. -- 22,610 30,283
Non-recurring compensation charge related to formula book
value change (c)....................................... 69,906 -- --
Professional and subcontracted services.................. 49,907 47,863 49,608
Other expenses........................................... 167,202 163,672 178,510
--------- -------- --------
Income (loss) before income taxes and minority interest.... $ (42,966) $ 23,800 $ 33,843
========= ======== ========
Income (loss) from continuing operations................... $ (56,212) $ 12,135 $ 18,533
Discontinued operations (d)................................ (69,906) 8,678 --
--------- -------- --------
Net income (loss)........................................ $(126,118) $ 20,813 $ 18,533
========= ======== ========
Earnings (loss) per share, continuing operations, basic and
fully diluted............................................ $ (3.27) $ 0.80 $ 1.24
Earnings (loss) per share, net income (loss), basic and
fully diluted............................................ $ (7.34) $ 1.37 $ 1.24
Weighted average shares outstanding........................ 17,170 15,215 15,000

Pro forma earnings per share information (unaudited) (e):
Continuing operations, basic and fully diluted........... $ 0.62
Net income, basic and fully diluted...................... $ 0.62
Weighted average shares outstanding...................... 30,000

[Enlarge/Download Table]

AS OF JUNE 30, 2000
---------------------------------------
PRO FORMA
AS
ACTUAL PRO FORMA(F) ADJUSTED(G)
--------- ------------ ------------

CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 41,410 $ 41,410 $ 70,010
Net working capital................................... 16,177 16,177 45,561
Total assets.......................................... 329,960 329,960 358,560
Redeemable common stock............................... 115,480 -- --
Total stockholders' equity (deficit).................. (74,269) 41,211 70,595

------------------------

(a) We believe that our income as an employee-owned company is not indicative of
the operating performance we will report as a publicly traded company due to
the significant impact of the following two non-recurring compensation
related expenses: (1) supplemental discretionary bonuses accrued under our
stock incentive bonus plan, described in more detail in footnote (b) below,
and (2) a one-time charge in fiscal year 1998 related to a change in the way
we calculated our formula book value, the redemption price at which we sold
and repurchased our restricted common stock in transactions with our
employees prior to the public offering, described in more detail in footnote
(c) below.

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compensation charge described above. The loss before taxes and minority
interest of $43.0 million for fiscal year 1998 would have improved by
$69.9 million without the non-recurring compensation charge. The income
before taxes and minority interest of $23.8 million for fiscal year 1999 and
$33.8 million for fiscal year 2000 would have improved by $22.6 million and
$30.3 million, respectively, if bonuses were accrued under the compensation
structure management will adopt as a publicly traded company. Income before
taxes and minority interest from continuing operations for the three years
ended June 30, 1998, 1999 and 2000 would have been $26.9 million,
$46.4 million and $64.1 million, respectively.

(b) Historically, we have paid incentive bonuses to associates under a fiscal
year-end bonus program. Beginning in fiscal year 1999, in addition to annual
fiscal year-end bonuses, we provided supplemental bonus compensation to our
employee stockholders pursuant to the stock incentive bonus plan in an
amount representing all income in excess of a targeted amount. These amounts
are accrued in the fiscal year to which they relate and are paid in the
following fiscal year. Following the public offering, we will terminate the
stock incentive bonus plan and replace it with equity based incentives more
customary to publicly traded companies.

The Watson Wyatt & Company Holdings 2000 Long Term Incentive Plan provides
for non-qualified stock options with an exercise price equal to fair market
value at the date of the grant and no uncertainties that would require
variable accounting under generally accepted accounting principles. In a few
foreign jurisdictions, where option grants are impractical, we will grant
stock appreciation rights (SARs), which will require recognition of
compensation expense over a vesting period to the extent the market price of
the stock increases. We do not expect that any compensation expense
resulting from the equity based incentive program in effect following the
offering will be material.

(c) As an employee-owned company without a public trading market, we sold and
repurchased shares of our redeemable common stock in transactions with our
employee stockholders at a formula book value, or redemption price,
calculated in accordance with our bylaws and based, in part, on the book
value of the company. In fiscal year 1998, we recorded a one-time non-cash
compensation charge against continuing operations of $69.9 million to
reflect a change in the method of calculating the redemption value of our
redeemable common stock. This change eliminated from the calculation the
$69.9 million charge taken for discontinued operations in fiscal year 1998
to reflect the discontinuation of our benefits administration outsourcing
business.

(d) As discussed in footnotes (a) and (c) above, in the third quarter of fiscal
year 1998 we discontinued our benefits administration outsourcing business
and recorded a $69.9 million charge to earnings in the discontinued
operations line. The discontinuation is more fully described under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Fiscal year 1998 also includes the operating losses of the
benefits administration outsourcing business prior to its discontinuation,
which are reflected in the discontinued operations line. In fiscal year
1999, the discontinued operations credit reflects the reduction of the
expected loss on disposal of the benefits administration outsourcing
business.

(e) The pro forma earnings per share information gives effect to the two for one
exchange of shares under our corporate reorganization as if completed
July 1, 1999.

(f) The "Pro Forma" column reflects the exchange of shares under our corporate
reorganization, including the reclassification of the current redeemable
common stock to permanent stockholders' equity.

(g) The "Pro Forma As Adjusted" column reflects the sale of 2,800,000 shares of
class A common stock offered by us, the automatic conversion of all shares
of class B common stock sold by selling stockholders in the offering into
shares of class A common stock, and the application of the estimated net
proceeds to us from this offering.

424B4 7th Page of 110 TOC 1st Previous Next ↓Bottom Just 7th
RISK FACTORS

BEFORE YOU INVEST IN OUR CLASS A COMMON STOCK, YOU SHOULD UNDERSTAND THE
RISKS INVOLVED. YOU SHOULD CAREFULLY CONSIDER THESE RISK FACTORS, AS WELL AS ALL
OF THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR CLASS A COMMON STOCK. IF
ANY OF THE RISKS DISCUSSED IN THIS PROSPECTUS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION AND OPERATING RESULTS COULD BE ADVERSELY AFFECTED. AS A
RESULT, THE TRADING PRICE OF OUR CLASS A COMMON STOCK COULD DECLINE AND YOU MAY
LOSE ALL OR PART OF YOUR INVESTMENT.

WE MUST CONTINUE TO RECRUIT AND RETAIN QUALIFIED CONSULTANTS; OUR FAILURE TO DO
SO COULD ADVERSELY AFFECT OUR ABILITY TO COMPETE SUCCESSFULLY.

Our continued success and future growth depend heavily upon our ability to
attract and retain enough highly skilled and motivated consultants. We must meet
these human capital requirements if we are to deliver our sophisticated and
technical services to our clients. We compete against many companies with
greater financial resources both within our industry and in other industries to
attract these qualified individuals. Our failure to recruit and retain adequate
talent could reduce our competitive strength and lead to a deterioration of our
business.

This competition for personnel may adversely affect our profitability. We
can give no assurance that we will be able to generate sufficient revenue to
offset any additional personnel costs. We also cannot guarantee that we will be
successful in hiring enough consultants to continue our growth.

CHANGES IN OUR COMPENSATION PROGRAMS COULD IMPAIR OUR ABILITY TO RETAIN
CONSULTANTS.

Historically, our compensation programs have been principally cash-based. We
plan to change our compensation programs upon completing this offering by
introducing stock options and discontinuing the payment of supplemental bonuses
under our current stock incentive bonus plan. This change could adversely affect
our ability to retain our consultants if our total compensation program is not
perceived by our consultants to be competitive with those of other firms.

WE DEPEND ON OUR ASSOCIATES; THE LOSS OF KEY CONSULTANTS AND MANAGERS COULD
DAMAGE OR RESULT IN THE LOSS OF CLIENT RELATIONSHIPS AND ADVERSELY AFFECT OUR
BUSINESS.

Our success largely depends upon the business generation capabilities and
project execution skills of our consultants. In particular, our consultants'
personal relationships with our clients are a critical element of obtaining and
maintaining client engagements. Losing consultants and account managers who
manage substantial client relationships or possess substantial experience or
expertise could adversely affect our ability to secure and complete engagements,
which would adversely affect our results of operations.

In addition, if any of our key consultants were to join an existing
competitor or form a competing company, some of our clients could choose to use
the services of that competitor instead of our services. Clients or other
companies seeking to develop in-house services similar to ours also could hire
our key consultants. Such hiring would not only result in our loss of key
consultants but also could result in the loss of a client relationship or a new
business opportunity.

COMPETITION COULD RESULT IN LOSS OF OUR MARKET SHARE THAT COULD REDUCE OUR
PROFITABILITY.

The markets for our principal services are highly competitive. Our
competitors currently include other human resources consulting and actuarial
firms, as well as the human resources consulting divisions of some public
accounting and consulting firms. Several of our competitors have greater
financial, technical, and marketing resources than we have, which could enhance
their ability to respond more quickly to technological changes, finance
acquisitions and fund internal growth. Also, the consulting practices of the
large international accounting firms, or other competitors who have a

424B4 8th Page of 110 TOC 1st Previous Next ↓Bottom Just 8th
larger presence than we do in particular markets, gain marketing advantages from
their greater name recognition.

Our current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase
their ability to address client needs. New competitors or alliances among
competitors could emerge and gain significant market share. In addition, some of
our competitors may have or may develop a lower cost structure or superior
services that gain greater market acceptance than the services that we offer or
develop.

CLIENTS' CRITERIA FOR SELECTING CONSULTANTS MAY CHANGE.

The ability to tailor services to clients' particular needs traditionally
has been a key selection criterion among buyers of consulting services in our
core businesses. However, these buyers' selection criteria may change and price
could become a more significant factor, thereby adversely affecting our
operating results.

DEMAND FOR OUR SERVICES MAY DECREASE FOR VARIOUS REASONS, INCLUDING A DECLINE IN
A CLIENT'S OR AN INDUSTRY'S FINANCIAL CONDITION OR AN INDUSTRY-SPECIFIC ECONOMIC
DOWNTURN, THAT COULD ADVERSELY AFFECT OUR OPERATING RESULTS.

We can give no assurance that the demand for our services will continue to
grow or that we will compete successfully with our existing competitors, new
competitors or our clients' internal capabilities. Some of our clients may
decide to develop or use their internal resources to satisfy their needs for
some or all of the services that we provide. Our clients' demand for our
services also may change based on their own needs and financial conditions. When
economic downturns affect particular clients or industry groups, they frequently
reduce their budgets for outside consultants, which could reduce the demand for
our services and increase price competition.

In addition, the demand for many of our core benefits services is affected
by government regulation and taxation of employee benefits plans. This
regulation and taxation drive our clients' needs for compliance-related
services. Significant changes in tax or social welfare policy or regulations
could lead some employers to discontinue their employee benefit plans, thereby
reducing the demand for our services. A simplification of regulations or tax
policy also could reduce the need for our services.

OUR CLIENTS GENERALLY MAY TERMINATE OUR SERVICES AT ANY TIME, WHICH COULD
DECREASE ASSOCIATE UTILIZATION.

Our clients generally may terminate our engagements at any time. If a client
reduces the scope of or terminates the use of our services with little or no
notice, our associate utilization will decline. In such cases, we must rapidly
redeploy our associates to other engagements in order to minimize the potential
negative impact on our financial performance. In addition, because much of our
work is project based rather than recurring in nature, our associates'
utilization depends on our ability to continually secure additional engagements.

MANY OF OUR ENGAGEMENTS, PARTICULARLY LONG-STANDING RELATIONSHIPS AND
ENGAGEMENTS INVOLVING STANDARD ANNUAL ACTIVITIES, ARE NOT BASED ON WRITTEN
AGREEMENTS, WHICH COULD RESULT IN DISPUTES WITH OUR CLIENTS.

Many of our engagements, including the majority of those involving
long-standing relationships or standard annual activities such as actuarial
valuations, are not based on formal written agreements. In such cases, there is
a greater risk of misunderstandings with our clients concerning the scope and
terms of our engagement and our liability for unsatisfactory performance.
Disputes could damage our client relationships and result in unanticipated costs
and loss of revenue that could adversely affect our results of operations.

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OUR FIXED FEE ENGAGEMENTS COULD HURT OUR FINANCIAL RESULTS IF NOT PROPERLY
MANAGED.

We enter into some of our engagements on a negotiated fixed fee basis. If we
do not properly negotiate the price and manage the performance of these
engagements we might incur losses on individual engagements and our overall
financial results would be adversely affected.

WE ARE SUBJECT TO MALPRACTICE CLAIMS ARISING FROM OUR WORK, WHICH COULD
ADVERSELY AFFECT OUR REPUTATION AND BUSINESS.

Clients and third parties who are dissatisfied with our services or who
claim to suffer damages caused by our services may bring lawsuits against us.
The nature of our work, especially our actuarial services, involves assumptions
and estimates concerning future events, the actual outcome of which we cannot
know with certainty in advance. In addition, we could make computational,
software programming, or data management errors.

Clients may seek to hold us responsible for the financial consequences of
these errors or variances. Given that we frequently work with large pension
funds, relatively small percentage errors or variances could create significant
dollar variances and claims for unfunded liabilities. In most cases, our
exposure to liability on a particular engagement is substantially greater than
the profit opportunity that the engagement generates for us. For example,
possible claims might include:

- a client's assertion that actuarial assumptions used in a pension plan
were unreasonable, leading to plan underfunding;

- a claim arising out of the use of inaccurate data, which could lead to an
underestimation of plan liabilities; and

- a claim that employee benefit plan documents were misinterpreted or plan
amendments were misstated in plan documents, leading to overpayments to
beneficiaries.

Defending lawsuits of this nature or arising out of any of our services
could require substantial amounts of management attention, which could affect
their focus on operations and could adversely affect our financial performance.
In addition to defense costs and liability exposure, malpractice claims may
produce negative publicity that could hurt our reputation and business.

OUR QUARTERLY REVENUES MAY FLUCTUATE WHILE OUR EXPENSES ARE RELATIVELY FIXED.

Quarterly variations in our revenues and operating results occur as a result
of a number of factors, such as:

- the significance of client engagements commenced and completed during a
quarter;

- the seasonality of some specific types of services; in particular,
retirement revenues are more heavily weighted toward the second half of
the fiscal year when annual actuarial valuations are required to be
completed for calendar year end companies and the related services are
performed. In the Human Resources Technologies group, the distribution of
work is concentrated at the end of the first fiscal quarter and through
the second fiscal quarter as there is demand from our clients for
assistance in updating systems and programs used in the annual
re-enrollment of employees in benefit plans, such as flex plans. Much of
the remaining business is project oriented and is thus influenced more by
particular client needs and the availability of our workforce;

- the number of business days in a quarter, employee hiring and utilization
rates, the clients' ability to terminate engagements without penalty;

- the size and scope of assignments;

- the level of vacation and holidays taken by our associates; and

- general economic conditions.

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Approximately 70-75% of our total operating expenses are relatively fixed,
encompassing the majority of occupancy, communications and other expenses,
general and administrative expenses, depreciation and amortization, and salaries
and employee benefits excluding fiscal year-end incentive bonuses. Therefore, a
variation in the number of client assignments or the timing of the initiation or
the completion of client assignments can cause significant variations in
quarterly operating results and could result in losses. Increases in the number
of professional personnel that are not followed by corresponding increases in
revenues could materially and adversely affect our operating results. Over the
most recent eight fiscal quarters, quarterly income from continuing operations
has fluctuated from $1.0 million to $7.3 million.

WE DEPEND ON WATSON WYATT PARTNERS FOR OUR BRAND IN THE EUROPEAN MARKET AND
COULD LOSE OUR POSITION IN EUROPE IF OUR ALLIANCE AGREEMENTS WERE TO TERMINATE.

Since 1995 we have marketed our services globally with Watson Wyatt Partners
as Watson Wyatt Worldwide. Under our alliance agreements with Watson Wyatt
Partners:

- we operate in North America, Latin America and Asia-Pacific;

- Watson Wyatt Partners operates in the United Kingdom, Ireland and Africa;
and

- Watson Wyatt Holdings (Europe) Limited, of which we own a 25% minority
interest, operates in continental Europe.

The alliance agreements with Watson Wyatt Partners generally restrict each
party's ability to enter into each other's geographic markets. If the alliance
agreements were to terminate, we could lose our position in Europe, which could
interrupt our global development and impair our ability to deliver services
seamlessly to clients throughout the world.

TERMINATION OF OUR RELATIONSHIP WITH WATSON WYATT PARTNERS COULD RESULT IN A
NAME CHANGE.

The alliance agreements set forth the rights we or Watson Wyatt Partners
have to buy each other out of our respective interests in each other's firm and
in Watson Wyatt Holdings (Europe) Limited in the event either of us becomes
affiliated with a competitor. A termination of our alliance with Watson Wyatt
Partners could precipitate a name change, which could result in confusion in our
markets.

OUR INTERNATIONAL OPERATIONS PRESENT SPECIAL RISKS THAT COULD NEGATIVELY AFFECT
OUR BUSINESS.

We conduct a portion of our business from offices outside the United States.
This subjects us to foreign financial and business risks, which could arise in
the event of:

- unusual currency exchange rate fluctuations;

- unexpected increases in taxes;

- new regulatory requirements and/or changes in policies and local laws that
materially affect the demand for our services or directly affect our
foreign operations;

- unusual and unexpected monetary exchange controls;

- the impact of unusually severe or protracted recessions in foreign
economies; and

- civil disturbance or other catastrophic events that reduce business
activity in other parts of the world.

Any of these factors could have an adverse effect on our results of
operations.

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OPERATIONAL READINESS OF OUR GLOBAL ADMINISTRATIVE INFRASTRUCTURE MIGHT NOT BE
AS COMPLETE AS REQUIRED TO MANAGE INTERNATIONAL OPERATIONS EFFECTIVELY.

The management of geographically dispersed operations requires substantial
management resources, resulting in significant ongoing expense. We have not
fully integrated all of our global operations from an administrative and
reporting standpoint. We are developing and implementing additional systems and
management reporting to help us manage our global operations, but we cannot
predict when these systems will be fully operational or how successful they will
be.

OUR BUSINESS FACES RAPID TECHNOLOGICAL CHANGE AND OUR FAILURE TO RESPOND TO THIS
CHANGE QUICKLY COULD ADVERSELY AFFECT OUR BUSINESS.

Increasingly, to remain competitive in our practice areas, we must identify
and offer the most current technologies and methodologies. This is particularly
true of our HR Technologies Group in which our success largely depends upon our
ability to quickly absorb and apply technological advances in both generic
applications and, particularly, those which are specifically required to deliver
employee benefits services. In some cases, significant technology choices and
investments are required. If we do not respond correctly, quickly, or in a
cost-effective manner, our business and operating results might be harmed.

The effort to gain technological expertise and develop new technologies in
our business requires us to incur significant expenses and, in some cases, to
implement them globally. If we cannot offer new technologies as quickly or
effectively as our competitors, we could lose market share. We also could lose
market share if our competitors develop more cost-effective technologies than we
offer or develop.

OUR HR TECHNOLOGIES GROUP HAS PROJECT-RELATED RISKS THAT COULD ADVERSELY AFFECT
OUR FINANCIAL RESULTS.

Our HR Technologies Group develops and implements computer software and
systems for clients. In securing or carrying out these engagements, we may
encounter inadequate project scope definitions, unforeseen technological and
systems integration problems, unanticipated costs, failures to meet contractual
performance objectives, and other business risks. If we are not successful in
defining, pricing and executing these assignments as planned, we may incur
financial losses.

LIMITED PROTECTION OF OUR PROPRIETARY EXPERTISE, METHODOLOGIES AND SOFTWARE
COULD HARM OUR BUSINESS.

We cannot guarantee that trade secret, trademark, and copyright law
protections are adequate to deter misappropriation of our confidential
information. Moreover, we may be unable to detect the unauthorized use of our
intellectual property and take the necessary steps to enforce our rights. If
employees or third parties misappropriate our proprietary information, our
business could be harmed. Redressing infringements also may consume significant
management time and financial resources.

OUR ASSOCIATES WILL OWN APPROXIMATELY 83% OF OUR STOCK, AND THEIR INTERESTS MAY
DIFFER FROM THOSE OF OTHER STOCKHOLDERS.

Immediately upon completion of this offering, our associates will continue
to own approximately 83% of our outstanding capital stock. As a result, our
associates will be able to elect the board of directors and generally determine
the outcome of any proposed corporate transaction or other matter submitted to
stockholders for their vote. Our associates' interests in these matters might
differ from those of our non-associate stockholders.

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CHANGE IN ASSOCIATE OWNERSHIP COULD ADVERSELY AFFECT OUR FIRM CULTURE.

We currently are predominantly owned by our associates. As owners, our
associates have traditionally been able to influence the direction of the firm,
which promotes an entrepreneurial spirit and motivates individual performance.
The stock owned by our associates will have transfer restrictions, which will
expire within two years following this offering. As these transfer restrictions
expire and our associates' stock becomes transferable, associate ownership may
decline. A decline in associate ownership and an increase in non-associate
influence could lower morale which could, in turn, adversely affect our business
operations.

WE HAVE VARIOUS MECHANISMS IN PLACE THAT MAY PREVENT A CHANGE IN CONTROL THAT A
STOCKHOLDER MIGHT FAVOR.

Our certificate of incorporation and bylaws contain provisions that might
discourage, delay or prevent a change in control that a stockholder might favor.
Our certificate of incorporation and bylaws:

- authorize the issuance of preferred stock without fixed characteristics
that could be issued by our board of directors to increase the number of
outstanding shares and deter a takeover attempt;

- classify our board of directors with staggered, three-year terms, which
may lengthen the time required to gain control of our board of directors;

- provide that only the president or our board may call a special meeting of
stockholders;

- prohibit stockholder action by written consent, which requires all actions
to be taken at a meeting of the stockholders;

- provide that vacancies on our board of directors, including new
directorships, may be filled only by the directors then in office; and

- require super-majority voting to amend the classified board and these
other provisions of our certificate of incorporation.

WE COULD ISSUE ADDITIONAL SHARES WHICH COULD HAVE A DILUTIVE EFFECT ON
STOCKHOLDERS.

At the time of the offering we will have 69,000,000 authorized shares of
class A common stock. Immediately following the completion of this offering, we
expect to have approximately 63,400,000 authorized but unissued shares of
class A common stock. Additional class A common stock will be issued upon
conversion of outstanding shares of class B common stock and pursuant to
employee stock option plans, and might be issued in connection with acquisitions
or other transactions, or offered for sale in future offerings. The issuance of
additional shares of class A common stock could dilute the value of outstanding
shares, including those purchased in this offering.

YEAR 2000 ISSUES COULD ADVERSELY AFFECT OUR BUSINESS.

We have provided our clients with software that we have developed and
software-related services. We also use software and information technology
extensively to deliver our consulting services to our clients and operate our
business. We cannot guarantee that we have identified all potential software
problems or that we will have successfully corrected all software problems. In
addition, some software (such as software used for open enrollment in benefit
plans) normally is modified on an annual or periodic basis. In some cases, we
have deferred performing Year 2000 remediation to coincide with the software's
next scheduled modification. We also have provided software to clients subject
to warranties regarding Year 2000 performance. If we fail to identify or correct
Year 2000 problems in our software, we may incur costs to repair or replace
affected

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systems. We also may incur liability or unanticipated costs as a result of
errors caused by our software that could have a material adverse effect on the
results of our operations.

WE WILL HAVE BROAD DISCRETION REGARDING THE NET OFFERING PROCEEDS.

We have not designated the anticipated net proceeds of this offering for
specific uses. We will have broad discretion regarding the use of the net
proceeds of this offering, and we may apply the proceeds differently than
investors in our stock might anticipate. Although we have no plans or agreements
regarding any material acquisitions on the date of this prospectus, we might use
a portion of the net proceeds to fund acquisitions.

ADDITIONAL SHARES BECOMING AVAILABLE FOR SALE UNDER OUR CERTIFICATE OF
INCORPORATION COULD ADVERSELY AFFECT THE PRICE OF OUR STOCK.

Transfer restrictions on the class B common stock expire 12 and 24 months
following this offering. As the transfer restrictions on the class B common
stock expire, subject in the case of affiliates to the restrictions of Rule 144
under the Securities Act of 1933, those shares automatically will convert into
shares of class A common stock that will be eligible for sale in the public
market. The class B shares will be owned largely by our current associates, and
these persons might want to sell their shares in the public market immediately
after the transfer restrictions expire. Substantial sales after the transfer
restrictions expire could adversely affect the market value of the class A
common stock and the value of your shares. We have entered into agreements
providing for additional staggered transfer restrictions of up to four years,
subject to specified exceptions, with stockholders holding approximately 36% of
our common stock after the offering; however, we cannot guarantee that the board
of directors will not waive the class B common stock transfer restrictions, that
the board of directors will not waive the up to four year transfer restrictions,
or that the underwriters will not waive their requirement that holders not sell
any shares for 180 days following this offering.

The following chart identifies the number of additional class A shares that
will become available for resale at the time the class B 12 and 24 month
restrictions expire:

[Download Table]

10/16/2000 10/16/2001 10/16/2002
---------- ---------- ----------

Post Merger Shares Eligible for
Resale................................ 0 13,403,606 13,403,606

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve substantial
risks and uncertainties. You can identify these statements by forward-looking
words such as "may," "will," "expect," "anticipate," "believe," "estimate,"
"plan," "intend," "continue" or similar words. You should read statements that
contain these words carefully because they discuss our future expectations,
contain projections of our future results of operations or of our financial
condition or state other "forward-looking" information. This prospectus also
contains third-party estimates regarding the size and growth of markets.

The sections captioned "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," as well as any
cautionary language in this prospectus, provide examples of risks,
uncertainties, and events that may cause our actual results to differ materially
from the expectations. Although we believe that the expectations reflected in
the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements. We qualify any
forward-looking statements entirely by these cautionary factors.

USE OF TERMINOLOGY

Immediately before the closing of this offering, we will effect a corporate
reorganization in order to create a holding company structure. As part of this
transaction, our current operating company, Watson Wyatt & Company, will merge
with an indirect wholly-owned subsidiary to become a wholly-owned subsidiary of
Watson Wyatt & Company Holdings. Unless the context indicates otherwise, the
information in this prospectus assumes that the corporate reorganization
transactions have been completed. References in this prospectus to "Watson
Wyatt," "we," "our" and "us" refer to both Watson Wyatt & Company and its
subsidiaries, before the merger, and to Watson Wyatt & Company Holdings and its
subsidiaries after the merger. References to "WW Holdings" refer to Watson
Wyatt & Company Holdings. We refer to our employees as associates.

Watson Wyatt Worldwide is the name of our global alliance with Watson Wyatt
Partners.

Watson Wyatt & Company currently files reports and other information with
the SEC, but its redeemable common stock, which has been subject to various
restrictions, has not been publicly traded. After the offering, Watson Wyatt &
Company Holdings will continue to file annual, quarterly and special reports,
proxy statements and other information with the SEC. Watson Wyatt & Company's
SEC filings are available at the SEC's web site at http://www.sec.gov. You may
read and copy any filed document at the SEC's public reference rooms in
Washington, D.C. at Judiciary Plaza, 450 Fifth Street, Washington, D.C. 20549,
and at the SEC's regional offices in New York at 7 World Trade Center, 13th
Floor, New York, New York 10048, and in Chicago at Suite 400, Northwestern
Atrium Center, 14th Floor, 500 W. Madison Street, Chicago, Illinois 60661.
Please call the SEC at 1-800-SEC-0330 for further information about the public
reference rooms.

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USE OF PROCEEDS

The net proceeds from the sale of the 2,800,000 shares of class A common
stock offered by us will be approximately $29.4 million, after deducting the net
costs of underwriting discounts and commissions and estimated offering expenses.
We will not receive any proceeds from the sale of common stock by the selling
stockholders. We have agreed with the selling stockholders to reimburse
underwriting fees payable by them. This amount has been taken into account in
estimating the net proceeds.

The primary purpose of this offering is to create a public market for our
common stock, create a currency for potential acquisitions, facilitate future
access to public markets, and enhance our ability to use our common stock to
attract, retain and provide incentives to our associates.

The proceeds from this offering will be used for capital expenditures,
working capital, and other general corporate purposes, which may include the
retirement of outstanding working capital indebtedness under our revolving
credit facility. Further, although we currently have no agreements or
commitments regarding any acquisitions, a portion of the offering proceeds could
be used for possible strategic acquisitions of complementary businesses,
products, or technologies. Pending the specific application of proceeds from
this offering, any proceeds available after the repayment of outstanding
indebtedness would be invested in short-term high-grade interest-bearing
securities.

At June 30, 2000, we had no debt outstanding. However, any debt outstanding
at the time of completion of this offering would be paid with the net proceeds.
The debt would be for cyclical working capital purposes. It would be comprised
of outstanding draws on our revolving credit facility, which would mature on
June 30, 2003 when the credit facility expires, if not repaid earlier. The
indebtedness bears interest at a rate that varies with LIBOR and/or the prime
rate. The interest rate on our borrowings is 9.5% at June 30, 2000.

DIVIDEND POLICY

We currently intend to retain our future earnings to finance the operation
and expansion of our business and we do not anticipate paying cash dividends on
our common stock in the foreseeable future. Any future determination as to the
payment of dividends will be at the discretion of our board of directors.

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CAPITALIZATION

The following table presents our consolidated net cash position and total
capitalization as of June 30, 2000:

- on an actual basis;

- on a pro forma basis giving effect to the two for one exchange of shares
under our corporate reorganization and related reclassification of the
redeemable common stock to stockholders' equity; and

- on a pro forma as adjusted basis to reflect the sale of 2,800,000 shares
of class A common stock being offered in this offering by us, the
automatic conversion of all class B common stock sold by the selling
shareholders in the offering to class A common stock, and the application
of the estimated net proceeds to us from the offering.

[Enlarge/Download Table]

AS OF JUNE 30, 2000
-------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
-------------------------------------
(UNAUDITED)
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ---------- -----------

Cash and cash equivalents................................. $ 41,410 $ 41,410 $70,010
======== ======== =======
Note payable.............................................. -- -- --
======== ======== =======
Redeemable common stock ($1 par value per share,
25,000,000 shares authorized; 14,805,145 shares issued
and outstanding) (a).................................... 115,480 -- --
======== ======== =======
Stockholders' equity:
Adjustment for redemption value greater than amounts
paid in by stockholders (a)........................... (6,097) -- --
Preferred stock (no par value per share, 1,000,000
shares authorized; no shares issued).................. -- -- --
Class A common stock ($0.01 par value per share,
69,000,000 shares authorized; 5,600,000 shares issued
and outstanding) (b).................................. -- 56
Class B-1 common stock ($0.01 par value per share;
15,000,000 shares authorized; 14,805,145 shares issued
and outstanding, pro forma; 13,405,145 shares issued
and outstanding, pro forma as adjusted)............... -- 148 134
Class B-2 common stock ($0.01 par value per share;
15,000,000 shares authorized; 14,805,145 shares issued
and outstanding, pro forma; 13,405,145 shares issued
and outstanding, pro forma as adjusted)............... -- 148 134
Additional paid in capital (c).......................... -- 109,087 140,109
Retained deficit (d).................................... (64,223) (64,223) (65,889)
Cumulative translation adjustment (other comprehensive
loss)................................................. (3,949) (3,949) (3,949)
-------- -------- -------
Total stockholders' equity (deficit)...................... (74,269) 41,211 70,595
-------- -------- -------
Total capitalization...................................... $ 41,211 $ 41,211 $70,595
======== ======== =======

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------------------------

(a) All shares of common stock at June 30, 2000 are classified as redeemable
common stock outside of stockholders' equity due to the bylaw provision that
required stock to be repurchased by us upon an associate's termination or
retirement. The difference between the redeemable value, as determined in
accordance with Watson Wyatt & Company's bylaws, and the amounts paid in or
deemed paid in for the stock is identified as the "Adjustment for redemption
value greater than amounts paid in by stockholders" and is included in the
stockholders' equity section of the historical balance sheet.

Under the terms of the corporate reorganization, all 14,805,145 outstanding
redeemable common shares will be converted into 29,610,290 newly issued
shares of class B-1 and class B-2 common stock, without redemption features.
This is reflected in the "Pro Forma" column. In the "Pro Forma" column, the
total historical cost of the shares is now fully reflected in stockholders'
equity.

(b) The "Pro Forma As Adjusted" number of shares of common stock to be
outstanding excludes (1) options to purchase approximately 1,800,000 shares
of class A common stock to be granted concurrent with this offering at an
exercise price equal to the public offering price and (2) approximately
2,700,000 shares of class A common stock reserved for issuance upon exercise
of options that may be granted in the future under our stock incentive plan.

(c) The "Pro Forma" column reflects the difference between cash paid in or
deemed paid in for the new outstanding 14,805,145 shares of the class B-1
common stock and 14,805,145 shares of class B-2 common stock and their $0.01
per share par value. The "Pro Forma As Adjusted" column adds to this amount
the issuance of shares of class A common stock in this offering, less the
$0.01 per share par value of each class of stock.

(d) We have decided to reimburse the selling stockholders for the underwriting
discount on the shares sold by them in connection with this offering. The
"Pro Forma as Adjusted" column reflects the resulting after-tax compensation
charge which will decrease our operating results and increase our retained
deficit in the quarter in which we complete this offering.

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DILUTION

As of June 30, 2000, after giving effect to our corporate reorganization and
the related termination of the redemption feature of our redeemable common
stock, our pro forma net tangible book value was approximately $32.5 million, or
approximately $1.10 per share. Net tangible book value per share is determined
by dividing our net tangible book value (total net tangible assets less total
liabilities) by 29,610,290 pro forma shares of common stock outstanding. After
giving effect to the sale of 2,800,000 shares of class A common stock in this
offering by us at an initial public offering price of $12.50 per share, and
after deducting the net costs of underwriting discounts and commissions and
offering expenses, our pro forma net tangible book value as of June 30, 2000
would have been $61.9 million, or $1.91 per share. This represents an immediate
increase in net tangible book value of $0.81 per share to our stockholders and
an immediate dilution in net tangible book value of $10.59 per share to new
investors purchasing shares in this offering. The following table illustrates
this per share dilution:

[Download Table]

Initial public offering price per share.................. $ 12.50
-------
Net tangible book value per share as of June 30,
2000................................................. $ 1.10
Increase in net tangible book value per share
attributable to the offering......................... 0.81
-------
Net tangible book value per share after this offering.... 1.91
-------
Dilution per share to new stockholders................... $ 10.59
=======

The following table summarizes, on a pro forma basis as of June 30, 2000,
the number of shares of class A common stock purchased from us, the total
consideration paid to us and the average price per share paid to us by the
existing holders of common stock and by the new stockholders purchasing shares
of class A common stock offered by us at an initial public offering price of
$12.50 per share, before deducting the net costs of underwriting discounts and
commissions and offering expenses payable by us.

[Enlarge/Download Table]

SHARES PURCHASED TOTAL CONSIDERATION
---------------------- ---------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- -------- ------------- -------- -------------

Existing stockholders........... 26,810,290 82.7% $ 98,930,000 58.6% $ 3.69
New stockholders................ 5,600,000 17.3 70,000,000 41.4 $12.50
----------- ----- ------------ -----
Total......................... 32,410,290 100.0% $168,930,000 100.0%
=========== ===== ============ =====

The foregoing table excludes:

- options to purchase approximately 1,800,000 shares of class A common stock
to be granted concurrent with this offering at an exercise price equal to
the public offering price; and

- approximately 2,700,000 shares of class A common stock reserved for
issuance upon exercise of options that may be granted in the future under
our stock option plan.

Additional sales by the selling stockholders of 318,500 shares and by us of
521,500 shares in this offering, if the underwriters' overallotment option is
exercised in full, would reduce the number of shares held by our existing
stockholders to 26,491,790 shares, or 80.4% of the total number of shares
outstanding after this offering, and will increase the number of shares held by
new investors to 6,440,000 shares or 19.6% of the total number of shares of
common stock outstanding after this offering.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data of Watson Wyatt & Company
Holdings should be read in conjunction with the consolidated financial
statements and the notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
prospectus. The balance sheet data as of June 30, 1999 and 2000 and the
statement of operations data for the years ended June 30, 1998, 1999 and 2000
have been derived from the consolidated financial statements for such years,
which have been audited by PricewaterhouseCoopers LLP, independent accountants.
The balance sheet data as of June 30, 1996, 1997 and 1998 and the statement of
operations data for the years ended June 30, 1996 and 1997 are derived from the
audited consolidated financial statements for such years that have been restated
to reflect our discontinued operations.

[Enlarge/Download Table]

YEAR ENDED JUNE 30,
---------------------------------------------------------
1996 1997 1998 1999 2000
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

CONSOLIDATED STATEMENT OF OPERATIONS DATA (A):
Revenue..................................................... $ 475,298 $486,502 $ 512,660 $556,860 $624,583
Costs of providing services:
Salaries and employee benefits............................ 250,103 252,302 268,611 298,915 332,339
Stock incentive bonus plan (b)............................ -- -- -- 22,610 30,283
Non-recurring compensation charge (c)..................... -- -- 69,906 -- --
Professional and subcontracted services................... 42,450 48,827 49,907 47,863 49,608
Occupancy, communications and other....................... 84,203 96,026(d) 88,840 92,668 100,099
General and administrative expenses....................... 38,656 45,696 51,759 56,578 63,596
Depreciation and amortization............................. 25,541 22,094 24,994 15,248 17,878
--------- -------- --------- -------- --------
440,953 464,945 554,017 533,882 593,803

Income (loss) from operations............................... 34,345 21,557 (41,357) 22,978 30,780

Other:
Interest income........................................... 1,441 1,462 901 944 1,823
Interest expense.......................................... (930) (1,506) (2,768) (2,646) (1,876)

Income from affiliates...................................... (820) 105 258 2,524 3,116
--------- -------- --------- -------- --------
Income (loss) before taxes and minority interest............ 34,036 21,618 (42,966) 23,800 33,843

Income taxes................................................ 14,071 9,070 13,134 11,448 15,195
--------- -------- --------- -------- --------
Income (loss) before minority interest...................... 19,965 12,548 (56,100) 12,352 18,648

Minority interest........................................... (130) (167) (112) (217) (115)
--------- -------- --------- -------- --------
Income (loss) from continuing operations.................... 19,835 12,381 (56,212) 12,135 18,533

Discontinued operations, net (e)............................ (10,480) (11,483) (69,906) 8,678 --
--------- -------- --------- -------- --------
Net income (loss)........................................... $ 9,355 $ 898 $(126,118) $ 20,813 $ 18,533
========= ======== ========= ======== ========
Earnings (loss) per share, continuing operations, basic and
fully diluted............................................. $ 1.07 $ 0.71 $ (3.27) $ 0.80 $ 1.24

Earnings (loss) per share, net income (loss), basic and
fully diluted............................................. $ 0.51 $ 0.05 $ (7.34) $ 1.37 $ 1.24

Weighted average shares outstanding......................... 18,516 17,438 17,170 15,215 15,000

Pro forma earnings per share information (unaudited) (f):

Continuing operations, basic and fully diluted............ $ 0.62

Net income, basic and fully diluted....................... $ 0.62

Weighted average shares outstanding....................... 30,000

[Enlarge/Download Table]

AS OF JUNE 30,
---------------------------------------------------------
1996 1997 1998 1999 2000
--------- --------- --------- --------- ---------
(IN THOUSANDS)

CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 21,694 $ 26,257 $ 13,405 $ 35,985 $ 41,410
Net working capital......................................... 18,788 21,307 23,748 11,692 16,177
Total assets................................................ 320,819 331,778 268,310 313,960 329,960
Note payable................................................ -- -- 9,000 -- --
Redeemable common stock..................................... 90,214 96,091 96,296 107,631 115,480
Total stockholders' deficit (g)............................. (5,832) (12,205) (84,510) (74,351) (74,269)
Shares outstanding.......................................... 18,262 18,130 15,917 16,112 14,805

424B4 20th Page of 110 TOC 1st Previous Next ↓Bottom Just 20th
------------------------------

(a) We believe that our income as an employee-owned company is not indicative of
the operating performance we will report as a publicly traded company due to
the significant impact of the following two non-recurring compensation
related expenses: (1) supplemental discretionary bonuses accrued under our
stock incentive bonus plan, described in more detail in footnote (b) below
and (2) a one-time charge in fiscal year 1998 related to a change in the way
we calculated our formula book value, the redemption price at which we sold
and repurchased our restricted common stock in transactions with our
employees prior to the public offering, described in more detail in footnote
(c) below.

We believe that our results of operations in fiscal years 1998, 1999 and
2000 are more comparable to, and a better indication of, our performance as
a publicly traded company if they are analyzed excluding the stock incentive
bonus plan and the non-recurring compensation charge described above. The
loss before taxes and minority interest of $43.0 million for fiscal year
1998 would have improved by $69.9 million without the non-recurring
compensation charge. The income before taxes and minority interest of
$23.8 million for fiscal year 1999 and $33.8 million for fiscal year 2000
would have improved by $22.6 million and $30.3 million, respectively, if
bonuses were accrued under the compensation structure management will adopt
as a publicly traded company. Income before taxes and minority interest from
continuing operations for the three years ended June 30, 1998, 1999 and 2000
would have been $26.9 million, $46.4 million and $64.1 million,
respectively.

(b) Historically, we have paid incentive bonuses to associates under a fiscal
year-end bonus program. Beginning in fiscal year 1999, in addition to annual
fiscal year-end bonuses, we provided supplemental bonus compensation to our
employee shareholders pursuant to the stock incentive bonus plan in an
amount representing all income in excess of a targeted amount. These amounts
are accrued in the fiscal year to which they relate and are paid in the
following year. Following the public offering, we will terminate the stock
incentive bonus plan and replace it with equity based incentives more
customary to publicly traded companies.

The Watson Wyatt & Company Holdings 2000 Long Term Incentive Plan provides
for non-qualified stock options with an exercise price equal to fair market
value at the date of the grant and no uncertainties that would require
variable accounting under generally accepted accounting principles. In a few
foreign jurisdictions, where option grants are impractical, we will grant
stock appreciation rights (SARs) which will require recognition of
compensation expense over a vesting period to the extent the market price of
the stock increases. We do not expect that any compensation expense
resulting from the equity based incentive program in effect following the
offering will be material.

(c) As an employee-owned company without a public trading market, we sold and
repurchased shares of our redeemable common stock in transactions with our
employee shareholders at a formula book value, or redemption price,
calculated in accordance with our bylaws and based, in part, on the book
value of the company. In fiscal year 1998, we recorded a one-time non-cash
compensation charge against continuing operations of $69.9 million to
reflect a change in the method of calculating the redemption value of our
redeemable common stock. This change eliminated from the calculation the
$69.9 million charge taken for discontinued operations in fiscal year 1998
to reflect the discontinuation of our benefits administration outsourcing
business.

(d) Results of operations for fiscal year 1997 were reduced by a $12.1 million
sublease loss due to the relocation of the corporate and one operating
office.

(e) As discussed in footnotes (a) and (c) above, in fiscal year 1998 we
discontinued our benefits administration outsourcing business and recorded a
$69.9 million charge to earnings in the discontinued operations line. Fiscal
years 1995 through 1998 also include the operating losses of the benefits
administration outsourcing business prior to its discontinuation in 1998,
which are reflected in the discontinued operations line. In fiscal year
1999, the discontinued operations credit reflects the reduction of the
expected loss on disposal of the benefits administration outsourcing
business.

(f) The pro forma earnings per share information gives effect to the two for
one exchange of shares under our corporate reorganization as if completed
July 1, 1999.

(g) The increase in total stockholders' deficit from June 30, 1997 to June 30,
1998 includes the discontinued operations charge of $69.9 million mentioned
in note (e) above.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Watson Wyatt & Company Holdings, including its subsidiaries, is a global
provider of human capital consulting services. We operate on a geographic basis
from 60 offices in 18 countries throughout North America, Asia-Pacific and Latin
America. We provide services in three principal practice areas: employee
benefits, human resources technologies and human capital consulting.

Although we operate globally as an alliance with our affiliates, our
revenues and operating expenses reflect solely the results of operations of
Watson Wyatt & Company Holdings. Our share of the results of our affiliates,
recorded using the equity method of accounting, is reflected in the "Income from
affiliates" line. Our principal affiliates are Watson Wyatt Partners, in which
we hold a 10% interest in a defined distribution pool, and Watson Wyatt Holdings
(Europe) Limited, a holding company through which we conduct continental
European operations. We own 25% of Watson Wyatt Holdings (Europe) Limited and
Watson Wyatt Partners owns the remaining 75%.

We derive substantially all of our revenue from fees for consulting
services, which generally are billed at standard hourly rates or on a fixed-fee
basis; management believes the approximate percentages are 60% and 40%,
respectively. Clients are typically invoiced on a monthly basis with revenue
recognized as services are provided. For the most recent three fiscal years,
revenue from U.S. consulting operations have comprised approximately 80% of
consolidated revenue. No single client accounted for more than 4% of our
consolidated revenue for any of the most recent three fiscal years.

In delivering consulting services, our principal direct expenses relate to
compensation of personnel. Salaries and employee benefits are comprised of wages
paid to associates, related taxes, benefit expenses such as pension, medical and
insurance costs and fiscal year-end incentive bonuses. In addition, professional
and subcontracted services represent fees paid to external service providers for
legal, marketing and other services, approximately one half of which are
specifically reimbursed by our clients and included in revenue.

Occupancy, communications and other expenses represent expenses for rent,
utilities, supplies and telephone to operate office locations as well as
non-client-reimbursed travel by associates, publications and professional
development. General and administrative expenses include the operational costs
and professional fees paid by corporate management, general counsel, marketing,
human resources, finance, research and technology support.

Historically, we have paid incentive bonuses to associates under a fiscal
year-end bonus program. Beginning in fiscal year 1999, in addition to annual
fiscal year-end bonuses, we have provided supplemental bonus compensation to our
employee shareholders pursuant to our stock incentive bonus plan in an amount
representing all income in excess of a targeted amount. These bonuses are
accrued in the fiscal year to which they relate and are paid in the following
year. Our results of operations for fiscal years 1999 and 2000 include expenses
for supplemental bonuses accrued under the stock incentive bonus plan of
$22.6 million and $30.3 million, respectively.

Following this offering, we will terminate our stock incentive bonus plan
and replace it with equity-based incentives more customary to publicly traded
companies. The Watson Wyatt & Company Holdings 2000 Long Term Incentive Plan
provides for non-qualified stock options with an exercise price equal to fair
market value at the date of the grant and no uncertainties that would require
variable accounting under generally accepted accounting principles. In a few
foreign jurisdictions, where option grants are impractical, we will grant stock
appreciation rights (SARs) which will require recognition of compensation
expense over a vesting period to the extent the

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market price of the stock increases. We do not expect that any compensation
expense resulting from the equity based incentive program in effect following
the offering will be material.

During the third quarter of fiscal year 1998, we elected to exit the
benefits administration outsourcing business and to end our participation in
Wellspring Resources, LLC, a joint venture that we had formed in 1996 with State
Street Bank and Trust Company. Wellspring provided benefits administration for
its clients, managing the day-to-day administration, including benefit
calculations, compliance and reporting, and providing benefit-related customer
service to plan participants through call centers. We chose to exit the business
in order to focus our management attention and corporate resources on our core
consulting business. Pursuant to our restructuring agreement with Wellspring and
State Street Bank and Trust, our 50% interest in Wellspring was redeemed
effective April 1, 1998. In conjunction with this redemption, we recorded an
after-tax charge of $69.9 million in fiscal year 1998. In fiscal year 1999, we
reduced the estimate of the anticipated loss, and consequently reduced the
expected loss on disposal by $8.7 million, net of tax.

As an employee-owned company without a public trading market, we sold and
purchased shares of our redeemable common stock in transactions with our
employees according to the formula book value, or redemption value, which is
based, in part, on the book value of the company. The $69.9 million charge
incurred in fiscal year 1998 in connection with our exit from the benefits
administration outsourcing business reduced our book value and, as such, would
have reduced the redemption value of our redeemable common stock. We altered the
formula for calculating the redemption value of our common stock to eliminate
the effect of the $69.9 million charge. In accordance with generally accepted
accounting principles, this change in the formula resulted in an additional
one-time, non-cash compensation charge of $69.9 million in fiscal year 1998.

Due to the stock incentive bonus plan and non-cash compensation charge
related to the change in stock redemption price described above, we believe that
our income as an employee-owned company is not indicative of the operating
performance we will report as a publicly traded company. We believe that our
results of operations in fiscal years 1998, 1999 and 2000 are more comparable
to, and a better indication of, our performance as a publicly traded company if
they are analyzed excluding the stock incentive bonus plan and the non-recurring
compensation charge described above. This is because the events giving rise to
these charges are eliminated once the offering is completed, namely, the new
holding company will not have redeemable stock and there will be a new incentive
compensation plan. The continuing operations loss before taxes and minority
interest of $43.0 million for fiscal year 1998 would have improved by
$69.9 million without the non-recurring compensation charge. The continuing
operations income before taxes and minority interest of $23.8 million for fiscal
year 1999 and $33.8 million for fiscal year 2000 would have improved by
$22.6 million and $30.3 million, respectively, if bonuses were accrued under the
compensation structure management will adopt as a publicly traded company.
Income before taxes and minority interest from continuing operations for the
three years ended June 30, 1998, 1999 and 2000 would have been $26.9 million,
$46.4 million and $64.1 million, respectively.

In connection with this offering, we have decided to reimburse the selling
stockholders for the underwriting discount on the shares sold by them in this
offering. In the fiscal quarter in which the offering is completed, our
operating results will be negatively affected by the resulting compensation
charge. We estimate that the reduction in income from operations will be
approximately $2.5 million and the reduction in net income would be
approximately $1.7 million due to this non-recurring compensation charge. If the
underwriters' overallotment option is exercised in full, we estimate that the
total reduction in income from operations will be approximately $2.7 million and
the total reduction in net income would be approximately $1.9 million due to
this non-recurring compensation charge.

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RESULTS OF OPERATIONS

The following table sets forth Consolidated Statement of Operations data as
a percentage of revenue for the periods indicated.

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YEAR ENDED JUNE 30
------------------------------------
2000 1999 1998
-------- -------- --------

Revenue..................................................... 100.0% 100.0% 100.0%

Costs of providing services:
Salaries and employee benefits............................ 53.2 53.7 52.4
Stock incentive bonus..................................... 4.9 4.1 --
Non-recurring compensation charge......................... -- -- 13.7
Professional and subcontracted services................... 7.9 8.6 9.7
Occupancy, communications and other....................... 16.0 16.7 17.3
General and administrative expenses....................... 10.2 10.1 10.1
Depreciation and amortization............................. 2.9 2.7 4.9
----- ----- -----
95.1 95.9 108.1
----- ----- -----
Income (loss) from operations............................... 4.9 4.1 (8.1)

Other:
Interest income........................................... 0.3 0.2 0.2
Interest expense.......................................... (0.3) (0.5) (0.6)

Income from affiliates...................................... 0.5 0.5 0.1
----- ----- -----
Income (loss) before income taxes and minority interest..... 5.4 4.3 (8.4)
----- ----- -----
Provision for income taxes.................................. 2.4 2.1 2.5
----- ----- -----
Income (loss) before minority interest...................... 3.0 2.2 (10.9)

Minority interest in net income of consolidated
subsidiaries.............................................. -- -- --
----- ----- -----
Income (loss) from continuing operations.................... 3.0 2.2 (10.9)

Discontinued operations:

Loss from operations of discontinued outsourcing business... -- -- (1.4)

Adjustment (loss) on disposal of discontinued outsourcing
business.................................................. -- 1.5 (12.3)
----- ----- -----
Net income (loss)........................................... 3.0% 3.7% (24.6)%
===== ===== =====

FISCAL YEAR ENDED JUNE 30, 2000 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1999

REVENUE

Revenue from continuing operations was $624.6 million in fiscal year 2000,
compared to $556.9 million in the prior year, an increase of $67.7 million, or
12%. This revenue growth was primarily due to a $25.5 million, or 14% increase
in revenue generated by our U.S. East region, a $21.2 million, or 14% increase
in revenue generated by our U.S. Central region, a $5.6 million, or 8% increase
in our U.S. West region, and a $2.2 million, or 4% increase in other North
American regions. The revenue increase in the North American regions was due
primarily to the realization of net billing rate increases, accounting for
approximately $32.1 million, increased chargeable hours accounting for
$10.2 million and improved management of the scope of projects, resulting in
$12.2 million less net fee markdowns in fiscal year 2000 than in fiscal year
1999. In addition, our Asia-Pacific region generated $11.0 million, or 23%
higher revenue than in the previous fiscal year,

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and our Latin American region generated $1.0 million, or 14% higher revenue than
in the previous fiscal year. Within North America the following individual lines
of business, not all inclusive, showed the following trends: revenue for our
Benefits Group was $334.3 million in fiscal year 2000, compared to
$307.1 million in fiscal year 1999, an increase of $27.2 million, or 9%; revenue
for our HR Technologies Group was $79.7 million in fiscal year 2000, compared to
$66.3 million in fiscal year 1999, an increase of $13.4 million, or 20%; and
revenue for our Human Capital Group was $49.7 million in fiscal year 2000,
compared to $41.0 million in fiscal year 1999, an increase of $8.7 million, or
21%.

SALARIES AND EMPLOYEE BENEFITS

Salaries and employee benefit expenses for fiscal year 2000 were
$332.3 million, compared to $298.9 million for the previous fiscal year, an
increase of $33.4 million, or 11%. The increase was mainly due to a
$22.4 million increase in compensation expenses, which is partly the result of
annual salary increases averaging 5% and a 5% increase in headcount. The
remainder of the difference was attributable to $7.5 million higher fiscal
year-end bonuses and a $3.2 million increase in other employee benefits. As a
percentage of revenues, salaries and employee benefits decreased to 53.2% from
53.7%. This decrease reflects the overall utilization of our operating
personnel.

STOCK INCENTIVE BONUS PLAN

The accrued bonus under our stock incentive bonus plan for fiscal year 2000
was $30.3 million, compared to $22.6 million for fiscal year 1999, an increase
of $7.7 million, or 34%. As a percentage of revenue, the accrued bonus under our
stock incentive bonus plan increased to 4.9% from 4.1%. The amount of the bonus
is at the discretion of our board of directors.

PROFESSIONAL AND SUBCONTRACTED SERVICES

Professional and subcontracted services used in consulting operations were
$49.6 million for fiscal year 2000, compared to $47.9 million for fiscal year
1999, an increase of $1.7 million, or 4%. The increase was mainly due to a
$2.5 million increase in international professional services, a $1.2 million
actuarial and strategic consulting expense from a sub-contractor, and
$0.9 million in non-compete payments, partially offset by lower reimbursable
expenses incurred on behalf of clients of $2.3 million and a $1.0 million
insurance claim. As a percentage of revenue, professional services decreased to
7.9% from 8.6%, due primarily to a reduction in the level of outside services
specifically incurred for and reimbursed by clients.

OCCUPANCY, COMMUNICATIONS AND OTHER

Occupancy, communications and other expenses were $100.1 million for fiscal
year 2000, compared to $92.7 million for fiscal year 1999, an increase of
$7.4 million, or 8%. The increase was mainly attributable to the $3.0 million
net gain from the sale of our defined contribution daily record-keeping software
recognized in fiscal year 1999 which reduced expense, a $2.1 million increase in
non-reimbursable travel expenses, an increase in rent expense of $1.0 million
and a $0.5 million increase in telephone expenses. As a percentage of revenue,
occupancy, communications and other expenses decreased to 16.0% from 16.7%, as
we leveraged these expenses over a larger revenue base.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for fiscal year 2000 were
$63.6 million, compared to $56.6 million for fiscal year 1999, an increase of
$7.0 million, or 12%. The increase was mainly attributable to increased legal
expenses of $2.2 million, increased professional services of $2.2 million, a
$1.1 million, or 5% increase in base salaries and $1.2 million in higher
non-client

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related travel expenses. As a percentage of revenue, general and administrative
expenses increased slightly to 10.2% from 10.1%.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense for fiscal year 2000 was
$17.9 million, compared to $15.2 million for fiscal year 1999, an increase of
$2.7 million, or 18%. The increase was mainly due to a $1.4 million increase in
computer hardware depreciation. The remaining increase was due primarily to
higher computer software and furniture, fixtures and equipment purchases during
fiscal year 2000, which account for $0.8 million of the increase, and an
increase in amortization of intangibles of $0.3 million. As a percentage of
revenue, depreciation and amortization expenses increased to 2.9% from 2.7%.

INTEREST INCOME

Interest income for fiscal year 2000 was $1.8 million, compared to
$0.9 million for fiscal year 1999, an increase of $0.9 million, or 100%. The
increase was attributable to the receipt of interest of $0.5 million related to
a federal tax refund and to additional interest income of $0.4 million earned
during the year on a higher average investment balance.

INTEREST EXPENSE

Interest expense for fiscal year 2000 was $1.9 million, compared to
$2.6 million for fiscal year 1999, a decrease of $0.7 million, or 27%. On
average, we borrowed less money against our revolving line of credit during
fiscal year 2000 than in fiscal year 1999.

INCOME FROM AFFILIATES

Income from affiliates for fiscal year 2000 was $3.1 million, compared to
$2.5 million for fiscal year 1999, an increase of $0.6 million, or 24%. The
increase reflects improvement in business operations by our affiliates in
Continental Europe and strong business performance by our United Kingdom
affiliate.

PROVISION FOR INCOME TAXES

Income taxes for fiscal year 2000 were $15.2 million, compared to
$11.4 million for fiscal year 1999. Our effective tax rate was 44.9% for fiscal
year 2000, compared to 48.1% for fiscal year 1999. The change was due to the
utilization of federal and state tax credits, a decrease in operating losses of
certain foreign affiliates and the utilization of tax benefits related to
foreign operating loss carryovers of certain foreign affiliates. Our effective
tax rate was also affected by differing foreign tax rates in various
jurisdictions. We record a tax benefit on foreign net operating loss carryovers
and foreign deferred expenses only if it is more likely than not that a benefit
will be realized.

DISCONTINUED OPERATIONS

During fiscal year 1999, we further resolved our future obligations related
to the discontinuation of our benefits administration outsourcing business and
reduced the expected loss on disposal by $8.7 million, net of tax. The
discontinuation is essentially completed, with contingencies remaining only on
guaranteed leases for real estate and equipment. We believe that we have
adequate provisions for any remaining costs related to the discontinuation. (See
Notes 14 and 15 of Notes to the Consolidated Financial Statements, for further
discussion of discontinued operations.)

NET INCOME

Net income for fiscal year 2000 was $18.5 million, compared to
$20.8 million in fiscal year 1999, a decrease of $2.3 million, or 11%. As a
percentage of revenue, net income decreased to

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3.0% from 3.7%. However, income from continuing operations in fiscal year 2000
was $6.4 million higher than in fiscal year 1999, reflecting improved operating
performance. This increase was more than offset by the $8.7 million after-tax
adjustment to reduce the loss on disposal of the discontinued benefits
administration outsourcing business recorded in fiscal year 1999. Income from
continuing operations for fiscal year 2000 and 1999 also reflect the stock
incentive bonus plan accruals discussed above.

FISCAL YEAR ENDED JUNE 30, 1999 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1998

REVENUE

Revenue from continuing operations reached $556.9 million in fiscal year
1999, an increase of $44.2 million from $512.7 million in fiscal year 1998. This
represents 9% growth in revenue. This increase is mainly attributable to
increases in our North American regions totaling $36.4 million and a further
$6.3 million, or 15%, increase in our Asia-Pacific region. The individual
regions within North America showed the following trends: U.S. East, a
$31.2 million, or 20% increase; U.S. Central, a $14.0 million, or 10% increase;
and, U.S. West, an $8.8 million, or 11% decline. The net revenue increase in
these regions can be attributed to the realization of net billing rate increases
accounting for $43.3 million, increased chargeable hours accounting for
approximately $22.9 million, offset by net fee markdowns of $19.3 million, and
contract losses of approximately $10.5 million. Within North America the
following individual lines of business, not all inclusive, showed the following
trends: revenue for our Benefits Group was $307.1 million in fiscal year 1999,
compared to $271.9 million in fiscal year 1998, an increase of $35.2 million, or
13%, including $11.5 million of additional revenue from the first fiscal quarter
acquisition of selected units of KPMG's benefits consulting business; revenue
for our Human Capital Group was $41.0 million in fiscal year 1999, compared to
$44.5 million in fiscal year 1998, a decrease of $3.5 million, or 8%, amid a
reorganization of the practice; revenue for our HR Technologies Group was $66.3
million in fiscal year 1999, compared to $53.6 million in fiscal year 1998, an
increase of $12.7 million, or 24%, despite the sale in early fiscal year 1999 of
the defined contribution recordkeeping business which had generated revenue in
fiscal year 1998 of $6.0 million; and, no risk and insurance consulting revenues
due to our sale of this practice in late fiscal year 1998, which had generated
$9.2 million in fiscal year 1998 revenue.

SALARIES AND EMPLOYEE BENEFITS

For fiscal year 1999, salaries and employee benefits expenses were $298.9
million, an increase of $30.3 million, or 11% from fiscal year 1998. This
increase is due primarily to a 6% increase in headcount, and increases in
compensation and benefits. As a percentage of revenue, salaries and employee
benefits increased to 53.7% from 52.4%. The increase was primarily driven by the
accrual of relatively higher fiscal year-end incentive bonuses in fiscal year
1999.

STOCK INCENTIVE BONUS PLAN

In fiscal year 1999, we accrued, for the first time, a supplemental bonus
under our stock incentive bonus plan of $22.6 million, which amounts were paid
in January, 2000.

PROFESSIONAL AND SUBCONTRACTED SERVICES

Professional and subcontracted services were $47.9 million for fiscal year
1999, a decrease of $2.0 million, or 4%, from fiscal year 1998 due to reduced
corporate expenses. As a percentage of revenue, professional services decreased
to 8.6% from 9.7%.

OCCUPANCY, COMMUNICATIONS AND OTHER

Occupancy, communications and other expenses increased $3.8 million, or 4.3%
from fiscal year 1998. The increase is primarily due to increased travel, net of
savings achieved through the

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adoption of an office size standard as well as our success in negotiating
advantageous leases of office space. As a percentage of revenue, occupancy,
communications and other expenses decreased to 16.7% from 17.3%, reflecting the
relatively fixed nature of these costs.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for fiscal year 1999 were
$56.6 million, an increase of $4.8 million, or 9%, from fiscal year 1998. The
increase was attributable to $4.8 million for providing technology support to
core consulting areas and $1.6 million for Year 2000 readiness. These increases
were offset by a $1.6 million decrease in marketing expenses for business
strategy initiatives from fiscal year 1998. As a percentage of revenue, general
and administrative expenses remained unchanged from fiscal year 1998 at 10.1%.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization decreased $9.7 million in fiscal year 1999 to
$15.2 million. This decrease is due to higher amortization of internally
developed software in fiscal year 1998 of $11.6 million, primarily due to a
re-evaluation and subsequent reduction of the useful lives of the related
products. Without this item in fiscal year 1998, depreciation and amortization
expense increased $1.9 million in fiscal year 1999 related to purchases of
capital assets. As a percentage of revenue, depreciation and amortization
expenses decreased to 2.7% from 4.9%, reflecting the higher amortization on
internally developed software in fiscal year 1998 mentioned above.

INCOME FROM AFFILIATES

Income from affiliates was $2.5 million in fiscal year 1999 compared to
$0.3 million in fiscal year 1998. The increase reflects heightened synergies and
focus within our affiliated European operations as well as improved business
operations in the United Kingdom.

PROVISION FOR INCOME TAXES

Income before income taxes, minority interest and discontinued operations
was $23.8 million in fiscal year 1999, which, considering taxes of
$11.4 million, reflects an effective tax rate of 48%. Income tax expense of
$13.1 million in fiscal year 1998 relates to a loss before taxes, minority
interest and discontinued operations of $43.0 million, for an effective tax rate
of (30.6)%. The reason for reporting a tax expense when we had a pretax loss and
the disparity in effective tax rates is the non-recurring compensation charge of
$69.9 million in fiscal year 1998, included in the loss before taxes of
$43.0 million, which is permanently non-deductible for tax purposes.

DISCONTINUED OPERATIONS

In fiscal year 1999, we further resolved our future obligations related to
the discontinuation of our benefits administration outsourcing business and
reduced the expected loss on disposal by $8.7 million, net of taxes. We believe
we have adequate provisions for any remaining costs related to the
discontinuation.

NET INCOME (LOSS)

We generated net income in fiscal year 1999 of $20.8 million compared to a
net loss in fiscal year 1998 of $126.1 million. As a percentage of revenue, net
income was 3.7%, compared to a net loss of (24.6)% in fiscal year 1998.
Continuing operations income before income taxes and minority interest of
$23.8 million in fiscal year 1999 compares to the loss of $43.0 million in
fiscal year 1998, which includes the $69.9 million non-recurring compensation
charge related to the change in formula book value for stock sales and
repurchases. The fiscal year 1999 results reflect significantly

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improved operating performance and the accrual of bonuses under the stock
incentive bonus plan, at the discretion of our board of directors.

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalents at June 30, 2000 totaled $41.4 million,
compared to $36.0 million at June 30, 1999. The $5.4 million increase in cash
from June 30, 1999 to June 30, 2000 was mainly attributable to cash from
operations of $138.0 million, net of bonus payouts of $67.2 million, tax
payments of $21.7 million, capital asset purchases of $20.2 million, payments to
retirees of $11.9 million and repurchases of redeemable common stock of $9.3
million.

CASH FROM OPERATING ACTIVITIES

Cash from operating activities for fiscal year 2000 was $36.9 million,
compared to cash from operating activities of $52.1 million for fiscal year
1999. However, cash received from our operations increased $36.4 million in
fiscal year 2000. This increase was more than offset by higher bonus payments of
$29.8 million, higher tax payments of $16.3 million, and higher payments to
retirees of $5.5 million.

Cash from operating activities increased in 1999 compared to 1998 by $28.6
million. The increase was primarily due to the $38.6 million increase in
accounts payable and accrued liabilities from fiscal year 1999 operating
expenses that will be paid in fiscal year 2000. This increase was augmented by
the $13.0 million decrease in the cash needed in the closedown of discontinued
operations. The increase in receivables from clients of $13.4 million decreased
cash that would have been provided by operations. The deferred income tax asset
increased $7.3 million in fiscal year 1999 in conjunction with the increase in
accounts payable and accrued liabilities, compared with a $2.0 million increase
in fiscal year 1998.

CASH USED IN INVESTING ACTIVITIES

Cash used in investing activities for fiscal year 2000 was $21.6 million,
compared to $21.4 million for fiscal year 1999. The increase in cash usage was
due to $3.0 million in lower distributions from affiliates and $0.6 million in
higher current year fixed asset purchases, partially offset by $3.1 million in
lower contingent consideration payments associated with acquisitions and higher
proceeds from the sale of fixed assets and investments of $0.3 million.

In fiscal year 1999, cash used in investing activities decreased
$8.7 million from fiscal year 1998, principally due to reduced cash needs of the
discontinued operations.

CASH USED IN FINANCING ACTIVITIES

Cash used in financing activities were $9.2 million for fiscal year 2000,
compared to $8.7 million for fiscal year 1999. This change reflects the net
repayments of $9.0 million against our revolving line of credit and a $5.8
million decrease in repurchases of redeemable common stock, partially offset by
a $15.3 million decrease in issuances of redeemable common stock. The decrease
in issuances occurred because we completed a formal stock sale during fiscal
year 1999 but did not have a formal stock sale during fiscal year 2000.

We used more cash in fiscal year 1999 compared to fiscal year 1998 as we
paid down our outstanding debt. Our net stock activity had virtually no impact
on cash used by financing activities in fiscal year 1999.

We have a $120.0 million senior secured revolving credit facility that
matures on June 30, 2003. Of the $95.0 million of the credit line that is
allocated for operating needs, $2.2 million is unavailable as a result of
support required for letters of credit issued under the credit line. We had no
borrowings outstanding at June 30, 2000 or June 30, 1999. However, during fiscal
year 2000, we

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made drawings and repayments against our revolving credit facility for cyclical
working capital needs.

We rely primarily on funds from operations and short-term borrowings for
liquidity. We believe that we have access to ample financial resources to
finance anticipated growth, meet commitments to affiliates, as well as support
ongoing operations. Anticipated commitments of funds are estimated at
$46.6 million for fiscal year 2001, mainly for computer hardware purchases,
office relocations and renovations, development and upgrade of financial and
knowledge management systems, acquisition related payments, and repurchases of
redeemable common stock. We expect operating cash flows to provide for these
cash needs. In future fiscal years, we would expect that our capital needs would
be similar in nature to what we have incurred in the past. Capital expenditures
will be required in conjunction with office lease renewals and relocations
required to support management's growth strategy. Additionally, our consultants
will require access to hardware and software that will support servicing our
clients. In a rapidly changing technological environment, management anticipates
we will need to make continued investments in our knowledge sharing and
financial systems infrastructure. We would expect cash from operations in
conjunction with the anticipated net proceeds from this offering and our
existing credit facility to adequately provide for these cash needs.

Our foreign operations do not materially impact liquidity or capital
resources. At June 30, 2000, $15.8 million of the total cash balance of
$41.4 million was held outside of North America, which we have the ability to
readily utilize, if necessary. There are no significant repatriation
restrictions other than local or U.S. taxes associated with repatriation. Our
foreign operations in total are substantially self-sufficient for their working
capital needs.

MARKET RISK

We are exposed to market risks in the ordinary course of business. These
risks include interest rate risk and foreign currency exchange risk. We have
examined our exposure to these risks and concluded that none of our exposures in
these areas are material to fair values, cash flows or earnings.

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QUARTERLY RESULTS OF OPERATIONS

The following table sets forth unaudited quarterly financial data for the
periods indicated. We obtained this information from unaudited quarterly
consolidated financial statements which, in our opinion, include all adjustments
(consisting of normal recurring adjustments) necessary to present fairly the
financial results for the periods. Results of operations for any previous
quarters do not necessarily indicate results that may be achieved in any future
period.

[Enlarge/Download Table]

QUARTERS ENDED
---------------------------------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1998 1998 1999 1999 1999 1999 2000 2000
--------- --------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Revenue........................... $133,985 $140,358 $135,573 $146,944 $146,323 $152,411 $157,502 $168,347
Costs of providing services:
Salaries and employee
benefits...................... 76,398 72,470 70,977 79,070 79,803 80,950 85,871 85,715
Stock incentive bonus plan...... 2,100 5,500 6,900 8,110 6,000 9,000 8,200 7,083
Non-recurring compensation
charge........................ -- -- -- -- -- -- -- --
Professional and subcontracted
services...................... 8,714 13,338 11,573 14,238 9,796 15,131 9,082 15,599
Occupancy, communications and
other......................... 17,367 24,173 25,715 25,413 22,016 24,707 26,561 26,815
General and administrative
expenses...................... 11,160 16,692 14,194 14,532 13,178 14,724 16,214 19,480
Depreciation and amortization... 3,853 3,971 3,996 3,428 4,907 4,610 5,483 2,878
-------- -------- -------- -------- -------- -------- -------- --------
119,592 136,144 133,355 144,791 135,700 149,122 151,411 157,570

Income from operations............ 14,393 4,214 2,218 2,153 10,623 3,289 6,091 10,777

Other:
Interest income................. 124 404 127 289 1,036 216 232 339
Interest expense................ (553) (1,168) (473) (452) (390) (698) (431) (357)

Income from affiliates............ 160 865 583 916 988 1,155 481 492
-------- -------- -------- -------- -------- -------- -------- --------
Income before taxes and minority
interest........................ 14,124 4,315 2,455 2,906 12,257 3,962 6,373 11,251

Income taxes...................... 6,830 2,087 1,530 1,001 5,919 1,916 2,806 4,554
-------- -------- -------- -------- -------- -------- -------- --------
Income before minority interest... 7,294 2,228 925 1,905 6,338 2,046 3,567 6,697

Minority interest................. -- (85) 54 (186) 18 158 (9) (282)
-------- -------- -------- -------- -------- -------- -------- --------
Income from continuing
operations...................... 7,294 2,143 979 1,719 6,356 2,204 3,558 6,415

Discontinued operations, net...... -- 8,678 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Net income........................ $ 7,294 $ 10,821 $ 979 $ 1,719 $ 6,356 $ 2,204 $ 3,558 $ 6,415
======== ======== ======== ======== ======== ======== ======== ========
Earnings per share, continuing
operations, basic and fully
diluted......................... $ 0.47 $ 0.15 $ 0.07 $ 0.11 $ 0.41 $ 0.15 $ 0.24 $ 0.43

Earnings per share, basic and
fully diluted................... $ 0.47 $ 0.74 $ 0.07 $ 0.11 $ 0.41 $ 0.15 $ 0.24 $ 0.43

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YEAR 2000 ISSUE

We have completed a program to ensure that our systems are Year 2000
compliant. To date, the change of our computer systems to the Year 2000 has not
had a material adverse effect on our business, results of operations, or
financial condition. Nevertheless, since the effects of the Year 2000 issue are
unpredictable, we do not expect that our Year 2000 compliance program will
eliminate all risk to us associated with the Year 2000 issue.

We believe that the most significant risk facing us in connection with the
Year 2000 issue relates to software provided by us to our clients. This software
has been provided to clients principally by the HR Technologies Group, including
benefit administration software and call center services, and the retirement
practice, principally spreadsheet-based benefit calculators. The risks presented
include the possibility of client errors using our software or contractual
liability to us caused by non-compliant software that is not identified or
corrected and the costs of replacing or repairing client systems, none of which
we expect to have a material effect on our business.

Our overall cost to address Year 2000 compliance issues exceeded
$4.0 million, most of which was spent in fiscal year 1999. Our principal
expenditures were for repair and testing of internal and client software, costs
associated with our Year 2000 compliance program and costs of outside
consultants. We anticipate no material cost associated with Year 2000 compliance
in fiscal year 2001.

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BUSINESS

OVERVIEW

Founded in 1946, Watson Wyatt & Company is a global human capital consulting
firm. We help our clients enhance business performance by improving their
ability to attract, retain and motivate qualified employees. As leading
economies worldwide become more services oriented, human capital has become
increasingly important to companies and organizations. The heightened
competition for skilled employees, unprecedented changes in workforce
demographics and rising employee-related costs have increased the importance of
effective human capital management. We help our clients address these issues by
combining our expertise in human capital management with web-based technologies
in order to improve the design and implementation of various human resources, or
HR programs, including compensation, retirement and healthcare plans.

The rapid expansion of the web-based delivery of HR information and
programs, which we refer to as our eHR-TM- services, is a natural outgrowth of
our longstanding leadership in employee benefits and human capital consulting.
We design, develop and implement HR strategies and programs through the
following three closely interrelated practice areas:

BENEFITS CONSULTING GROUP

- Retirement plans, including pension and 401(k) plans

- Healthcare, disability and other group benefits plans

- Actuarial services

- Investment consulting services to pension plans

HR TECHNOLOGIES GROUP

- eHR-TM-: our web-based delivery of HR information and programs

- Employee self-service applications

- HR call centers

- Benefit administration systems and retirement planning tools

HUMAN CAPITAL GROUP

- Strategies to align workforces with business objectives

- Strategies for attracting, retaining and motivating employees

- Organizational effectiveness services

- Compensation plans, including executive compensation and stock option
programs

Our clients include many of the world's largest corporations as well as
emerging growth companies, public institutions and non-profit organizations. We
consult to General Electric Company, General Motors, IBM and Lockheed Martin
Corporation. Many of our client relationships have existed over several decades.

We believe that our extensive history, global presence, dedication to
long-term client relationships and recognized reputation for quality provide us
with significant competitive advantages. We focus on delivering value-added
consulting services that help our clients anticipate, identify and capitalize on
emerging opportunities in human capital management. We implement this strategy
through over 4,000 associates in 60 offices located in 18 countries. We
generated approximately $624.6 million in revenues during the twelve months
ended June 30, 2000, with net income of $18.5 million during this same period.

CORPORATE INFORMATION

Watson Wyatt & Company was incorporated in Delaware on February 17, 1958.
Including predecessors, we have been in business since 1946. We conducted our
business as The Wyatt Company until changing our corporate name to Watson Wyatt
& Company in connection with the

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establishment of the Watson Wyatt Worldwide alliance. Watson Wyatt & Company
Holdings was incorporated in Delaware on January 7, 2000.

Our web site is at http://www.watsonwyatt.com. The information contained on
our web site is not incorporated in this prospectus.

WATSON WYATT WORLDWIDE ALLIANCE

Recognizing our clients' need for a global organization to service their
needs, we established operations throughout Europe in the late 1970s by
acquiring local firms and opening new offices. Responding to the rapidly
increasing globalization of the world economy, we made a strategic decision in
1995 to strengthen our European capabilities significantly and extend our global
reach by entering into an alliance with R. Watson & Sons (now Watson Wyatt
Partners), a leading United Kingdom-based actuarial, benefits and human
resources consulting partnership that was founded in 1878. Since 1995, we have
marketed our services globally under the Watson Wyatt Worldwide brand, sharing
resources, technologies, processes and business referrals.

The Watson Wyatt Worldwide global alliance maintains 85 offices in 30
countries and employs over 5,500 employees. Watson Wyatt & Company operates 60
offices in 18 countries in North America, Latin America and Asia-Pacific. Watson
Wyatt Partners operates 11 offices in the United Kingdom, Ireland and Africa.
The alliance operates 14 offices in 9 continental European countries principally
through a jointly owned holding company, Watson Wyatt (Holdings) Europe Limited,
which is 25% owned by us and 75% owned by Watson Wyatt Partners.

To establish the Watson Wyatt Worldwide global alliance, we transferred our
United Kingdom operations to Watson Wyatt Partners in return for a 10% interest
in a defined distribution pool of the partnership. In addition, Watson Wyatt
Partners purchased 600,000 shares or approximately 2% of our common stock. The
alliance agreements contain buy/sell provisions that provide a mechanism to
maintain Watson Wyatt Partners' ownership of us at a level of between 600,000
shares and 1,000,000 shares. We also consolidated our individual European
operations into Watson Wyatt Holdings (Europe) Limited. Under the alliance
agreements, we generally will not operate in the United Kingdom, Ireland or
Africa, and Watson Wyatt Partners generally will not operate in North America,
Latin America or Asia-Pacific.

HUMAN RESOURCES CONSULTING INDUSTRY

OVERVIEW

The growing demand for employee benefits and human capital consulting
services is directly related to the size, complexity and rapid changes
associated with human resources programs. In the U.S. alone, companies spend
over $5 trillion annually on the direct costs of human capital such as
compensation and benefits, according to the U.S. Department of Commerce, Bureau
of Economic Analysis. In 1998, U.S. employers contributed over $120 billion to
pension and profit sharing plans, and the assets of U.S. retirement plans
exceeded $8 trillion.

Employers, regardless of geography or industry, are facing unprecedented
challenges involving the management of their people. Changing technology,
critical skill shortages, and an aging population in many developed countries
have increased competition for talented employees. At the same time, employees'
expectations relating to compensation, benefits and other HR services are
growing. Employers must address these challenges effectively in order to remain
competitive.

The industry in which we compete directly is comprised of four dominant HR
consulting firms, based on revenues: Watson Wyatt Worldwide, William M. Mercer,
Towers Perrin and Hewitt Associates. In addition to these firms, the industry
includes smaller benefits and compensation firms and the HR consulting divisions
of diversified professional service firms, such as the big five accounting
firms, Andersen Consulting, EDS, and Booz, Allen & Hamilton. The global HR
consulting

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industry is highly fragmented. There are approximately 950 firms providing
HR-related consulting services, with the four major HR consulting firms
accounting for approximately 40% of total industry revenue.

INDUSTRY TRENDS

Because of our long history and reputation, as well as our experienced
consulting professionals and the services we provide in the field of human
capital consulting, we believe that we are in a position to capitalize on a
number of favorable trends that will contribute to the growth of the HR
consulting industry, including:

GROWING STRATEGIC IMPORTANCE OF HUMAN CAPITAL. In today's knowledge-based
economy, businesses are increasingly recognizing that the effective management
of human capital contributes to increased shareholder value. As a result,
companies are increasingly looking to HR consulting firms to help them align
their human capital programs with their business strategies.

TECHNOLOGY REVOLUTION IN HR PROGRAMS. The Internet, corporate intranets and
other e-business tools enable companies to deliver HR information and services
to employees more efficiently and effectively than ever before. Many companies
are moving to what we call an eHR-TM- model that uses technology to make HR
processes more flexible and employee-friendly, such as online benefits
enrollment. Companies increasingly are looking to firms with expertise in human
capital and information technology to transform their HR processes.

CHANGING WORKFORCE DEMOGRAPHICS. As human capital becomes more important to
business success, companies in many developed countries today are faced with a
critical shortage of talented employees and an unprecedented aging of the
workforce. These trends, along with the changing mobility and needs of workers,
are prompting companies to engage experienced human capital consulting firms to
redesign employee compensation and benefits plans and to fundamentally rethink
their workforce strategies so that they can effectively attract and retain
employees.

GROWING IMPORTANCE OF EMPLOYER-SPONSORED BENEFITS PROGRAMS. Assets in
retirement plans are growing rapidly, and the need for effective management of
these plans--in terms of structuring benefits, managing liabilities and
maximizing the plans' value in attracting and retaining employees--has never
been greater. The combined effect of limited retirement savings of baby boom
employees, concerns regarding the continuing viability of government-sponsored
retirement and healthcare programs, and rising healthcare costs increases the
importance of benefits programs to both employers and employees.

RECORD LEVEL OF MERGERS AND ACQUISITIONS. Mergers and acquisitions
throughout the world are occurring at unprecedented rates, prompting the need to
combine corporate cultures and human resources programs quickly and effectively.
Mergers and acquisitions are becoming increasingly complex and cross-border. Our
research indicates that when business combinations fail, it is often due to
inadequate integration of human resources. As a result, companies are expected
to increasingly use human capital consultants to assist them with pre-merger
planning and post-merger integration.

CONTINUING GLOBALIZATION OF ECONOMIES. As business becomes more global,
corporations are seeking human capital consultants with global resources and
local expertise on benefits and human resources issues. These companies are
looking to HR consulting firms to help them develop and implement global
benefits and HR policies and establish consistency in worldwide reporting and
quality control.

COMPLEX AND CHANGING REGULATORY ENVIRONMENT. Employee benefits programs in
most industrialized countries are subject to complex government regulations.
These regulations change

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as governments address social and economic policy issues and as private
employers implement changes in plan designs. Employers throughout the world are
increasingly seeking human capital consultants to assist them with plan design,
compliance and regulatory advice.

COMPETITIVE STRENGTHS

Unlike several of our direct competitors that also have large benefits
administration operations or unrelated consulting practice lines, we focus
exclusively on providing human capital consulting services. We believe that our
competitive strengths include:

REPUTATION FOR QUALITY. We are recognized as one of the world's highest
quality consulting firms. For example, in a management consulting survey
conducted by THE WALL STREET JOURNAL of its subscribers and published in January
1999, we placed first in the consulting industry in terms of delivering value to
clients and first among our human resources consulting peers for overall quality
of reputation.

LONG-STANDING RELATIONSHIPS WITH BLUE-CHIP CLIENTS. We have built long-term
relationships with many of our clients. In many cases these relationships have
existed continuously for several decades. We provide the actuarial consulting
services for the three largest corporate defined benefits pension plans in the
United States.

TECHNOLOGY-BASED SERVICES. Using our eHR-TM- approach, we design systems
for clients that enable them to offer cost-effective delivery of HR services to
employees, such as web-based self-service and call centers. Over the past
decade, we have invested extensively in proprietary technology to help solve our
clients' human resources needs.

GLOBAL REACH AND SCALE. We believe that our global presence through the
Watson Wyatt Worldwide alliance is among the most extensive in the human capital
consulting business, spanning 85 offices in 30 countries. We have a strong
presence in major markets across the United States, and the Watson Wyatt
Worldwide alliance provides us with significant depth in Europe. We have
operated in Asia since 1979 and currently have 16 offices in Asia-Pacific. We
were named HR Consultancy of the Year in Hong Kong for 1998 and 1999 by China
Staff magazine. We were the first international human capital consulting firm to
open a wholly-owned operation in China, and we are building scale in other
markets in order to meet the growing demands of our local and multinational
clients.

EXTENSIVE AND WIDELY-CITED RESEARCH. Our research is extensive and
widely-cited and is a core part of our brand identity, account penetration
strategy and consulting process. Our research on changing demographics in major
economies is helping companies prepare for the impact of these changes on costs,
productivity and the ability to attract and retain talented workers. We operate
research and information centers in Bethesda and Toronto that are staffed with
more than 80 economists, analysts and attorneys who conduct research and inform
clients on legislative and regulatory developments. We also produce proprietary
studies and groundbreaking white papers on topics such as executive pay,
healthcare quality and costs, integrated disability management, employee
communications and workplace attitudes.

HIGHLY EDUCATED AND ACCREDITED CONSULTING STAFF. Watson Wyatt consultants
are trusted advisors and experts in their fields. Our consultants include over
400 accredited actuaries, as well as professionals with M.B.A.s, Ph.D.s and law
degrees. Our consultants frequently testify before government and regulatory
agencies, are regularly quoted in the business press and have authored many
HR-related books. Recent books by our consultants include THE REAL DEAL: THE
HISTORY AND FUTURE OF SOCIAL SECURITY, HEALTH OF NATIONS: AN INTERNATIONAL
PERSPECTIVE ON U.S. HEALTH CARE REFORM, THE COMPLETE GUIDE TO MERGERS &
ACQUISITIONS, HEALTHCARE.COM: RX FOR REFORM, CEO PAY AND SHAREHOLDER VALUE, and
FUNDAMENTALS OF PRIVATE PENSIONS.

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GROWTH STRATEGY

In an environment that is characterized by changing workforce demographics,
rapid advances in technology and growing recognition of the importance of human
capital, our strategy is to expand our competitive position by providing
comprehensive, value-added human capital consulting services that help our
clients solve their human capital challenges. We plan to pursue growth by:

EXPANDING OUR RELATIONSHIPS WITH EXISTING CLIENTS. We believe there is
significant opportunity to increase our share of our clients' consulting
expenditures by leveraging our recurring engagements. We utilize dedicated
account managers to identify and refer additional consulting opportunities, and
we believe that our ability to provide integrated services will enable us to
secure additional business from our existing client base.

CREATING EHR-TM- SYSTEMS. Our clients are increasingly demanding
integrated, flexible approaches to provide HR benefits information and access to
their employees 24 hours a day, 7 days a week. By combining our human capital
and technical expertise, we help clients implement web-based systems in order to
transform the way they deliver HR services to managers and employees. Our
eHR-TM- approach connects multiple software applications and databases around
web technologies. Through user-friendly interfaces that run on company
intranets, employees can access their HR information directly and perform tasks
ranging from enrolling in benefits plans, to modeling 401(k) investments, to
participating in online career training.

LEVERAGING OUR GLOBAL CAPABILITIES. Multinational corporations increasingly
require a total services capability, regardless of where they operate. By
drawing upon our global resources and local execution capabilities, we are well
positioned to serve our clients' growing needs for integrated human resources
services throughout the world.

DEVELOPING NEW CLIENT RELATIONSHIPS. Our recognized brand name and global
reputation for quality service and extensive and widely-cited research enable us
to promote our consulting services effectively to new clients. We also believe
that there are significant opportunities to develop new relationships by
proposing innovative, high-value projects, such as our eHR-TM- systems, to
corporations and other major employers.

PURSUING STRATEGIC ACQUISITIONS. We will continue to explore strategic
opportunities to expand our human capital consulting capabilities and to expand
geographically. Our recent acquisitions of selected units of KPMG's benefits
consulting business provided us with additional senior consultants in New York,
Boston, Dallas, Toronto and Cleveland, as well as additional Fortune 500
clients.

PROMOTING OUR ENTREPRENEURIAL CULTURE. We seek associates who strive to be
innovators and to add value to their clients' businesses through effective human
capital programs and technologies. Our training and compensation programs are
aimed toward developing in our consultants the specialized skills to advance our
clients' interests.

CONSULTING SERVICES

We focus our consulting services into three practice groups: Benefits
Consulting, HR Technologies and Human Capital.

BENEFITS CONSULTING GROUP

Our Benefits Consulting Group is our largest and most established practice,
with a franchise dating to 1946. This group consists of over 1,700 consultants
and works with clients to create cost-effective benefits programs that help
attract, retain and motivate a talented workforce. We strive

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to provide tailored benefits programs for our clients, and we base our
recommendations on extensive research. Our Benefits Consulting Group, which
consists of Retirement Consulting, Investment Consulting, and Group & Health
Care Consulting, accounted for approximately 64% of our North American
consulting revenue in fiscal year 2000.

RETIREMENT CONSULTING

We believe we are one of the world's most respected advisers on retirement
plans, and we provide actuarial and consulting services for large defined
benefit and defined contribution retirement plans. Our consultants work with
clients to provide realistic assessments of the impact that the change in
workforce demographics will have on their retirement plans, corporate cash flow
requirements, and retiree benefits adequacy and security.

In North America, and increasingly throughout much of the developed world,
retirement security is provided through funded pension plans, most of which are
either defined benefit or defined contribution plans. A typical defined benefit
plan is characterized by employer contributions and a specified future benefit
to the employee. These plans typically involve large asset pools, complex
calculations to determine employer costs and funding requirements and
sophisticated analysis to match liabilities and assets over long periods of
time. These plans are commonly referred to as pension plans. A typical defined
contribution retirement plan is characterized by employee contributions,
possible employer matching contributions and an unspecified future benefit paid
to the employee which will ultimately be based on investment returns. In the
United States, the most common example of a defined contribution plan is a
401(k) plan.

Our target market for defined benefit plans consists of plans with more than
1,000 participants. Our consultants provide actuarial services to many of the
world's largest retirement plans, including the three largest
corporate-sponsored defined benefit plans in the United States. Our defined
benefit services include:

[Enlarge/Download Table]

- STRATEGIC PLAN DESIGN - FINANCIAL REPORTING

- ACTUARIAL SERVICES - VALUATION AND DIAGNOSTIC SOFTWARE AND SYSTEMS

- FUNDING RECOMMENDATIONS - ASSISTANCE WITH MERGING, DIVESTING AND
ACQUIRING PLANS
- MULTINATIONAL ASSET POOLING CONSULTING

We also help companies design and implement defined contribution plans,
especially 401(k) plans in the United States. We assist clients with the
selection of asset managers and administrators and in communicating with their
employees concerning enrollment, plan provisions and investment alternatives.

In both the defined benefit and defined contribution areas, we emphasize
research-based consulting to design retirement programs that align our clients'
workforces with their business strategies. Examples of our products and services
include:

- PENSION EQUITY PLAN--an alternative retirement plan that combines the lump
sum portability of defined contribution and cash balance plans desired by
younger workers with a benefits formula based on the final few years of
earnings, providing benefits security typical to a traditional defined
benefit plan that older and long-service employees seek;

- FLEX PENSION PLUS-TM---a tax-effective Canadian supplemental retirement
plan for attracting and retaining key employees;

- PREPARE!-TM---a web-based tool that enables employees to model different
savings and retirement income scenarios;

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- WATSON WYATT 401(K) VALUE INDEX-TM---a tool that looks beyond cost to
identify the total value that employers and their employees derive from
their 401(k) plans;

- PHASED RETIREMENT PROGRAMS--a combination of programs that help clients
attract and retain older workers by enabling them to balance work/life
needs through a gradual transition to retirement;

- CLIENTSITE-TM---a relationship management tool that allows web-based
communication between our clients and associates that can be updated
globally and instantaneously; and

- ELECTRONIC ACTUARY/ELECTRA-TM---a tool that performs immediate "what if"
scenarios so that different plan designs can be modeled and priced
interactively with clients.

To support our retirement consulting services, we invest heavily in
state-of-the-art technology, software, and systems to ensure seamless
consistency and efficiency of service delivery in all our offices worldwide. We
also maintain extensive proprietary databases, Watson Wyatt COMPARISON-TM- and
BenTRACK,-TM- that enable our clients to track and benchmark benefits plan
provisions in the United States and throughout the world, respectively.

INVESTMENT CONSULTING

Together with our retirement consulting services, we offer investment
consulting services that help private and public sector clients throughout the
world maximize the return on their retirement plan assets, develop governance
policies and strategies, and design investment structures to successfully manage
financial liabilities within the context of their overall business objectives.
Our services include:

- asset/liability modeling and asset allocation studies;

- governance and investment policy development;

- investment structure analysis;

- investment manager selection and evaluation; and

- performance evaluation and monitoring.

GROUP AND HEALTH CARE CONSULTING

Health care premiums paid by US. employers are rising annually at
approximately 10%. In this environment, we help our clients with the design,
financing, administration and communication of medical, disability and other
group benefits plans. Clients seek our services to assist them in an environment
that is characterized by escalating costs, employee dissatisfaction with health
care programs and multiple vendor relationships. Our primary objective is to
establish a link between each element of an employers' benefits programs and its
desired cost, employee satisfaction and productivity goals. Our services
include:

- plan design;

- actuarial services;

- vendor management services;

- on- and off-shore funding analysis;

- benefits pricing;

- assistance with plan changes relating to mergers, acquisitions and
divestitures; and

- integrated disability management.

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Our approach to group benefits consulting is research-based and makes use of
sophisticated consulting tools such as:

- PREVIEW-TM---a medical benefits modeling system which accurately and
quickly models medical claims under alternative plan designs, covered
populations and managed care delivery systems;

- HEALTH PLAN VALUE LIBRARY-TM---software tools and a database of
information on the cost, quality and accessibility of health plans that
are used to screen and evaluate health plans; and

- AUTO-RFP-TM---a powerful software application that organizes and eases the
administrative process of gathering and evaluating the responses from
health care vendors to requests for proposals.

HR TECHNOLOGIES GROUP

Our HR Technologies Group helps clients select and implement technologies
that enhance the delivery of benefits and related information to employees. Our
HR Technologies Group consists of approximately 360 consultants and represented
approximately 15% of our North American consulting revenue in fiscal year 2000.

As human resources programs become more complex and important for recruiting
and retaining employees, organizations are seeking flexible, adaptable and
cost-effective ways to provide benefits information to their employees. We are
well-positioned to help clients address these challenges because of our eHR-TM-
approach, which integrates HR-related data, computer systems and transactions in
a single employee accessible network. We help organizations that have adopted
Internet applications for external business strategies to employ similar
advanced technologies for internal applications such as HR. Our services include
assisting clients to implement employee self-service applications, retirement
plan administration systems, benefits enrollment, training programs, time and
attendance systems and applicant tracking systems.

Using our proprietary consulting methodology of "Discover, Invent and
Deliver," our consultants work with clients to evaluate existing HR
infrastructure and business strategy, identify the best sources of people,
process and technology, and design and implement tailored approaches. Our
consulting work frequently involves the development of web-based employee
self-service applications, the implementation of interactive call centers and
the integration of existing legacy systems. We also offer hosting services for
companies who prefer to access applications from our servers rather than host on
their own intranets. In addition, we deliver state-of-the-art applications in
health and welfare enrollment, pension administration, compensation planning and
retirement planning.

HUMAN CAPITAL GROUP

Our Human Capital Group, which consists of over 390 consultants, helps
clients achieve competitive advantage by aligning their workforce with their
business strategy. This includes helping clients develop and implement
strategies for attracting, retaining and motivating their employees to maximize
the return on their investment in human capital. Our Human Capital Group
represented approximately 10% of our North American consulting revenue in fiscal
year 2000. Our Human Capital Group focuses in three principal areas:

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STRATEGIC REWARDS

We help align an organization's rewards--including compensation, stock
programs, incentives, recognition programs and flexible work arrangements--with
its business strategies, cultural values, work design and human resources
strategy. We work together with our Benefits Consulting Group to develop optimal
total compensation programs for our clients.

ORGANIZATION EFFECTIVENESS

We help clients build high-performance organizations by working with them to
clarify and implement business strategy, recognizing the impact of employee
attitudes and commitment, as well as effective team and leadership development,
on business success. We provide a wide array of organization diagnostic
services--employee and customer surveys, human capital audits and cultural
assessments--as well as leadership development services that include assessment,
coaching, workshops and team building. We also provide process management
services to help organizations achieve their desired vision, strategy and
culture.

EXECUTIVE COMPENSATION

We counsel executives and boards of directors on executive pay programs,
including cash compensation, stock options and stock purchase plans, and on ways
to align pay-for-performance plans throughout the organization in order to
increase shareholder value.

We have developed the WATSON WYATT HUMAN CAPITAL INDEX,-TM- a proprietary
tool for demonstrating the relationship between the effectiveness of an
organization's human capital practices and the creation of superior shareholder
returns. In support of our human capital consulting we also maintain databases
of employee attitudes for client organization comparison. Our
WorkUSA-Registered Trademark-/WorkCanada-TM- database is regarded as the most
up-to-date survey in existence on the attitudes of North American workers. It
includes the opinions of 10,000 employees surveyed independently, reflecting a
large cross-section of jobs and industry types. Our clients compare their own
employee survey results against these norms to identify workplace perceptions
and satisfaction and commitment levels. Through our People Management Resources
division, we also provide an online best practices database of more than 300
in-depth case studies covering key people practices, such as culture
development, staffing and selection, leadership development, and employee
communication.

OTHER CONSULTING SERVICES

While we focus our consulting services in the three areas described above,
one of our primary strengths is our ability to draw upon consultants from our
different practices to deliver integrated services to meet the needs of our
clients. Examples include:

MERGER & ACQUISITION SERVICES

Recognizing that many business combinations fail because of "people
problems," we help clients achieve better transactional success by assisting
with faster integration, cost containment, increased customer focus and greater
productivity. We assemble multi-disciplinary teams to provide key services that
include due diligence of pension and benefits plans, company cultures and human
resources strategies; integration of human resources processes and practices;
and enterprise-wide project management.

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EMPLOYEE COMMUNICATIONS CONSULTING

We also have one of the most respected communications consulting groups in
the human resources consulting industry--a team that has won numerous awards for
innovative and effective communications. Our consultants combine strong creative
skills with technical excellence on human resources issues and solid research on
employee attitudes and communication effectiveness. We conduct communications
audits, research and focus groups, and provide communications planning and
implementation. In addition, our consultants assist employers in complying with
disclosure requirements.

WATSON WYATT DATA SERVICES

Watson Wyatt Data Services provides a comprehensive array of global
compensation, benefits and employment practices information that is often
studied and cited by many of our clients and competitors. In the United States,
we publish and market an extensive library of reports on human resources issues,
and more than 5,000 organizations participate in one or more of our annual
surveys. Our databases contain compensation information for more than one
million employees in virtually every industry sector and major metropolitan
area. Outside of the United States, our worldwide alliance offers more than 70
remuneration, benefits and employment practice references guides, covering more
than 50 countries and 6 continents. In addition to our annual survey references,
we also offer many reference works intended to assist practitioners in creating
or maintaining programs in a variety of subject areas such as variable pay,
performance management, and personnel policies.

EXAMPLES OF REPRESENTATIVE CLIENT ENGAGEMENTS

Some recent examples of our work with clients are described below:

EHR-TM- RE-ENGINEERING

- ENGAGEMENT: Assist a global oil field services company on a five-year,
multi-phased approach to transform a traditional personnel department into
a comprehensive eHR-TM- business unit.

- CHALLENGE: Our client's personnel function in North America was hindered
by decentralized administration practices, different benefits and payroll
systems for each product line and location, manual procedures for
processing benefits and services, and limited use of technology in
delivering services to employees. As a result, personnel managers and
employees expended significant time and effort contacting benefits
managers and obtaining benefits data, retirement and loan projections, and
performing benefits related transactions.

- APPROACH: We formulated a strategy to develop web-based, employee
self-service systems to deliver HR services, transactions, and
communications via desktop computers and kiosks.

- RESULTS: Our client successfully migrated 98% of its U.S. employees to
web-based benefits enrollment. Today, 16,000 U.S. employees have
self-service access to real-time data, records, and transactions on their
profit sharing plan, pension and 401(k) plans. Through this system
employees can access daily account balances, model loans, and estimate
retirement income. This system also provides for health & welfare
enrollment, administration, and plan documentation. Additional launches
are planned to expand the eHR-TM- approach to regions outside North
America.

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MERGER & ACQUISITION INTEGRATION AND DUE DILIGENCE

- ENGAGEMENT: Assist a global industrial company to complete cultural,
benefits and human capital due diligence on several target companies in
Asia-Pacific, including an evaluation of the future financial obligations
of the target's benefits plans, staff retention challenges, and ongoing
employee communications needs.

- CHALLENGE: Our client faced several key issues in evaluating potential
acquisitions, including staff retention, pension liabilities arising from
unfunded pension plans, transformation of the organizational cultures, and
the lack of uniform HR processes and systems.

- APPROACH: We conducted a post-transaction audit and review of the
competitiveness of the target companies' compensation and benefits
programs. We then identified position requirements, matched employees
having the desired backgrounds, defined job classifications and developed
salary structures that were consistent with our client's existing system.
We also developed comprehensive communication plans and materials and
designed cross-cultural training for expatriates.

- RESULTS: In addition to assuring a positive reception by the target
companies' employees, we limited potential liabilities, installed formal
HR programs and systems, and maintained compensation and benefits levels
during the ongoing review.

INTEGRATED DISABILITY MANAGEMENT

- ENGAGEMENT: Assist a computer hardware manufacturer to design and
implement a more flexible and comprehensive disability management program.

- CHALLENGE: Our client regularly had difficulty fulfilling customers orders
at year end. Our client employed a "just-in-time" inventory system, and
required a full staff to fill its orders, but seemed to suffer from
chronic shortages of product supply. However, an apparent production issue
was determined to be a benefits design issue. The design and reporting
system of the company's paid time off and disability programs were
encouraging employees to take time off at the end of the year.

- APPROACH: After benchmarking other firms in our client's industry, we
devised a more competitive plan design, established a tracking system for
data collection and identified best practices for better connecting all
components of the paid time-off program. We also installed a new data
collection system with the ability to track workplace absences for faster
and more efficient resolution.

- RESULTS: The first year of implementation resulted in total savings of
$800,000. A year later, our client acquired two manufacturing companies.
With the best practice processes already in place, the merging of the
three programs went smoothly, and as a result, our client reported savings
of approximately $11 million in direct and indirect costs.

RETIREMENT PLAN ADMINISTRATION

- ENGAGEMENT: Assist a large high-tech company whose pension administration
outsourcing provider was exiting the business.

- CHALLENGE: Our client needed to assess the options of entering into
another outsourcing agreement or moving the pension administration
function to their North American HR service center. After evaluating
alternatives, our client selected a blended approach, expanding their own
internal call center capabilities through our expertise in pension
technology.

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- APPROACH: We designed and built a retirement benefits administration
system that is an integral part of the client's North American HR service
center. The system is located at our site and accessed by the
organization's service center representatives. Employees can also access
the system for numerous self-service functions, including retirement plan
modeling.

- RESULTS: The new technology-based delivery model improved the productivity
of the benefits administrative staff. The perception of our client's HR
department's role in the organization was also enhanced. The new system
rollout was highly successful, achieving a customer satisfaction rating of
well over 90%.

SALES AND MARKETING

Our growth strategy starts with ensuring the satisfaction of current clients
through our Account Management program. We have approximately 135 account
managers who focus on the effective delivery of services to clients and on
expanding our relationships across service lines, geographic boundaries and
divisions within client companies. A key element of this program is an approach
we call CLIENTFIRST-TM-. Using proprietary processes and tools, ranging from
interview guides to satisfaction checklists to planning templates, we work with
clients to define their needs and expectations before an engagement begins and
then continually measure our performance according to the agreed upon standards.

We also pursue new clients using cross-disciplinary teams of consultants as
well as dedicated business developers to initiate relationships with carefully
selected companies. Our client expansion and new client acquisition efforts are
supported by market research, comprehensive sales training programs, and
extensive marketing databases.

Our sales efforts are also supported by a full array of marketing programs
designed to raise awareness of the Watson Wyatt Worldwide brand and our
reputation within our target markets. These programs promote our thought
leadership on key human resources issues and establish us as a preferred human
capital consulting firm to many of the world's largest companies.

CLIENTS

We work with major corporations, emerging growth companies, government
agencies and not-for-profit institutions in North America, Latin America and
Asia-Pacific across a wide variety of industries. Our client base is broad and
geographically diverse. In fiscal year 2000, our ten largest clients accounted
for approximately 12% of our consolidated revenues and no individual client
represented more than 4% of our consolidated revenues. Representative clients
include:

Asea Brown Boveri (ABB)
Canada Post
General Electric Company
General Motors

IBM
ICI Americas
Ingersoll-Rand
Lockheed Martin Corporation

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COMPETITION

The human capital consulting business is highly competitive. We believe that
there are several barriers to entry, such as the need to assemble specialized
intellectual capital to provide expertise on a global scale, and that we have
developed significant competitive advantages in providing human resources
consulting services. However, we face intense competition from several different
sources.

Our current and anticipated competitors include:

- major human resources consulting firms, such as William M. Mercer and
Towers Perrin and the administration/consulting firm Hewitt Associates;

- smaller benefits and compensation consulting firms, such as Buck
Consultants, The Segal Company and Hay Group;

- the human resources consulting practices of public accounting and
consulting firms, such as PricewaterhouseCoopers and Booz, Allen &
Hamilton;

- information technology consulting firms, such as Andersen Consulting and
Internet/intranet development firms; and

- boutique consulting firms comprised primarily of professionals formerly
associated with the firms mentioned above.

Watson Wyatt is ranked fourth or fifth among the top HR consulting
companies, based on revenues, according to surveys of consulting companies from
the 1998 Kennedy Information Research Group report, December 1999 Business
Insurance rankings and June 2000 Consultants News.

The market for our services is subject to change as a result of regulatory,
legislative, competitive and technological developments and to increased
competition from established and new competitors. We believe that the primary
determinants of selecting a human resources consulting firm include reputation,
ability to provide measurable increases to shareholder value, global scale,
service quality, and the ability to tailor services to a clients' unique needs.
We believe we compete favorably with respect to these factors.

EMPLOYEES

We employ approximately 4,000 associates. None of our associates is subject
to collective bargaining agreements. We believe relations with associates are
good.

FACILITIES

Our principal executive offices are located at 6707 Democracy Boulevard,
Suite 800, Bethesda, Maryland 20817. We plan to move our principal executive
offices to 1717 H Street NW, Washington DC in October 2000.

We operate in 60 offices in principal markets throughout the world.
Operations are carried out in leased offices under operating leases that
normally do not exceed 10 years in length. We do not anticipate difficulty in
meeting our space needs at lease expiration or if additional space is required
earlier. We also evaluate office relocation on an ongoing basis to meet changing
needs in our markets while minimizing our occupancy expense.

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LEGAL PROCEEDINGS

From time to time, we are a party to various lawsuits, arbitrations or
mediations that arise in the ordinary course of business. These disputes
typically involve claims relating to employment matters or the rendering of
professional services. The four matters summarized below involve the most
significant pending or potential claims against us. We believe, based on
currently available information, that the results of all such proceedings, in
the aggregate, will not have a material adverse effect on our financial
condition, but claims which are possible in our business could be material to
our financial results for a particular period.

REGINA, SASKATCHEWAN POLICE. The Administrative Board of the Regina Police
Superannuation and Benefit Plan filed an action against us and three individual
employees in 1994 alleging errors in valuation methods, assumptions and
calculations for the plan during the course of work provided for the Plan since
the 1970s. Discovery is concluded and expert reports have been exchanged. Unless
settled earlier, trial is scheduled for January 2001. The Administrative Board
seeks approximately $26 million in damages, plus interest.

CITY OF MILWAUKEE, WISCONSIN. In 1997, the City of Milwaukee Employees
Retirement Board notified us of a potential claim involving an erroneously
calculated cost of living adjustment that was based on a formula provided by the
staff of the Employees Retirement Board. In response to the notice of claim, we
filed a declaratory judgment action against the City of Milwaukee and the
Employees Retirement Board in the U.S. District Court in Chicago. By mutual
consent, the parties agreed to dismiss the claim with leave to reinstate,
pending settlement discussions among other parties.

CONNECTICUT CARPENTERS PENSION FUND. The Connecticut Carpenters Pension
Fund filed an action against us in 1999 claiming errors in valuations from 1991
through 1998 that allegedly resulted in understated liabilities. The plaintiffs
are seeking damages of approximately $65 million; a punitive damage claim has
been dismissed. In the event that the claim is not settled, trial is anticipated
in early 2001.

SOCIETE INTERNATIONALE DE TELECOMMUNICATIONS AERONAUTIQUE S.C. (SITA). In
1999, a law firm representing SITA, a French based cooperative, notified Watson
Wyatt Partners, our European alliance partner, of a claim involving alleged
errors in the design of a global employee stock plan which includes work
performed by a former subsidiary that is now owned by Watson Wyatt Holdings
(Europe) Limited. The claim alleges damages that could exceed $75 million.
Formal proceedings have yet to be commenced and the parties have informally
exchanged information pursuant to English legal procedures. Although the parties
concerned are in discussions about the claim, unless a settlement is reached,
proceedings might be commenced as early as October 2000 against Watson Wyatt
Partners and/or The Wyatt Company (UK) Limited, one of our subsidiaries.

We carry substantial professional liability insurance with a self-insured
retention of $1 million per occurrence which provides coverage for professional
liability claims including the cost of defending such claims. We also carry
employment practices liability insurance.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth the names, ages and positions of our
directors, executive officers and director nominees as of the date of this
prospectus:

[Enlarge/Download Table]

NAME AGE POSITION
---- -------- --------

John J. Haley........................ 50 President, Chief Executive Officer and Director
Walter W. Bardenwerper............... 49 Vice President, General Counsel and Secretary
Thomas W. Barratt.................... 58 Vice President, Regional Manager (U.S. Central) and
Director
Jorge V. Bou......................... 58 Vice President, Regional Manager (Latin America)
Paula A. DeLisle..................... 46 Vice President and Director
David B. Friend, M.D................. 44 Vice President, Regional Manager (U.S. East) and
Director
James A. Gargiulo.................... 41 Vice President, Human Resources
Ira T. Kay........................... 50 Vice President, Director -- U.S. Compensation Practice
and Director*
Brian E. Kennedy..................... 57 Vice President, Regional Manager (Canada) and Director*
Eric P. Lofgren...................... 49 Vice President, Global Director -- Benefits Consulting
Group and Director
David P. Marini...................... 44 Vice President, Global Director -- H.R. Technologies
Group and Director Nominee
Carl D. Mautz........................ 53 Vice President, Chief Financial Officer
Gail E. McKee........................ 41 Vice President and Director
Kevin L. Meehan...................... 55 Vice President and Director
J.P. Orbeta.......................... 39 Vice President, Global Director -- Human Capital Group
and Director Nominee
Sylvester J. Schieber................ 54 Vice President, Director of Research and Information
John A. Steinbrunner................. 50 Vice President and Director*
A. Grahame Stott..................... 46 Vice President, Regional Manager (Asia-Pacific) and
Director*
Charles P. Wood, Jr.................. 56 Vice President, Regional Manager (U.S. West) and
Director
Barbara H. Franklin.................. 60 Director
John J. Gabarro...................... 61 Director
Robert D. Masding.................... 56 Director*
R. Michael McCullough................ 61 Director
Gilbert T. Ray....................... 56 Director
Elizabeth M. Caflisch................ 46 Director Nominee
Paul N. Thornton..................... 50 Director Nominee

------------------------

* Under our board rotation policy, Messrs. Kay, Kennedy, Steinbrunner and
Stott will not be standing for reelection at the next annual meeting of
stockholders. In addition, Mr. Masding has announced his retirement from
Watson Wyatt Partners effective April 30, 2001 and will not be standing for
reelection at the next annual meeting of stockholders. The associates listed
above as director nominees have been nominated to stand for election at the
next annual meeting of stockholders.

JOHN J. HALEY has served as President and Chief Executive Officer since
January 1, 1999 and as a Director since 1992, and is a member of the Partnership
Board of Watson Wyatt Partners. Mr. Haley joined Watson Wyatt in 1977. Prior to
becoming President and Chief Executive Officer, he was the Global Director of
the Benefits Consulting Group. Mr. Haley is a Fellow of the Society of Actuaries
and is a co-author oF FUNDAMENTALS OF PRIVATE PENSIONS (University of
Pennsylvania Press). He has an A.B. in Mathematics from Rutgers College and
studied under a Fellowship at the Graduate School of Mathematics at Yale
University.

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WALTER W. BARDENWERPER has served as Vice President and General Counsel
since joining Watson Wyatt in 1987 and has served as Secretary since 1992.
Mr. Bardenwerper was a Director of Watson Wyatt from 1992 to 1997. He serves as
chairman of the Global Quality Committee of Watson Wyatt Worldwide, and is
President and a director of Professional Consultants Insurance Company. He has a
B.A. in Economics from the University of Virginia and a J.D. from the University
of Virginia Law School.

THOMAS W. BARRATT has served as Vice President and Regional Manager (U.S.
Central) since 1997 and has served as a Director since 1998. Mr. Barratt
rejoined Watson Wyatt in 1994 after serving as the Managing Consultant of the
Detroit office of Towers Perrin, a competing human resources consulting firm,
from 1987 through 1993. He began his career with Watson Wyatt in 1976 and was a
consultant with the Company through 1986. He has a B.B.A. from Western Michigan
University and was graduated from Northwestern University's National Trust
School in 1966.

JORGE V. BOU has served as Vice President since 1998 and Regional Manager
(Latin America) since 1994. Prior to joining Watson Wyatt in 1986, Mr. Bou was a
Vice President with the Martin E. Segal Company, an actuarial and benefits
consulting firm, and was previously with the American International Group, an
insurance organization. He has been providing consulting services to various
clients in Latin America since 1969. Mr. Bou is an Associate of the Society of
Actuaries. He has a B.S. in Mathematics from Georgia State University.

PAULA A. DELISLE has served as Vice President and as a Director since 1997.
Ms. DeLisle joined Watson Wyatt in 1982 and is the Managing Consultant of our
Hong Kong office. Ms. DeLisle is responsible for Watson Wyatt's China
operations, for the Asia-Pacific operations of Watson Wyatt Data Services, and
is a frequent speaker at international conferences on human resources issues in
the Asia-Pacific region. She is the Vice-Chairman of the American Chamber of
Commerce in Hong Kong and is the Hong Kong representative to the Pacific
Economic Cooperation Council's Human Resources Development Task Force. She has a
B.A. from Saint Mary's College and a Master's degree from Loyola University of
Chicago.

DAVID B. FRIEND, M.D. has served as Vice President and Regional Manager
(U.S. East) since 1997 and has served as a Director since 1997. He formerly was
the Practice Director of Watson Wyatt's Group and Health Care Practice. Prior to
joining Watson Wyatt in 1995, Dr. Friend served on the medical staff at Malden
Hospital in Malden, Massachusetts. Prior to attending medical school,
Dr. Friend was an Executive Vice President with High Voltage Engineering, a
specialty industrial manufacturing conglomerate. Dr. Friend is the author of
HEALTHCARE.COM: RX FOR REFORM (St. Lucie Press), and also serves on the Advisory
Board of the Schneider Institute for Health Policy at Brandeis University. He
has an A.B. in Economics from Brandeis University, an M.D. from the University
of Connecticut and an M.B.A. from The Wharton School of the University of
Pennsylvania.

JAMES A. GARGIULO has served as Vice President, Human Resources since 1999.
Mr. Gargiulo has been an Account Manager in the Eastern Region for the past two
years. Prior to joining Watson Wyatt in 1997, he was the Regional Director for
the Compensation practice at Aon Corporation, an insurance and consulting
organization, and has held various human resources positions for the investment
banking firm of Salomon Brothers, The Gap, retailer, and Banque Paribas.
Mr. Gargiulo has a B.A. in Business Administration from Bernard Baruch College
in New York.

IRA T. KAY has served as Vice President since 1996. He was appointed
Director of the U.S. Compensation Practice in September 2000. Prior to assuming
his current responsibilites he was North America Practice Director of the Human
Capital Group since 1998 and as a Director since 1996. Prior to joining Watson
Wyatt in 1993, Mr. Kay was a Managing Director and served on the Partnership
Management Committee of The Hay Group, a competing human resources consulting
firm, and prior to that, he was a Managing Director in the Human Resources
Department of the investment banking firm Kidder Peabody. Mr. Kay is the author
of CEO PAY AND SHAREHOLDER VALUE (St. Lucie Press). Mr. Kay has a B.S. in
Industrial and Labor Relations from Cornell University and a Ph.D. in Economics
from Wayne State University.

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BRIAN E. KENNEDY has served as Vice President and Regional Manager (Canada)
since 1995 and as a Director since 1996. Prior to joining Watson Wyatt in 1995,
Mr. Kennedy spent 18 years with the Alexander Consulting Group, an insurance and
benefits consulting firm, most recently as Chairman and Chief Executive Officer
of Alexander Clay, their U.K. and European operations.

ERIC P. LOFGREN has served as Vice President, Global Director--Benefits
Consulting Group and as a Director since 1998. Prior to joining Watson Wyatt in
1989, Mr. Lofgren spent seven years with William M. Mercer, a competing human
resources consulting firm, and seven years at The Mutual of New York Insurance
Company. Mr. Lofgren is a recognized authority in the areas of retirement plan
design, the effects of demographics on benefit systems and asset liability
management. He is widely credited with developing the Pension Equity Plan (PEP),
one of the three primary families of defined benefit pension design.
Mr. Lofgren is a Fellow of the Society of Actuaries, and holds a B.A. in
Mathematics from New College in Sarasota, Florida and studied at the Graduate
School of Logic at the University of California at Berkeley.

DAVID P. MARINI has served as Vice President since 1998 and Global
Director--HR Technologies Group since 1997. Prior to assuming his current
responsibilities, he led several of the firm's technology projects involving
reengineering administrative client services. Prior to joining Watson Wyatt in
1994, Mr. Marini spent 13 years at the insurance company CIGNA Corporation, most
recently as the President of the Iowa division of Trilog Inc., a wholly-owned
401(k) recordkeeping subsidiary, and he was previously a CPA with the accounting
firm Coopers & Lybrand. He has a B.S. in business administration from Western
New England College.

CARL D. MAUTZ has served as Vice President and Chief Financial Officer since
February 1999 and previously served as Controller. Prior to joining Watson Wyatt
in 1997, Mr. Mautz served as the Controller for Tactical Defense Systems, Loral
Corporation, which merged into defense contractor Lockheed Martin Corporation.
From 1990 to 1994, Mr. Mautz held operating and corporate finance positions at
the computer firm Unisys Corporation and from 1972 to 1984 was a CPA with the
accounting firm of KPMG Peat Marwick. Mr. Mautz has a B.S. and an M.A.S. in
accounting from the University of Illinois.

GAIL E. MCKEE has served as Vice President and as a Director since 1997.
Prior to joining Watson Wyatt in 1992, Ms. McKee was with the Walt Disney
Company, an entertainment conglomerate, where she served as the Manager of
International Compensation and Benefits from 1991 to 1992. From 1982 to 1990,
she was an Account Manager with Hewitt Associates, a competing human resources
consulting firm, in New York and Los Angeles. She has a B.A. from the University
of Washington.

KEVIN L. MEEHAN has served as Vice President since 1994 and as a Director
since 1999. Mr. Meehan joined Watson Wyatt in 1983, and has been instrumental in
developing our flexible benefits operations, our Human Resources Technologies
Group and our Account Management system. Mr. Meehan is a frequent speaker on
employee benefits tax and legal issues, and regularly testifies before the IRS,
the Department of Labor and Committees of Congress on employee benefit plan
issues. Mr. Meehan has a B.A. from the College of the Holy Cross and a J.D. from
St. John's University Law School.

J.P. ORBETA has served as Vice President since 1998 and as Global Practice
Leader--Human Capital Group since 1998. Prior to joining Watson Wyatt in
April 1986, Mr. Orbeta was a faculty member of the Mathematics Department and
director of Computer Education and Services at the Ateneo de Manila University.
Mr. Orbeta is a member and Certified Compensation Professional (CCP) of the
American Compensation Association and is the first practitioner in the
Philippines to have earned this designation. He is a member of the Industrial
Relations Committees of the American Chamber of Commerce of the Philippines, the
Personnel Management Association of the Philippines and is currently the
President of the Compensation Management Society of the Philippines. Mr. Orbeta
has a B.S. in Economics from Ateneo de Manila University in the Philippines.

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SYLVESTER J. SCHIEBER has served as Vice President and Director of the
Watson Wyatt Research and Information Center (RIC) since 1983, and as a Director
of Watson Wyatt from 1989 to 1996. Mr. Schieber joined Watson Wyatt in 1983 as
Director of RIC, and from 1994-1996, he served on the Advisory Council on Social
Security for the Clinton Administration. He is currently serving a six-year term
on the Social Security Advisory Board, for which he was appointed by the U.S.
Senate Majority Leader. Mr. Schieber has served on the Board of the Pension
Research Council of the Wharton School, University of Pennsylvania since 1985.
He has authored or co-authored four books on retirement issues, including
FUNDAMENTALS OF PRIVATE PENSIONS (University of Pennsylvania Press), THE REAL
DEAL: THE HISTORY AND FUTURE OF SOCIAL SECURITY (Yale University Press, 1999),
and he has co-edited four other volumes on a broad range of human resources
issues. Mr. Schieber is a frequent speaker on pension and Social Security policy
issues throughout the world. He has a Ph.D. in Economics from the University of
Notre Dame.

JOHN A. STEINBRUNNER has served as Vice President since 1996 and a Director
since 1996. Mr. Steinbrunner joined Watson Wyatt in 1974 and was formerly the
Retirement Practice Director of the Benefits Consulting Group. Mr. Steinbrunner
continues to consult with major corporate clients on a variety of strategic
benefits issues. He is a Fellow of the Society of Actuaries and has an M.S. in
Mathematics from Case Western Reserve University.

A. GRAHAME STOTT has served as Vice President since 1995 and Regional
Manager (Asia-Pacific) since 1995 and as a Director since 1995. Mr. Stott joined
Watson Wyatt in 1982 and is a member of the Hang Seng Index Advisory Committee,
a past President of the Actuarial Association of Hong Kong and has been a member
of a number of Hong Kong Government working parties in the areas of Social
Security and pension legislation. Mr. Stott, a Fellow of the Faculty of
Actuaries, has a B.Sc. in Mathematics from the University of Manchester
Institute of Science and Technology.

CHARLES P. WOOD, JR. has served as Vice President since 1998, as Regional
Manager (U.S. West) since 1999 and as a Director since 1999. Mr. Wood joined
Watson Wyatt in 1975 and is a specialist in matters relating to Retirement,
Group and Health Care, and Compensation consulting. Mr. Wood, a Fellow of the
Society of Actuaries and the Casualty Actuarial Society, has a B.S. in
Engineering Science and Mathematics from the U.S. Air Force Academy and an S.M.
in Applied Mathematics from Harvard University.

BARBARA H. FRANKLIN was appointed as a Director in May, 2000. Ms. Franklin
has been President and Chief Executive Officer of Barbara Franklin Enterprises,
an international trade consulting and investment firm, since 1995. Ms. Franklin
previously served as U.S. Secretary of Commerce in the Bush Administration.
Ms. Franklin is a director of four companies--Aetna, Inc., a health insurance
provider, The Dow Chemical Company, a chemical manufacturer, Milacron, Inc., a
manufacturing technologies company, and MedImmune, Inc., a biotechnology
company. Ms. Franklin is currently a distinguished visiting fellow at the
Heritage Foundation, vice chair of the Atlantic Council, a director of the
National Committee on United States-China Relations. She is also a trustee of
the Economic Club of New York and a member of the Board of Directors of the
Associates of the Harvard Business School.

JOHN J. GABARRO has served as a Director since 1999 and was previously a
director from 1995 to 1998. Mr. Gabarro has been a professor at the Harvard
Business School since 1972. Mr. Gabarro is the UPS Foundation Professor of Human
Resource Management at the Harvard Business School, where he has taught in
Harvard's M.B.A., Advanced Management, and Owner-President Management Programs.
He has also served as faculty chairman of Harvard's International Senior
Management Program and as chairman of its Organization Behavior and Human
Resource Management faculty. Mr. Gabarro is the author of six books, the most
recent of which include BREAKING THROUGH: THE MAKING OF MINORITY EXECUTIVES IN
CORPORATE AMERICA (Harvard, 1999), MANAGING PEOPLE IN ORGANIZATIONS (Harvard,
1992) and THE DYNAMICS OF TAKING CHARGE (Harvard,

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1987), which won the 1988 New Directions in Leadership Award and was named one
of the best business books of the year by THE WALL STREET JOURNAL. Mr. Gabarro
is also a recipient of the 1980 McKinsey Foundation Prize, the 1986 Center for
Creative Leadership Distinguished Scholar Colloquium and the 1988 Johnson Smith
and Knisely Award for research on leadership. Mr. Gabarro has an M.B.A. and a
Ph.D. from Harvard University.

ROBERT D. MASDING has served as the Senior Partner of Watson Wyatt Partners,
our global alliance partner, since 1995 and as a Director since 1995 upon the
establishment of the global alliance. He joined Watson Wyatt Partners in 1969
and became a partner in 1972. Mr. Masding is a former Chairman of the
International Association of Consulting Actuaries and is a member of the
Professional Affairs Board of the Institute of Actuaries. Mr. Masding, a Fellow
of the Institute of Actuaries, has an M.A. in Mathematics from Cambridge
University.

R. MICHAEL MCCULLOUGH has served as a Director since 1996. Mr. McCullough is
the retired Chairman of the management consulting firm of Booz, Allen &
Hamilton. He joined Booz, Allen & Hamilton in 1965 as a consultant, was elected
a Partner in the firm in 1971, became Managing Partner of the firm's Technology
Center and was elected to the position of Chairman in 1984. Mr. McCullough is a
member of the Boards of Capital Auto Real Estate Investment Trust, an automobile
property real estate investment trust, Charles E. Smith Residential Real Estate
Trust, a residential property real estate investment trust and is Chairman of
Ecutel, Inc., a private Internet communications products and services firm.

GILBERT T. RAY was appointed a Director in March, 2000. Mr. Ray is senior
counsel of the law firm O'Melveny & Myers LLP. He joined O'Melveny & Myers in
1972, and was named a partner in 1981. After practicing corporate law for over
28 years, Mr. Ray retired from active practice in January, 2000. Mr. Ray is a
member of the boards of Host Marriott Services Corporation, a concessions
provider, Automobile Club of Southern California, a provider of emergency road
and travel services and insurance, and is Chair of the Board of Sierra
Monolithics, Inc. a high speed communications systems company. Mr. Ray is also
the recipient of the Fred Snowden Humanitarian Award--Greater Los Angeles
African American Chamber of Commerce, the Outstanding Alumni Award--Ashland
University, the NAACP Legal Defense Fund--Civil Rights Advocate of the Year, and
the Central City Association--Leadership and Achievement Award.

ELIZABETH M. CAFLISCH is a nominee to Watson Wyatt's Board of Directors. Ms.
Caflisch joined Watson Wyatt in 1979 and is currently a consulting actuary and
the Retirement Practice Leader in our Washington, D.C. office. Ms. Caflisch has
served on the Finance Committee since 1997. Ms. Caflisch is a Fellow of the
Society of Actuaries and an Enrolled Actuary under ERISA. She holds a B.A.
degree in mathematics and economics from Trinity College.

PAUL N. THORNTON is a nominee to the Board of Directors. He joined Watson
Wyatt Partners in 1974, qualified as a Fellow of the Institute of Actuaries in
1975 and became a Partner of the firm in 1977. Mr. Thornton has been elected to
the position of Senior Partner of Watson Wyatt Partners effective May 1, 2001.
He was a Chairman of the Pensions Board of the Faculty and Institute of
Actuaries in the U.K. from 1994 to 1996, Chairman of the Association of
Consulting Actuaries from June 1997 until June 1998 and President of the
Institute of Actuaries from July 1998 to July 2000. Mr. Thornton is a member of
the Executive Committee of the International Actuarial Association, Chairman of
the Pensions Committee of the Groupe Consultatif of European Actuaries, Chairman
of the Committee of the International Actuarial Association dealing with the
International Accounting Standard on Employee Benefits and a member of the
Committee of the International Association of Consulting Actuaries. He holds an
honours degree in Mathematics from Oxford University.

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BOARD COMPOSITION

Prior to the proposed corporate reorganization, Watson Wyatt & Company
directors were elected at each annual stockholders' meeting for a one-year term.
Of the 17 seats, 12 are filled by current employees of Watson Wyatt & Company,
four are filled by outside directors, and one by the Senior Partner of Watson
Wyatt Partners. Under the Watson Wyatt & Company bylaws, an employee stockholder
is qualified to hold a directorship only during the term of his or her
employment.

Under the Watson Wyatt & Company Holdings certificate of incorporation, the
directorships are to be divided into three classes. At the regularly scheduled
stockholders' meeting in 2000, stockholders will elect three classes of
directors. The directorships in the first class will expire as of the
stockholders meeting in 2001 and every three years thereafter, the directorships
in the second class will expire as of the stockholders meeting in 2002 and every
three years thereafter, and the directorships in the third class will expire as
of the stockholders meeting in 2003 and every three years thereafter. Under the
Watson Wyatt & Company Holdings certificate of incorporation and bylaws, each
employee director automatically ceases to be a director upon termination of his
or her employment.

BOARD COMMITTEES

AUDIT COMMITTEE. The Audit Committee assesses and monitors the control of
financial transactions and oversees financial reporting to shareholders and
others. It also reviews (in cooperation with our internal auditors, independent
accountants and management) our internal accounting procedures and controls, and
the adequacy of the accounting services provided by our Finance and
Administration office. The members of the Audit Committee are Barbara Franklin,
John Gabarro, Michael McCullough and Gilbert Ray.

COMPENSATION COMMITTEE. The Compensation Committee oversees executive
compensation policies and practices. The Compensation Committee members are
Barbara Franklin, John Gabarro, Michael McCullough and Gilbert Ray.

EXECUTIVE COMMITTEE. The Executive Committee oversees and reviews our
long-range corporate and strategic planning. Additionally, it meets throughout
the year between meetings of the board of directors to review, consider and make
decisions affecting general management policies of our company, to approve
significant business decisions not requiring full board approval and to make
recommendations to the executive officers and the board. The members of the
Executive Committee are John Haley, Brian Kennedy, Ira Kay, Eric Lofgren and
Grahame Stott.

FINANCE COMMITTEE. The Finance Committee reviews and considers issues
relating to our capital structure. This includes strategic determinations
regarding the financing of our future growth and development. The members of the
Finance Committee are David Friend, Elizabeth Caflisch, Carl Mautz, John
Steinbrunner, Charles Wood and Grahame Stott.

Members of these committees may, but will not necessarily, change after the
next annual stockholders' meeting.

DIRECTOR COMPENSATION

Directors who are employees of Watson Wyatt & Company are not compensated
separately for their services as directors or as members of any committee of the
board. Outside directors in fiscal year 2000 earn a quarterly retainer of $6,250
plus $1,500 per day for board meetings, $1,000 per day for regular committee
meetings, $750 if held in conjunction with a board meeting, and $2,000 per day
for committee meetings if the outside director chaired that committee, $1,000 if
held in conjunction with a board meeting. Telephone meetings of less than four
hours duration were compensated at 50% of the applicable per day fee. These fees
have been paid in shares of Watson

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Wyatt & Company common stock up to 7,500 shares, and the balance paid in cash.
We established the Voluntary Deferred Compensation Plan to enable outside
directors, at their election, to defer receipt of any or all of their director's
fees until they are no longer serving as a director of the company. We intend to
continue to compensate outside directors for services rendered to Watson Wyatt &
Company Holdings.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of our Compensation and Stock Committee, predecessor to the
current Compensation Committee, for the last completed fiscal year were: Thomas
W. Barratt, Paula A. DeLisle, Ira T. Kay, Kevin L. Meehan and John A.
Steinbrunner. All are officers of the company. The committee members did not
participate in decisions regarding their own compensation. No interlocking
relationship exists between our board of directors or our Compensation Committee
and any member of any other company's board of directors or their compensation
committee, nor has any interlocking relationship existed in the past.

EXECUTIVE COMPENSATION

For the fiscal year ended June 30, 2000, the compensation of the executive
officers, and all other associates eligible to receive a bonus, was comprised
primarily of three elements: base salary, fiscal year-end bonus, and stock
incentive bonus plan payment. The compensation system establishes target bonuses
for all associates eligible to receive a bonus, based on their compensation band
level. Target bonuses range from 5% of base salary for more junior associates to
70% of base salary for the Chief Executive Officer. After the end of each fiscal
year, the board of directors determines the funding of the fiscal year-end bonus
pool, which may be more or less than 100% of target bonuses, and associates
eligible to receive a bonus are awarded bonuses based on individual, practice,
region and company performance.

In January 2000 we paid stock incentive bonus plan bonuses to eligible
associates based on the stock incentive bonus plan funding level approved by the
board and accrued at June 30, 1999, an individual's actual fiscal year bonus and
their actual stock ownership as compared to their target stock ownership. We
also intend to pay stock incentive bonus plan bonuses to eligible associates in
January 2001, which amounts were accrued at June 30, 2000. We will terminate the
stock incentive bonus plan following the completion of this offering.

The following table sets forth annual compensation for the President, Chief
Executive Officer and the other four most highly compensated executive officers
for the fiscal years ended June 30, 2000, 1999 and 1998 by those persons who
were, on June 30, 2000:

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SUMMARY COMPENSATION TABLE

[Enlarge/Download Table]

NAME AND FISCAL TOTAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS SIBP(A) SALARY/BONUS/SIBP COMPENSATION(B)
------------------ -------- --------- --------- --------- ----------------- ---------------

John J. Haley................................ 2000 $612,500 $570,000 $725,514 $1,908,014 $54,932
President, Chief Executive Officer and 1999 543,750 422,625 491,000 1,457,375 25,255
Director 1998 440,000 320,000 -- 760,000 19,300

Eric P. Lofgren.............................. 2000 430,000 350,000 367,736 1,147,736 23,107
Vice President, Global Director, Benefits 1999 390,000 290,000 260,960 940,960 19,170
Consulting Group and Director 1998 331,500 250,000 -- 581,500 15,035

Charles P. Wood, Jr.......................... 2000 390,000 250,000 413,750 1,053,750 22,969
Vice President, Western Regional Manager 1999 290,000 190,000 325,351 805,351 12,476
and Director 1998 246,750 125,000 -- 371,750 12,760

Kevin L. Meehan.............................. 2000 350,500 318,600 379,243 1,048,343 21,146
Vice President and Director 1999 326,250 300,000 290,425 916,675 17,690
1998 280,150 250,000 -- 530,150 5,110

David B. Friend, M.D......................... 2000 435,000 325,000 239,704 999,704 32,746
Vice President, Eastern Regional Manager 1999 415,000 315,000 175,270 905,270 21,380
and Director 1998 387,500 270,000 -- 657,500 17,125

------------------------------

(a) In 1996, Watson Wyatt & Company adopted a supplemental bonus plan called the
stock incentive bonus plan. Following this offering, we will terminate the
stock incentive bonus plan and replace it with equity based incentives more
customary to publicly traded companies.

(b) "All Other Compensation" consists of the following: (1) company matching
contributions of 50% of the first 6% of total compensation contributed to
our 401(k) plan as a 401(k) salary deferral by the named executive up to the
IRS maximum; (2) an additional company matching contribution to a
non-qualified savings plan of 3% of total compensation above the IRS
compensation limit of $160,000 if individual 401(k) contributions equal the
IRS maximum; and (3) payments for the annual cash out of excess unused
accrued vacation, as required by our paid time off policy, as amended in
1999. All Associates were subject to the same accrued vacation limits.

Concurrent with this offering we will grant options to our associates
pursuant to a new stock option plan to purchase approximately 1,800,000 shares
of class A common stock at an exercise price equal to the public offering price.
As part of this grant, Messrs. Haley, Lofgren, Wood, Meehan and Dr. Friend will
be granted options to purchase 15,235, 8,000, 7,040, 6,400 and 7,360 shares of
stock, respectively, on the same basis as other associates.

PENSION ARRANGEMENTS WITH NAMED EXECUTIVE OFFICER

Watson Wyatt & Company has an agreement with Dr. Friend to provide a
supplemental pension benefit. At the time of his retirement, Dr. Friend will
receive an additional service credit (for the purposes of calculating benefits
only) so that his total service credit will be calculated as follows: (actual
years of service + 1) multiplied by 1.5. In addition, if, before the date on
which Dr. Friend would be entitled to receive an early retirement benefit, there
is a change in control of the company and Dr. Friend leaves the employ of the
company within six months of the change in control, his pension will be
calculated as if he had reached early retirement.

GENERAL EMPLOYMENT ARRANGEMENTS

Generally, executive officers are not parties to employment agreements with
us. Non-employee directors are paid pursuant to a compensation plan approved on
an annual basis. Executives and other associates in salary bands 4, 5, 6 and
higher are required to sign non-competition and confidentiality agreements to
protect our proprietary information.

LONG TERM INCENTIVE PLAN

Under the terms of the 2000 Long Term Incentive Plan, which was approved by
our stockholders on June 26, 2000, Watson Wyatt & Company Holdings is permitted
to grant options to associates and directors allowing them to purchase shares of
class A common stock at fair market

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value on the date of grant. Options to purchase an aggregate of 4,500,000 shares
are authorized under the plan. Concurrent with this offering, we will grant
options to our associates to purchase approximately 1,800,000 shares of class A
common stock at an exercise price equal to the public offering price. Each
associate will be granted options to purchase stock valued at 40% of their
target bonus amount, subject to a minimum grant of 100 options. These options
will expire after seven years, subject to early termination in specified
circumstances, and will vest on a pro-rata basis over five years.

TRANSACTIONS WITH MANAGEMENT AND OTHERS

On April 1, 1995 we transferred our United Kingdom operations to R. Watson &
Sons, subsequently renamed Watson Wyatt Partners, and received a beneficial
interest and a 10% interest in a defined profit pool of the partnership. We also
transferred our Continental Europe operations to a newly formed holding company
owned by our company and Watson Wyatt Partners in exchange for 50.1% of its
share. Effective July 1, 1998, we sold one-half of our investment in the holding
company to Watson Wyatt Partners. Mr. Robert D. Masding, Senior Partner of
Watson Wyatt Partners, is a member of our board of directors, Mr. Paul N.
Thornton, also a partner of Watson Wyatt Partners, is a nominee to our board of
directors, and Mr. John J. Haley is a member of the Watson Wyatt Partners
Partnership Board. Watson Wyatt Partners and Watson Wyatt & Company provide
various services to and on behalf of each other in the ordinary course of
business.

COMMON STOCK PURCHASE ARRANGEMENTS BEFORE PUBLIC OFFERING

To encourage ownership of common stock by associates, we had historically
maintained a stock purchase plan. Under the stock purchase plan, we regularly
sold common stock to associates on or about March 1 of each year, except in 1998
and 2000. Historically, ownership of the common stock has been spread widely
among associates, with no individual stockholder owning more than 2% of the
total number of shares outstanding. Before 1996, it was our policy not to sell
shares to stockholders who, as a result of such sales, would have purchased more
than 300,000 shares under the stock purchase plan. In 1996, we reduced this
number to 200,000. The stock purchase plan will be terminated upon completion of
this offering.

The stock purchase plan permitted associates to borrow up to the full amount
of the purchase price of the common stock from our lenders, and we guaranteed
repayment of all such loans. The loans provided for full recourse to the
individual borrower and were secured by a pledge of the stock purchased.
Officers, directors and executive officers had access to this credit facility on
the same basis as other associates. As of October 11, 2000, 3,269,000 shares of
common stock were pledged to our lenders to secure loans to stockholders,
representing approximately 22% of the outstanding shares of common stock. As of
the same date, the aggregate amount of outstanding loans was approximately
$14.3 million. This loan program will continue in effect to accommodate the
amortization of existing loans after the offering, but will be amended and will
not be used to create new loans.

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CORPORATE REORGANIZATION

GENERAL

We are offering shares of our class A common stock pursuant to this
prospectus. This offering is conditioned upon completion of the merger described
below.

THE MERGER

Before this offering, Watson Wyatt & Company Holdings will be a wholly-owned
subsidiary of Watson Wyatt & Company. Immediately before this offering, a
wholly-owned subsidiary of Watson Wyatt & Company Holdings will merge with and
into Watson Wyatt & Company. At the time of such merger, each outstanding share
of common stock of Watson Wyatt & Company automatically will convert into one
share of Watson Wyatt & Company Holdings class B-1 common stock and one share of
Watson Wyatt & Company Holdings class B-2 common stock. Watson Wyatt & Company
will then return to capital the one share of Watson Wyatt & Company Holdings
previously owned by it. As a result of all these actions, existing Watson
Wyatt & Company stockholders automatically will become Watson Wyatt & Company
Holdings stockholders, and Watson Wyatt & Company Holdings then will own all of
Watson Wyatt & Company's outstanding common stock.

The following charts illustrate the holding company structure before and
after the planned merger.

BEFORE MERGER

[CHART]

AFTER MERGER

[CHART]

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CLASS A AND CLASS B COMMON STOCK

Shares of class B-1 common stock and class B-2 common stock are not
transferable or otherwise convertible into shares of class A common stock, until
the relevant transfer restriction period expires or is otherwise waived by the
board of directors. The board has not yet determined the conditions under which
it would waive these transfer restrictions, except that the stockholders
participating in this offering may exchange an equal number of shares of
class B-1 and class B-2 common stock into the shares of class A common stock to
be offered. Pursuant to the terms of the underwriting agreement, Watson Wyatt &
Company Holdings has agreed that for a period of 180 days from the date of this
prospectus, the board will not waive the stock transfer restriction without the
prior written consent of Duetsche Bank Securities Inc. The class B transfer
restriction periods, provided in our certificate of incorporation, will expire
12 months after this offering for shares of class B-1 common stock and
24 months after this offering for shares of class B-2 common stock. Once these
transfer restrictions expire or are waived by our board, the shares of class B
common stock automatically will convert into shares of class A common stock. The
shares of class A common stock by their terms can be freely transferred, subject
to any other applicable restrictions on transfer imposed by law or contract.
Except for the transfer restrictions placed on shares of class B common stock,
all shares of common stock of Watson Wyatt & Company Holdings will be identical.

After the merger and this offering, shares of class B-1 common stock and
class B-2 common stock will constitute about 83% of our total outstanding common
stock. Shares of class A common stock will constitute about 17% of our total
outstanding common stock.

The merger was approved by the stockholders on June 26, 2000. However, even
though the merger was approved by our existing stockholders, the merger will not
be consummated if we do not proceed with this offering.

As described above, current Watson Wyatt & Company stockholders are entitled
to participate in this offering. The board of directors has announced that it
will waive the transfer restrictions on a portion of the class B common stock
and permit the conversion of class B common stock to class A common stock for
resale in this offering. Following the conversion of Watson Wyatt & Company
stock for Watson Wyatt & Company Holdings class B-1 and class B-2 stock, each
selling stockholder will be allowed to sell in this offering the equivalent of
500 Watson Wyatt & Company shares, on a pre-conversion basis, or 500 class B-1
shares and 500 class B-2 shares, on a post-conversion basis, plus up to 10% of
the selling stockholder's remaining stockholdings. An even number of shares of
Watson Wyatt & Company Holdings class B-1 and class B-2 common stock will be
converted to shares of class A common stock and sold in this offering.

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SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS

The following table sets forth information known to us with respect to
beneficial ownership of common stock as of October 11, 2000, after giving effect
to our corporate reorganization, of all directors, director nominees, named
executive officers and directors and executive officers as a group.

[Download Table]

SHARES BENEFICIALLY
OWNED BEFORE OFFERING
---------------------
NAME OF BENEFICIAL OWNER (A) NUMBER PERCENT
---------------------------- --------- ---------

John J. Haley............................................... 455,498 1.5%
Charles P. Wood, Jr......................................... 401,868 1.4
A. Grahame Stott............................................ 268,000 *
Eric P. Lofgren............................................. 218,730 *
John A. Steinbrunner........................................ 206,382 *
Kevin L. Meehan............................................. 200,022 *
Thomas W. Barratt........................................... 178,000 *
Ira T. Kay.................................................. 161,050 *
David B. Friend, M.D........................................ 142,000 *
Paula A. DeLisle............................................ 107,800 *
Brian E. Kennedy............................................ 100,000 *
Gail E. McKee............................................... 54,750 *
Barbara H. Franklin......................................... 0(b)
John J. Gabarro............................................. 15,000 *
R. Michael McCullough....................................... 15,000 *
Robert D. Masding........................................... 726,000(c) 2.5
Gilbert T. Ray.............................................. 0(b)
Elizabeth M. Caflisch....................................... 107,512 *
David P. Marini............................................. 76,000 *
J. P. Orbeta................................................ 53,510 *
Paul N. Thornton............................................ 726,000(c) 2.5
All current directors and executive officers as a
group (24)................................................ 4,061,984 13.7%

------------------------

* Beneficial ownership of 1% or less of all of the outstanding common stock is
indicated with an asterisk.

(a) Unless noted otherwise, the address for each of the beneficial owners
identified in this table is
c/o of Watson Wyatt & Company Holdings, 6707 Democracy Boulevard, Suite 800,
Bethesda, Maryland 20817.

(b) Ms. Franklin and Mr. Ray were appointed as directors recently and do not own
any shares.

(c) Watson Wyatt Partners, in which Messrs. Masding and Thornton are partners,
beneficially owns 726,000 shares (2.5%) of our common stock. Messrs. Masding
and Thornton do not own any shares in their individual capacities and
disclaim beneficial ownership of these shares. Pursuant to our alliance
agreement, if Watson Wyatt Partners holds more than 800,000 shares of our
common stock, it has an option to sell to us any number of shares that
exceed 600,000. We, in turn, have an option to purchase from Watson Wyatt
Partners any number of shares of our common stock in excess of 800,000
shares if Watson Wyatt Partners holds more than 1,000,000 shares of our
common stock.

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SELLING STOCKHOLDERS

In preparing for this offering, we asked our stockholders to indicate their
interest in selling in this offering up to 1,000 shares of our common stock,
plus up to 10% of their remaining holdings on a post-conversion basis. The
following table sets forth for each selling stockholder the total number of
shares of common stock being offered in this offering. If the underwriters
exercise their over-allotment option in full, the selling stockholders would
sell, generally on a pro rata basis, an additional 318,500 shares.

[Enlarge/Download Table]

NUMBER OF SHARES NUMBER OF PERCENTAGE OF
OWNED IMMEDIATELY SHARES OWNED SHARES OWNED
POSITION, OFFICE, OR PRIOR TO NUMBER OF SHARES AFTER AFTER
NAME MATERIAL RELATIONSHIP OFFERING TO BE SOLD OFFERING OFFERING*
--------------------- -------------------------------- ----------------- ---------------- ------------- -------------

Charles Wood Jr...... Vice President; Director 401,868 36,714 365,154 1.1%
Frederick Green...... Vice President 391,706 35,806 355,900 1.1%
W. Michael Carter.... Vice President 336,876 30,904 305,972
Clarence Bayer....... Associate 321,524 26,808 294,716
John Reynolds........ Associate 264,624 24,450 240,174
Richard Hubbard...... Associate 265,986 24,126 241,860
Sylvester Schieber... Vice President 266,676 23,836 242,840
Wallace Wilson....... Associate 237,888 21,982 215,906
Michael Busby........ Vice President 232,234 21,554 210,680
Larry Weitzner....... Associate 226,394 21,032 205,362
John Steinbrunner.... Vice President; Director 206,382 19,246 187,136
Walter Bardenwerper.. Vice President 203,872 19,020 184,852
Kevin Meehan......... Vice President; Director 200,022 18,678 181,344
Richard Imperato..... Associate 200,000 18,676 181,324
Robert Ellis......... Associate 195,552 18,278 177,274
Anthony Stott........ Vice President; Director 268,000 17,872 250,128
Edward Fleischer..... Associate 240,000 17,872 222,128
Charles Commander.... Associate 201,634 17,872 183,762
Kenneth Steiner...... Associate 188,194 17,620 170,574
David Riddell........ Associate 183,986 16,966 167,020
Thomas Barratt....... Vice President; Director 178,000 16,710 161,290
James Youngquist..... Associate 175,410 16,450 158,960
Michael Button....... Associate 180,000 16,084 163,916
Jay Wolfe............ Associate 173,870 16,084 157,786
Eugene Sullivan
Jr................. Associate 172,948 15,726 157,222
James Vonesh Jr...... Associate 166,804 15,708 151,096
Jorge Bou............ Vice President 167,426 15,572 151,854
Ira Kay.............. Vice President; Director 161,050 15,194 145,856
Louis Valentino...... Associate 167,000 15,190 151,810
Paul Sanchez......... Associate 160,388 15,136 145,252
Joseph Huffman....... Associate 156,452 14,784 141,668
Jack Williams........ Associate 152,506 14,432 138,074
Gary Lawson.......... Vice President 148,036 14,030 134,006
Kevin Wagner......... Associate 145,524 13,808 131,716
David Friend......... Vice President; Director 142,000 13,492 128,508
David Beech.......... Associate 141,400 13,440 127,960
Martin Brown......... Associate 140,000 13,314 126,686
Clay Cprek........... Associate 139,010 13,224 125,786
Keith Oswald......... Associate 135,370 12,900 122,470
Raymond Shapiro...... Associate 135,356 12,898 122,458
Marjorie Kulash...... Associate 134,122 12,788 121,334
Thomas Grass......... Associate 132,200 12,618 119,582
Steven Vernon........ Vice President 130,792 12,490 118,302
Grant Inglis......... Associate 128,374 12,274 116,100
Steven Early......... Associate 128,168 12,256 115,912
Wayne Dydo........... Associate 127,394 12,186 115,208
Linda Moncrief....... Associate 122,680 11,766 110,914
Daniel Lawrence...... Associate 119,686 11,438 108,248
James Terry Jr....... Associate 118,432 11,386 107,046
William Miner........ Associate 114,508 10,998 103,510
Alfred Lopus......... Associate 122,010 10,732 111,278
John Parkington...... Associate 109,892 10,622 99,270
Patsy Amendola....... Associate 109,600 10,598 99,002

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Edward Forte......... Associate 109,169 10,558 98,611
Peter Miller......... Associate 106,692 10,336 96,356
Jamie Hale........... Associate 105,872 10,264 95,608
Dan Fisher........... Associate 105,740 10,252 95,488
William Hickman...... Associate 101,038 9,830 91,208
Frederic Kenyon...... Associate 100,932 9,822 91,110
David Flagg.......... Associate 100,000 9,740 90,260
Robert Haws.......... Associate 100,000 9,740 90,260
Brian Kennedy........ Vice President; Director 100,000 9,740 90,260
Jennifer Mebes....... Associate 100,000 9,740 90,260
Edward Graskamp...... Associate 100,000 9,650 90,350
Howard Peyser........ Associate 96,170 9,396 86,774
Michael Gazdo Jr..... Associate 94,248 9,226 85,022
Steven Richter....... Associate 93,650 9,172 84,478
Patrick Snead........ Associate 93,600 9,168 84,432
Kjeld Sorensen....... Associate 91,794 9,006 82,788
Kam Li............... Associate 112,000 8,936 103,064
James Pearce......... Associate 90,918 8,926 81,992
Frank Di Leonardi
Jr................. Associate 90,720 8,910 81,810
Edward Shumsky....... Associate 90,716 8,908 81,808
Constantin Hontalas.. Associate 88,170 8,682 79,488
Iain Woods........... Associate 88,466 8,610 79,856
Richard Watts........ Associate 111,114 8,578 102,536
Richard Lindahl...... Associate 80,000 7,952 72,048
Howard Fine.......... Associate 79,700 7,926 71,774
Theodore Chien....... Associate 78,000 7,774 70,226
Alfred Gimbel........ Associate 77,900 7,766 70,134
Michael Maxwell...... Associate 76,692 7,656 69,036
Nadine Orloff........ Associate 80,000 7,238 72,762
Sharon Bronzwaer..... Associate 71,224 7,148 64,076
Les Taylor........... Associate 70,990 7,146 63,844
Andrew Dillon........ Associate 70,430 7,096 63,334
F. Atkins............ Associate 70,348 7,090 63,258
Shih Yo Huang........ Associate 69,100 6,970 62,130
Diane Plank.......... Associate 67,755 6,858 60,897
Philip Schneider..... Associate 67,748 6,858 60,890
Patricia Bethke...... Associate 67,058 6,794 60,264
Martin Swiatkowski... Associate 68,040 6,792 61,248
Philip Ullom......... Associate 65,600 6,666 58,934
Danny Quant.......... Associate 65,100 6,622 58,478
Robert Crane......... Associate 64,022 6,524 57,498
Gregory Metzger...... Associate 62,000 6,344 55,656
Stanley Dash Jr...... Associate 62,094 6,338 55,756
John Caldarella...... Vice President 61,600 6,308 55,292
James Minogue........ Associate 61,518 6,300 55,218
Roger Ray............ Associate 62,034 6,286 55,748
Donald Dulaney Jr.... Associate 84,012 6,254 77,758
David Marini......... Vice President 76,000 6,254 69,746
Jacques Leger........ Associate 70,734 6,254 64,480
Michael Cochrane..... Associate 64,504 6,254 58,250
John Bartz........... Associate 62,000 6,254 55,746
Douglas Tokerud...... Associate 60,626 6,222 54,404
David Bright......... Associate 60,470 6,206 54,264
Robert Lista......... Associate 60,000 6,166 53,834
Richard Murdock...... Associate 59,564 6,126 53,438
Paul Robberson....... Associate 59,140 6,076 53,064
Peter Mills.......... Associate 59,226 5,920 53,306
Nancy Yake........... Associate 57,418 5,898 51,520
Maureen Cotter....... Associate 57,000 5,898 51,102
Carl Hess............ Associate 56,776 5,876 50,900
Uladislao Prieto
Santos............. Associate 56,400 5,844 50,556
Barbara Snead........ Associate 56,024 5,810 50,214
Gail McKee........... Vice President; Director 54,750 5,696 49,054

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John Menefee......... Associate 52,772 5,518 47,254
Timothy Connolly..... Associate 51,120 5,372 45,748
Stanley Goldfarb..... Associate 124,878 5,362 119,516
Paula Delisle........ Vice President; Director 107,800 5,362 102,438
Victoria Slomiany.... Associate 54,522 5,362 49,160
Valerie Wedin........ Associate 51,492 5,362 46,130
Savage Flatt......... Associate 50,838 5,346 45,492
David Kornwitz....... Associate 50,818 5,344 45,474
Kenneth Klingler..... Associate 50,330 5,300 45,030
Francis Grealy Jr.... Associate 50,028 5,274 44,754
David Fleiss......... Associate 50,000 5,272 44,728
Hector Gonzalez
Gale............... Associate 50,000 5,272 44,728
Lawrence Difiore..... Associate 49,576 5,232 44,344
Segundo Tascon
Newton............. Associate 48,000 5,094 42,906
C. Lawley Jr......... Associate 47,088 5,012 42,076
Gunter Becher........ Associate 47,000 5,004 41,996
Paul Lew............. Associate 70,506 4,960 65,546
Robert Sperl......... Associate 45,206 4,844 40,362
Henry Pflager III.... Associate 45,000 4,826 40,174
George Tornay Jr..... Associate 44,920 4,818 40,102
Lindsay Frew......... Associate 44,694 4,796 39,898
Jeri Stepman......... Associate 44,156 4,748 39,408
Arlen Ferguson....... Associate 43,948 4,730 39,218
Mary McGowan......... Associate 43,912 4,726 39,186
Peter Riemer......... Associate 43,734 4,710 39,024
Marie Cox-Annett..... Associate 43,634 4,702 38,932
Kyle Brown........... Associate 43,574 4,696 38,878
Andre Latia.......... Associate 42,676 4,616 38,060
James Lannen......... Associate 42,214 4,576 37,638
Allison Easton....... Associate 41,832 4,542 37,290
William Courage...... Associate 41,786 4,538 37,248
Denise Patterson..... Associate 41,818 4,468 37,350
Richard Seid......... Associate 40,450 4,418 36,032
William Cuthbert..... Associate 40,736 4,410 36,326
Marc McBrearty....... Associate 40,074 4,384 35,690
Daniel Murphy........ Associate 40,064 4,384 35,680
Robert Barry......... Associate 40,000 4,378 35,622
David Harris......... Associate 40,000 4,378 35,622
Pang Chang........... Associate 44,878 4,358 40,520
William Kilzer....... Associate 39,200 4,308 34,892
James Stewart........ Associate 39,000 4,290 34,710
Edward Lukis......... Associate 38,972 4,286 34,686
Daniel Ishac......... Associate 38,126 4,210 33,916
Albert Chau Kwok-
Woon............... Associate 37,800 4,182 33,618
Michel Guay.......... Associate 37,400 4,146 33,254
Kevin Spring......... Associate 37,200 4,128 33,072
Keith Grassel........ Associate 37,000 4,110 32,890
Mark O'Reilly........ Associate 36,400 4,056 32,344
David Barndollar..... Associate 36,354 4,052 32,302
Donald Heezen........ Associate 36,040 4,024 32,016
Jon Randall.......... Associate 35,302 3,958 31,344
Brad Jeffrey......... Associate 35,200 3,950 31,250
Sheldon Grossman..... Associate 35,000 3,932 31,068
Keizo Tannawa........ Associate 35,000 3,932 31,068
Carmine De Rubeis.... Associate 34,062 3,848 30,214
Patrick Longhurst.... Associate 33,900 3,834 30,066
Joseph Timmins....... Associate 33,744 3,820 29,924
Robert Hackney....... Associate 33,648 3,810 29,838
Carl Voss............ Associate 33,566 3,804 29,762
William Gee.......... Associate 33,384 3,786 29,598
Howard Simms......... Associate 33,170 3,768 29,402
Glenn Smith.......... Associate 33,000 3,752 29,248

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Ann Kenny............ Associate 32,676 3,722 28,954
Alan Taylor.......... Associate 32,456 3,702 28,754
Richard Fulljames.... Associate 32,860 3,628 29,232
Karen Valeck......... Associate 31,494 3,618 27,876
Richard Beal......... Associate 31,200 3,592 27,608
Eric Schweizer....... Treasurer 48,000 3,574 44,426
Charles Thrower...... Associate 43,592 3,574 40,018
Mark Straus.......... Associate 32,488 3,574 28,914
Robert Campbell...... Associate 32,000 3,574 28,426
Andrew Marut......... Associate 31,016 3,574 27,442
Edward Hudson........ Associate 30,972 3,570 27,402
Noriyuki Morimoto.... Associate 30,850 3,560 27,290
Andrew Boal.......... Associate 30,700 3,548 27,152
Pierre Lanoix........ Associate 30,656 3,542 27,114
Robert McKee......... Associate 30,500 3,530 26,970
Gordon Goodfellow.... Associate 30,178 3,500 26,678
Ralph Fecke Jr....... Associate 30,036 3,486 26,550
Helen Baker.......... Associate 30,000 3,484 26,516
Jan Grude............ Associate 30,000 3,484 26,516
Johan Heymans........ Associate 30,000 3,484 26,516
Michael Keane........ Associate 30,000 3,484 26,516
John Stanforth....... Associate 29,296 3,420 25,876
Steven Erickson...... Associate 28,852 3,382 25,470
Angela De Oliveira... Associate 28,348 3,336 25,012
Nancy Vander Baaren.. Associate 28,328 3,334 24,994
James Isbell......... Associate 28,074 3,306 24,768
Luellen Lucid........ Associate 27,514 3,262 24,252
Timothy Dillon....... Associate 26,604 3,182 23,422
John Stahl........... Associate 26,060 3,132 22,928
Michael Prokopow..... Associate 25,324 3,066 22,258
Bryan Osborne........ Associate 25,302 3,064 22,238
Robert Ryan.......... Associate 24,800 3,020 21,780
Aruna Vohra.......... Associate 24,556 2,998 21,558
Iva Martin........... Associate 24,510 2,994 21,516
Ian Leznoff.......... Associate 24,300 2,976 21,324
Scott Ziemba......... Associate 24,200 2,966 21,234
Barbara Garland...... Associate 24,098 2,956 21,142
Debora Schell........ Associate 24,024 2,950 21,074
Steven McCormick..... Associate 24,000 2,948 21,052
Michael O'Boyle...... Associate 24,000 2,948 21,052
Cary Franklin........ Associate 23,708 2,922 20,786
Donna Cherney........ Associate 23,630 2,914 20,716
Miles
Buckinghamshire.... Associate 23,400 2,896 20,504
Ronald Metz.......... Associate 23,162 2,874 20,288
Brian Murphy......... Associate 23,100 2,868 20,232
Dennis Pastorelle.... Associate 24,860 2,860 22,000
Jean Julian.......... Associate 22,976 2,856 20,120
George Dubrish....... Associate 22,372 2,802 19,570
Mary Jacobson........ Associate 22,200 2,788 19,412
Jose Correa Di Gesu.. Associate 22,000 2,770 19,230
Laurie Barnes........ Associate 21,950 2,764 19,186
Alexander Miller..... Associate 30,092 2,762 27,330
Joann Riopelle....... Associate 21,714 2,744 18,970
Jerry McAdams........ Associate 21,600 2,734 18,866
Susan Starr.......... Associate 21,470 2,722 18,748
James Locey.......... Associate 21,318 2,708 18,610
Alan Hurley.......... Associate 21,214 2,698 18,516
Mark Brolley......... Associate 21,200 2,698 18,502
John McKellar........ Associate 36,368 2,680 33,688
Christopher Johnson.. Associate 28,868 2,680 26,188
Richard Chislett..... Associate 26,458 2,680 23,778
Michael Campbell..... Associate 23,200 2,680 20,520
Hugh Mullenbach...... Associate 22,142 2,680 19,462

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Kathleen Burke....... Associate 21,740 2,680 19,060
George Rippel........ Associate 21,154 2,680 18,474
Marsha Fischel....... Associate 21,014 2,680 18,334
John Diefenbach...... Associate 20,898 2,670 18,228
Barry Miller......... Associate 20,466 2,632 17,834
Jolie Frank.......... Associate 20,406 2,628 17,778
Eyke Nicholson....... Associate 20,206 2,610 17,596
Brian Brown.......... Associate 20,122 2,602 17,520
Hollis Nelson........ Associate 29,000 2,592 26,408
Brian Hersey......... Associate 20,000 2,592 17,408
Frederico Jorge...... Associate 20,000 2,592 17,408
Ian Midgley.......... Associate 20,000 2,592 17,408
Richard Tewksbury
Jr................. Associate 20,000 2,592 17,408
David Gore........... Associate 19,820 2,576 17,244
Pedro Sanchez
Cuervo............. Associate 19,500 2,546 16,954
Marie Curreri........ Associate 19,484 2,544 16,940
Michael Simpson...... Associate 19,300 2,528 16,772
Russell Barker....... Associate 19,200 2,520 16,680
George Yeates........ Associate 19,200 2,520 16,680
Peter Maillet........ Associate 19,032 2,502 16,530
James Miller......... Associate 18,976 2,498 16,478
Sheryl Smolkin....... Associate 18,906 2,494 16,412
Kevin Gorman......... Associate 18,866 2,490 16,376
Tignor Thompson...... Associate 38,466 2,472 35,994
Herbert Miller Jr.... Associate 32,746 2,454 30,292
Leonard Levitt....... Associate 22,724 2,434 20,290
Robert McMahon....... Associate 18,156 2,426 15,730
Laura Sejen.......... Associate 18,100 2,422 15,678
Carolyn Hadiji....... Associate 18,000 2,412 15,588
Shirley Newman....... Associate 17,836 2,396 15,440
Gerald Trask......... Associate 18,880 2,394 16,486
Stephen Jackstadt.... Associate 17,800 2,394 15,406
Dorothea Atkerson.... Associate 17,742 2,390 15,352
Gary Karp............ Associate 27,668 2,384 25,284
Kenneth Jamison...... Associate 17,374 2,356 15,018
Michael Singer....... Associate 17,278 2,346 14,932
Thomas Reed.......... Associate 17,260 2,346 14,914
Alan Holdsworth...... Associate 18,610 2,332 16,278
Michael Ringuette.... Associate 17,006 2,324 14,682
Joan Thorpe.......... Associate 16,494 2,276 14,218
James Obernesser..... Associate 16,190 2,250 13,940
Mark Bails........... Associate 16,164 2,248 13,916
Thomas Ches.......... Associate 16,154 2,246 13,908
David Marcus......... Associate 16,128 2,244 13,884
Tamra Lair........... Associate 16,100 2,242 13,858
R. Adams............. Associate 16,000 2,234 13,766
Hans Kothuis......... Associate 16,000 2,234 13,766
Kenneth Murray....... Associate 18,446 2,186 16,260
Kenneth Lining....... Associate 15,452 2,184 13,268
Michael McGrath...... Associate 15,168 2,158 13,010
Jeffrey Kraft........ Associate 15,134 2,156 12,978
Gary Gausman......... Associate 15,084 2,152 12,932
J. Conradi........... Associate 57,356 2,144 55,212
Jorge Vazquez........ Associate 21,000 2,144 18,856
Raymond Robinson..... Associate 14,876 2,132 12,744
Mary Stone........... Associate 14,800 2,126 12,674
Charles Nightengale.. Associate 14,741 2,122 12,619
Robert Sherwood Jr... Associate 14,740 2,122 12,618
Marilyn Jones........ Associate 14,550 2,104 12,446
Mark Agnew........... Associate 14,400 2,090 12,310
Andrew Kusner........ Associate 14,366 2,088 12,278
Michael Guerin III... Associate 14,266 2,078 12,188
Fran Schiavo......... Associate 14,250 2,076 12,174

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Kathleen Kartje...... Associate 14,170 2,070 12,100
James Goddeeris...... Associate 14,114 2,064 12,050
Jeffrey Klein........ Associate 14,000 2,056 11,944
Stoddard Lawrence.... Associate 14,000 2,056 11,944
Colleen Schulte...... Associate 14,000 2,056 11,944
Richard Sinni........ Associate 14,000 2,056 11,944
Harold Barr.......... Associate 14,492 2,048 12,444
Alice Opalach........ Associate 13,662 2,022 11,640
David Lee............ Associate 13,230 1,986 11,244
Thomas Matthews...... Associate 22,222 1,984 20,238
Kevin Kenney......... Associate 13,150 1,978 11,172
Linda Mott........... Associate 13,800 1,966 11,834
James Pare........... Associate 13,034 1,966 11,068
Lynda Avery.......... Associate 12,800 1,948 10,852
David Strom.......... Associate 12,600 1,930 10,670
Donald Cullinane..... Associate 12,400 1,912 10,488
Mark Davis........... Associate 12,278 1,900 10,378
Martin Crosby........ Associate 12,200 1,894 10,306
Randall Dziubek...... Associate 12,150 1,890 10,260
Paul Meyer........... Associate 11,750 1,854 9,896
Charlene Shishido.... Associate 11,596 1,838 9,758
Linda Gilmour........ Associate 11,568 1,838 9,730
Ross Feldman......... Associate 11,270 1,810 9,460
Richard Mulder Jr.... Associate 11,240 1,808 9,432
Deborah Wallace...... Associate 11,200 1,806 9,394
Lyman Edwards........ Associate 11,150 1,800 9,350
Yu Sai............... Associate 11,812 1,798 10,014
Kathleen Kibbe....... Associate 11,112 1,796 9,316
Mark White........... Associate 65,464 1,788 63,676
Pierre Caron......... Associate 39,448 1,788 37,660
Jeffrey Kurtz........ Associate 37,028 1,788 35,240
Madeline McMenamin... Associate 32,400 1,788 30,612
Alfred Schorath...... Associate 24,948 1,788 23,160
Albert Kleinberg
Jr................. Associate 24,800 1,788 23,012
Michael Methlie...... Associate 17,000 1,788 15,212
Paul Morris.......... Associate 13,972 1,788 12,184
Janet Downing........ Associate 12,784 1,788 10,996
Ronald Hammit........ Associate 12,586 1,788 10,798
Thomas McCarthy...... Associate 12,000 1,788 10,212
Dindina Tso.......... Associate 11,600 1,788 9,812
Lewis Ward........... Associate 11,330 1,788 9,542
Kathleen Hardy....... Associate 11,284 1,788 9,496
Joseph Chan.......... Associate 11,264 1,788 9,476
Sherrie Desmond...... Associate 11,100 1,788 9,312
Valerie Paganelli.... Associate 11,000 1,788 9,212
Thomas Porath........ Associate 11,000 1,788 9,212
Diane Smith.......... Associate 11,000 1,788 9,212
Christopher
Goldsmith.......... Associate 10,950 1,782 9,168
Kathleen Rosenow..... Associate 10,878 1,774 9,104
Juan Alonso.......... Associate 10,800 1,770 9,030
Michael Kivi......... Associate 10,800 1,770 9,030
Cynthia Boyle........ Associate 10,650 1,754 8,896
James Alroth Jr...... Associate 10,510 1,742 8,768
Ardith Bowden........ Associate 10,310 1,724 8,586
Hetty Ngo............ Associate 10,284 1,722 8,562
Daniel Johnson....... Associate 10,200 1,716 8,484
Cara Jareb........... Associate 10,160 1,712 8,448
Jeremiah Houston..... Associate 10,108 1,706 8,402
Aura Whittaker....... Associate 10,094 1,704 8,390
Linda Tandle......... Associate 10,086 1,704 8,382
Amy Finsand.......... Associate 10,030 1,700 8,330
Keith Paquin......... Associate 23,854 1,698 22,156
Sheldon Wayne........ Associate 10,482 1,698 8,784

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James Mullis......... Associate 10,000 1,698 8,302
Gerard Murphy........ Associate 10,000 1,698 8,302
Jon Samuelson........ Associate 10,000 1,698 8,302
Evalynne
Bahrynowski........ Associate 9,968 1,694 8,274
Erminelia Pestanas... Associate 9,776 1,676 8,100
Deborah Rochelle..... Associate 9,722 1,672 8,050
Andrew Woolls........ Associate 9,568 1,658 7,910
Raymond Sue.......... Associate 9,544 1,656 7,888
Patricia Crooke...... Associate 9,512 1,654 7,858
Karen Wellerson...... Associate 9,502 1,654 7,848
Adam Matthews........ Associate 9,500 1,654 7,846
Stephen Carlson...... Associate 11,842 1,646 10,196
Michael Hartfield.... Associate 9,400 1,644 7,756
Robert Wesselkamper.. Associate 9,400 1,644 7,756
William Smith........ Associate 9,356 1,638 7,718
Julie Campbell....... Associate 9,300 1,636 7,664
Coralyn Del Rosario.. Associate 9,200 1,626 7,574
John Coskey.......... Associate 9,100 1,618 7,482
Annie Lim............ Associate 14,802 1,608 13,194
Richard McCleary..... Associate 8,954 1,604 7,350
Cynthia Herb......... Associate 8,912 1,600 7,312
Frank Gallo.......... Associate 8,600 1,572 7,028
Paul Timmins......... Associate 8,424 1,556 6,868
Robert Goodman....... Associate 8,394 1,554 6,840
Bruno Valdevit....... Associate 8,394 1,554 6,840
Shwu-Yuann Chow...... Associate 8,100 1,528 6,572
Ronald Jordan........ Associate 8,056 1,522 6,534
Brian Finnerty....... Associate 8,074 1,520 6,554
Nestor Azcune........ Associate 8,000 1,520 6,480
Lisa Drummond........ Associate 8,000 1,520 6,480
Robert Hirschberg.... Associate 8,000 1,520 6,480
Daniel Morrison...... Associate 8,000 1,520 6,480
Carolyn Smith........ Associate 8,000 1,520 6,480
Christopher Wood..... Associate 8,000 1,520 6,480
Christine Kellogg.... Associate 7,700 1,520 6,180
Claudia Roberts...... Associate 7,800 1,502 6,298
Valerie Wise......... Associate 7,800 1,502 6,298
Dean Quick Jr........ Associate 7,782 1,500 6,282
Judith Ziems......... Associate 7,730 1,494 6,236
Bor-Song Wang........ Associate 7,700 1,492 6,208
Jeanette Bakon....... Associate 7,668 1,488 6,180
Irene Graham......... Associate 7,600 1,484 6,116
Barbara Alpern....... Associate 7,560 1,480 6,080
David McNeice........ Associate 7,450 1,470 5,980
Derek Aldridge....... Associate 7,400 1,466 5,934
Jeanne Decamps....... Associate 7,400 1,466 5,934
Wendy Ziemer-
Nemetz............. Associate 7,284 1,454 5,830
Anne Quinlan......... Associate 7,248 1,452 5,796
Hilda Thompson....... Associate 7,720 1,448 6,272
David Shannon........ Associate 7,200 1,448 5,752
Patricia Wenneman.... Associate 7,024 1,432 5,592
Kevin McGarvey....... Associate 12,600 1,430 11,170
Alastair Scott
Anthony............ Associate 7,264 1,430 5,834
Nicholas Gruschow.... Associate 7,192 1,430 5,762
Catherine Meschter... Associate 7,086 1,430 5,656
Douglas Belden....... Associate 7,000 1,430 5,570
Kathleen Burns....... Associate 7,000 1,430 5,570
Christopher Lonner... Associate 7,000 1,430 5,570
Laura Newman......... Associate 7,000 1,430 5,570
Glenn Palmer......... Associate 7,000 1,430 5,570
David Ronald......... Associate 7,000 1,430 5,570

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Adelina Cruz......... Associate 6,977 1,426 5,551
Sherry Labute........ Associate 12,990 1,420 11,570
Flora Olsen.......... Associate 6,916 1,420 5,496
Florence Oatridge.... Associate 6,856 1,416 5,440
Paul Christiani...... Associate 8,782 1,414 7,368
Mary Tugwell......... Associate 6,808 1,412 5,396
Peter Schwalbenberg.. Associate 6,772 1,408 5,364
Kathleen Coda........ Associate 6,766 1,408 5,358
Juanita Fernandez.... Associate 6,762 1,408 5,354
Margaret Ellen
Clark.............. Associate 6,750 1,406 5,344
Sarah Clark.......... Associate 6,700 1,402 5,298
Raymond Murrill...... Associate 6,700 1,402 5,298
Lisa Canafax......... Associate 6,658 1,398 5,260
Yen-Hsing Li......... Associate 6,600 1,394 5,206
Karen Sutherland..... Associate 6,600 1,394 5,206
Michelle Tsui........ Associate 6,600 1,394 5,206
Michael Landon....... Associate 6,568 1,390 5,178
Lisa Swatland........ Associate 6,550 1,388 5,162
Terry Paulus......... Associate 6,400 1,376 5,024
Donald Doucette Jr... Associate 6,354 1,370 4,984
Tommie Coulston...... Associate 6,340 1,370 4,970
Sheryll Hirschi...... Associate 6,282 1,366 4,916
Paul Schulte......... Associate 6,200 1,358 4,842
Frieda Umpierre...... Associate 10,112 1,352 8,760
Aurora Arellano...... Associate 6,122 1,352 4,770
Lisa Burrascano...... Associate 6,160 1,350 4,810
Elizabeth Giffels.... Associate 6,076 1,346 4,730
Susan Stebbins....... Associate 6,050 1,344 4,706
Michael Mamish....... Associate 6,024 1,342 4,682
Michael Kirchner..... Associate 18,562 1,340 17,222
James Shaddy......... Associate 9,500 1,340 8,160
Roger Smith.......... Associate 6,018 1,340 4,678
David Dasef.......... Associate 6,000 1,340 4,660
Judy Gerwing......... Associate 6,000 1,340 4,660
Suzanne Horn......... Associate 6,000 1,340 4,660
Bruce Kelley......... Associate 6,000 1,340 4,660
Craig Williamson..... Associate 6,000 1,340 4,660
Joseph Yip........... Associate 6,000 1,340 4,660
Anna Woo............. Associate 5,961 1,336 4,625
Richard Loebach...... Associate 5,938 1,334 4,604
Anne Soh............. Associate 5,900 1,332 4,568
Paul Lee-Shanok...... Associate 5,806 1,322 4,484
Mark Bilderback...... Associate 5,800 1,322 4,478
Sarah Hutchinson..... Associate 5,800 1,322 4,478
Thomas O'Reilly...... Associate 5,728 1,316 4,412
Kiran Arora.......... Associate 5,700 1,314 4,386
William Odefey....... Associate 5,678 1,310 4,368
Rita Flory........... Associate 5,672 1,310 4,362
Joyce Waslowicz...... Associate 5,644 1,308 4,336
Arthur Kelly......... Associate 5,610 1,304 4,306
Garry Fraser......... Associate 5,600 1,304 4,296
Robert Gump.......... Associate 5,506 1,296 4,210
Christopher
Steiger............ Associate 5,500 1,296 4,204
Benjamin Kibbe....... Associate 5,442 1,290 4,152
Karen Anway.......... Associate 5,414 1,286 4,128
Amy Litten........... Associate 5,408 1,286 4,122
Thomas Grimsley...... Associate 5,400 1,286 4,114
Kevin Seda........... Associate 5,348 1,282 4,066
Crispin Lace......... Associate 4,350 1,274 3,076
Kathleen Dickerson... Associate 5,208 1,268 3,940
Mark Herndon......... Associate 5,200 1,268 3,932
Herry Kuswara........ Associate 5,200 1,268 3,932
Bruce Walton......... Associate 5,200 1,268 3,932
Amanda Wilson........ Associate 5,200 1,268 3,932

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Jeffrey Passmore..... Associate 5,102 1,260 3,842
Robert Brown......... Associate 5,046 1,254 3,792
Rowena Agnes......... Associate 5,500 1,250 4,250
Laurene Graig........ Associate 5,378 1,250 4,128
Mervyn Kopinsky...... Associate 5,024 1,250 3,774
Diane Girard......... Associate 5,010 1,250 3,760
Alfred Bingham Jr.... Associate 5,000 1,250 3,750
Hung-Chyi He......... Associate 4,988 1,250 3,738
Leslie Quantz........ Associate 4,886 1,240 3,646
Shelley Crosby....... Associate 4,800 1,234 3,566
Richard Silvey....... Associate 4,800 1,234 3,566
Robert Seith......... Associate 4,794 1,232 3,562
Thomas Bernier....... Associate 4,706 1,224 3,482
Teresa Schepp........ Associate 4,658 1,218 3,440
Sean Henaghan........ Associate 4,600 1,216 3,384
Lori Palmer.......... Associate 4,536 1,208 3,328
Bruce Schneider...... Associate 4,750 1,206 3,544
Ruth Townsend........ Associate 4,450 1,200 3,250
Robert Webb.......... Associate 4,400 1,198 3,202
Gloria Chilvers...... Associate 4,394 1,196 3,198
Theresa Santise-
Mallios............ Associate 4,372 1,194 3,178
Robert Newton........ Associate 4,300 1,188 3,112
April Martin......... Associate 4,252 1,184 3,068
Joseph Petroccione... Associate 4,252 1,184 3,068
Nancy Pokorny........ Associate 4,252 1,184 3,068
Michel Gamache....... Associate 4,200 1,180 3,020
Jeffrey Nipp......... Associate 4,200 1,180 3,020
Fred Pisoni.......... Associate 4,200 1,180 3,020
John Steele.......... Associate 4,200 1,180 3,020
Michael Winter....... Associate 4,200 1,180 3,020
Pierre Olivier....... Associate 4,150 1,174 2,976
Gail Perrault........ Associate 4,026 1,164 2,862
Peter Dorsey......... Associate 4,020 1,164 2,856
Martin Lutyens....... Associate 4,092 1,162 2,930
Mary Carney.......... Associate 4,010 1,162 2,848
Rachel Baker......... Associate 4,004 1,162 2,842
Felicisima Reyno..... Associate 4,002 1,162 2,840
Robert Bacher........ Associate 4,000 1,162 2,838
George Brown......... Associate 4,000 1,162 2,838
Joseph Gallagher..... Associate 4,000 1,162 2,838
Gilbert Lopez........ Associate 4,000 1,162 2,838
James Marple......... Associate 4,000 1,162 2,838
Jane Petruniak....... Associate 4,000 1,162 2,838
Daniel Wu............ Associate 4,000 1,162 2,838
Mark Dunning......... Associate 3,960 1,158 2,802
Gershon Lipschitz.... Associate 36,290 1,152 35,138
Lynn Frontiero....... Associate 3,914 1,152 2,762
Anne Cowling......... Associate 3,880 1,144 2,736
Hiroomi Ichikawa..... Associate 3,800 1,144 2,656
Rosaline Hixon....... Associate 3,790 1,142 2,648
George Nickle........ Associate 3,782 1,142 2,640
Pyush Kumar.......... Associate 13,776 1,140 12,636
Susan Bisping........ Associate 3,758 1,138 2,620
Stephen Kilmer....... Associate 3,745 1,138 2,607
Pierre Boutin........ Associate 3,742 1,138 2,604
Rose Menza........... Associate 5,214 1,130 4,084
Sara Hutchinson...... Associate 3,644 1,130 2,514
Enrico Di
Giuseppantonio..... Associate 3,600 1,126 2,474
Scott Fowler......... Associate 3,600 1,126 2,474
Edward Murphy........ Associate 3,600 1,126 2,474
Patricia O'Reilly.... Associate 3,600 1,126 2,474
Theresa Scandle...... Associate 3,598 1,124 2,474

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George Boldizar...... Associate 3,590 1,124 2,466
Linda Steele......... Associate 3,532 1,118 2,414
Erica Curtis......... Associate 3,530 1,118 2,412
Daniel Sweet......... Associate 3,710 1,116 2,594
Diane Sullivan....... Associate 3,508 1,116 2,392
Ronald Dorfman....... Associate 3,500 1,116 2,384
Ronald Archibald..... Associate 3,436 1,110 2,326
Cheryl Littauer...... Associate 3,400 1,108 2,292
Virginia Brillon..... Associate 3,368 1,104 2,264
Douglas Beckendorf... Associate 3,356 1,102 2,254
Pauline Durant....... Associate 3,300 1,100 2,200
Don Hutchison........ Associate 3,250 1,094 2,156
Eileen Settineri..... Associate 3,250 1,094 2,156
Luc Grandchamp....... Associate 3,422 1,092 2,330
Margaret Marciniak... Associate 3,232 1,092 2,140
Cara Cantrell........ Associate 3,200 1,090 2,110
Yee Hoy Cheng........ Associate 3,200 1,090 2,110
Andrew MacDonald..... Associate 3,200 1,090 2,110
Murlyn Zeske......... Associate 3,200 1,090 2,110
Marie Haroon......... Associate 3,138 1,084 2,054
Celeste Wallwork..... Associate 3,128 1,084 2,044
Robert Swatland...... Associate 3,208 1,080 2,128
Mark Buis............ Associate 3,068 1,078 1,990
Melanie Litke........ Associate 3,020 1,074 1,946
Thomas Smith......... Associate 12,212 1,072 11,140
Pedro Nebres Jr...... Associate 5,560 1,072 4,488
Eric Hoy............. Associate 5,542 1,072 4,470
John O'Hara.......... Associate 4,800 1,072 3,728
Roxanne Poulin....... Associate 4,632 1,072 3,560
Steven Teo........... Associate 4,600 1,072 3,528
Linda Saunders....... Associate 4,094 1,072 3,022
Jacquelyn Derrow..... Associate 3,904 1,072 2,832
Jane Auman........... Associate 3,800 1,072 2,728
David Neiger......... Associate 3,448 1,072 2,376
Diane Gaulin......... Associate 3,400 1,072 2,328
Richard Weaver....... Associate 3,220 1,072 2,148
Takashi Kano......... Associate 3,200 1,072 2,128
Aaron Wong........... Associate 3,200 1,072 2,128
Rachelle Arcebal..... Associate 3,000 1,072 1,928
Yuen-Sang Chan....... Associate 3,000 1,072 1,928
John Finney.......... Associate 3,000 1,072 1,928
Sigrid Geens......... Associate 3,000 1,072 1,928
Ronald Littler....... Associate 3,000 1,072 1,928
Lisa Schuler......... Associate 3,000 1,072 1,928
David Swayze......... Associate 3,000 1,072 1,928
Valerie White........ Associate 3,000 1,072 1,928
Kimberly Van
Valkenburgh........ Associate 2,916 1,064 1,852
Tara Purohit......... Associate 2,864 1,060 1,804
Gayle Lowen.......... Associate 2,848 1,058 1,790
Jose Jesus Deduque... Associate 2,800 1,054 1,746
Terry McFadden....... Associate 2,800 1,054 1,746
Coral Neisen......... Associate 2,800 1,054 1,746
Kathleen Breckbill... Associate 2,756 1,050 1,706
Lynn Phillips........ Associate 2,750 1,050 1,700
Mark Valerius........ Associate 2,740 1,050 1,690
Joseph Porten........ Associate 2,704 1,046 1,658
Gary Durand.......... Associate 2,700 1,046 1,654
Diane Coulombe....... Associate 2,688 1,044 1,644
Dorothy Proulx....... Associate 2,638 1,038 1,600
Renate Rodgers....... Associate 2,600 1,036 1,564
Greg Sluka........... Associate 2,600 1,036 1,564
Manette Snow......... Associate 2,600 1,036 1,564

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Cynthia Somer-
Larsen............. Associate 2,600 1,036 1,564
Carolyn Chase........ Associate 2,582 1,034 1,548
Ann Etter............ Associate 2,560 1,032 1,528
Debra Lee Donnelly... Associate 2,552 1,032 1,520
Karen German......... Associate 2,844 1,028 1,816
Eileen Moore......... Associate 2,498 1,026 1,472
Susana Duran......... Associate 2,489 1,026 1,463
Mark Stewart......... Associate 2,478 1,024 1,454
Robert Pecek......... Associate 2,456 1,022 1,434
May Cheng............ Associate 2,418 1,018 1,400
Satoko Hiraga........ Associate 2,408 1,018 1,390
Kelly Devine......... Associate 2,400 1,018 1,382
David Hollingsworth.. Associate 2,400 1,018 1,382
Norma Hope-Ede....... Associate 2,400 1,018 1,382
Edward Lehman........ Associate 2,400 1,018 1,382
Catherine Lyn........ Associate 2,400 1,018 1,382
Lenita Palma......... Associate 2,400 1,018 1,382
Diane Savage......... Associate 2,400 1,018 1,382
Paul Yim............. Associate 2,400 1,018 1,382
Mike Patterson....... Associate 2,392 1,016 1,376
Lynn Albert.......... Associate 2,350 1,014 1,336
Fang-Yu Chen......... Associate 2,350 1,014 1,336
Rafael Fernandez-
Toledo............. Associate 2,322 1,012 1,310
Michael Marion....... Associate 2,316 1,010 1,306
Keith Gilbert........ Associate 2,314 1,010 1,304
Daniel Carpenter..... Associate 2,284 1,008 1,276
Diana O'Grady........ Associate 2,276 1,006 1,270
Donna Thompson....... Associate 2,242 1,004 1,238
Ma.Carmela
Cabading........... Associate 2,200 1,000 1,200
Spencer Farrow....... Associate 2,200 1,000 1,200
Susan Feldman........ Associate 2,200 1,000 1,200
Wendell Gurley....... Associate 2,200 1,000 1,200
Nancy Helt........... Associate 2,200 1,000 1,200
Inez Seaney.......... Associate 2,200 1,000 1,200
Maureen Tarantello... Associate 2,200 1,000 1,200
Yiu Lai.............. Associate 2,176 998 1,178
Nathalie Jutras...... Associate 2,174 998 1,176
Ecaterina Nagy....... Associate 2,172 998 1,174
Nancy Zajac.......... Associate 2,172 998 1,174
Russell Caine........ Associate 3,112 994 2,118
Donna Trimmer........ Associate 2,116 992 1,124
Robert Gormley....... Associate 2,100 992 1,108
Debora Robare........ Associate 2,094 990 1,104
Bruce Osterweil...... Associate 2,084 990 1,094
Hiromi Sudo.......... Associate 2,050 986 1,064
Ruth Hannon.......... Associate 2,042 986 1,056
Diane Rose........... Associate 3,100 982 2,118
Michael Ashe......... Associate 2,000 982 1,018
Dean Haskell......... Associate 2,000 982 1,018
Susan Hobson......... Associate 2,000 982 1,018
Marcia Lambert....... Associate 2,000 982 1,018
Betsy Missimer....... Associate 2,000 982 1,018
Myriam Peeters....... Associate 2,000 982 1,018
Nancy Pendergast..... Associate 2,000 982 1,018
Jack Potter.......... Associate 2,000 982 1,018
Jacqueline Forbes.... Associate 1,976 980 996
Barry Bolander....... Associate 1,974 980 994
David Cleland........ Associate 1,970 980 990
Maribel Zaballero.... Associate 1,952 978 974
Laurie Randall....... Associate 1,950 978 972
John Hampstead....... Associate 1,938 976 962

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Janet Storace........ Associate 8,090 974 7,116
Catherine Brown...... Associate 1,900 974 926
Corinne Carlson...... Associate 1,900 974 926
Michael Kravitz...... Associate 1,900 974 926
Roger Edelman........ Associate 1,852 968 884
David Youngs......... Associate 1,824 966 858
Mark Sanford......... Associate 1,802 966 836
Nick Callil.......... Associate 1,800 966 834
Dewey Dennis......... Associate 1,800 966 834
Margaret George...... Associate 1,800 966 834
Angela Hairston...... Associate 1,800 966 834
David Johnston....... Associate 1,800 966 834
Raphael Law.......... Associate 1,800 966 834
David Millington..... Associate 41,076 962 40,114
Greta Broxham........ Associate 1,764 962 802
Sharyn Lottero....... Associate 1,750 960 790
Susan Bies........... Associate 1,746 960 786
Birri Aradom......... Associate 1,650 950 700
Ruby Burt............ Associate 1,648 950 698
Lee Exton............ Associate 1,638 948 690
Robin Hayburn........ Associate 1,600 948 652
Christopher Hemmer... Associate 1,600 948 652
Amy Brown............ Associate 2,112 938 1,174
John Whiting......... Associate 1,846 934 912
Mark Blair........... Associate 11,600 920 10,680
Mary Hanhan.......... Associate 61,226 894 60,332
Aida Sukys........... Associate 20,502 894 19,608
Robert Cavaliere..... Associate 20,208 894 19,314
Bizhan Said.......... Associate 7,880 894 6,986
Doris Chan........... Associate 7,400 894 6,506
Jill Green........... Associate 7,000 894 6,106
Frederick Cheung..... Associate 6,600 894 5,706
James Neal V......... Associate 6,400 894 5,506
Hideki Machida....... Associate 6,000 894 5,106
Connie Sattler....... Associate 5,200 894 4,306
Brad Carter.......... Associate 5,000 894 4,106
Stewart Hardacre..... Associate 5,000 894 4,106
Pamela Hughes
Yannoni............ Associate 4,750 894 3,856
Theodore Don Jr...... Associate 4,600 894 3,706
Keat Tian............ Associate 4,600 894 3,706
Marshall Walters..... Associate 3,824 894 2,930
Tracy Shatek......... Associate 3,800 894 2,906
Stephane Besson...... Associate 3,000 894 2,106
Sandra Hill.......... Associate 3,000 894 2,106
Lauren Keller........ Associate 3,000 894 2,106
John Bowe............ Associate 2,850 894 1,956
Elaine Hwang......... Associate 2,610 894 1,716
Beth Eve............. Associate 2,602 894 1,708
Betty Bardell........ Associate 2,276 894 1,382
Ricardo Donate-
Armada............. Associate 2,200 894 1,306
Phillip Funk......... Associate 2,200 894 1,306
Raymond George....... Associate 2,200 894 1,306
Steven Likovich...... Associate 2,200 894 1,306
Asa Waterman III..... Associate 2,200 894 1,306
Lisa Klaasen......... Associate 2,074 894 1,180
Vincent Grillo Jr.... Associate 2,000 894 1,106
Lourdes Martinez..... Associate 1,862 894 968
Shelby Fox........... Associate 1,800 894 906
Belinda Hayes........ Associate 1,700 894 806
Bing Zheng........... Associate 1,662 848 814
Kimberly Olson....... Associate 1,840 840 1,000
Beverly Jackson...... Associate 2,908 812 2,096

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Lawrence Harpine..... Associate 4,254 804 3,450
Jean Triner.......... Associate 9,500 760 8,740
Catherine Smith...... Associate 5,850 760 5,090
Kenneth Norman....... Associate 19,628 714 18,914
Joseph D'Anna........ Associate 10,258 714 9,544
Ada Leong............ Associate 3,802 714 3,088
Yasuhide Nerome...... Associate 1,800 714 1,086
Keiko Yokomizo....... Associate 1,679 714 965
Janice Sipus......... Associate 3,122 626 2,496
Graham Batchelor..... Associate 2,192 580 1,612
Karin Leblanc........ Associate 2,922 536 2,386
Dana Volinski........ Associate 2,074 536 1,538
Jeanne Walsh......... Associate 2,052 536 1,516
Lilly Schor.......... Associate 3,012 458 2,554
Thanh-Dung Cohn...... Associate 2,630 448 2,182
Lelan Conti.......... Associate 4,112 446 3,666
Karen Harris......... Associate 2,000 446 1,554
Paul Adamczyk........ Associate 19,410 358 19,052
Maria Pizzino........ Associate 7,302 358 6,944
Steven Kueffner...... Associate 2,500 358 2,142
Nolan Kishi.......... Associate 2,212 358 1,854
Judith Welch......... Associate 1,844 358 1,486
Melvin Warner........ Associate 7,706 178 7,528
Frank Kovacs......... Associate 50,086 76 50,010
Additional selling
stockholders
(452)**............ 295,956 227,392 68,564

------------------------------

* Unless otherwise indicated each selling stockholder will hold less than 1%
of our outstanding shares after the offering.

** Represents additional selling stockholders who hold in the aggregate less
than 1% of our outstanding shares prior to and after the offering.

After the offering, we expect that approximately 17% of the outstanding
common stock will be held by the public and that approximately 83% of the
remaining common stock will be held by officers, directors and existing
stockholders.

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DESCRIPTION OF CAPITAL STOCK, CERTIFICATE OF INCORPORATION AND BYLAWS

COMMON STOCK

After the merger, we will be authorized to issue up to 99,000,000 shares of
common stock, par value $0.01 per share. 69,000,000 of these shares will be
class A common stock, 15,000,000 of these shares will be class B-1 common stock
and 15,000,000 of these shares will be class B-2 common stock. Upon completion
of this offering, approximately 5,600,000 shares of the class A common stock
will be outstanding (assuming the over-allotment option is not exercised), and
13,403,606 shares of class B-1 common stock and 13,403,606 shares of class B-2
common stock will be outstanding.

Each stockholder is entitled to one vote for each share of common stock held
on all matters submitted to a vote of stockholders. Subject to the preferences
of any series of preferred stock that may at times be outstanding, if any,
holders of outstanding shares of common stock are entitled to receive dividends
when, as, and if declared by our board of directors out of funds legally
available for dividends and, if we liquidate, dissolve or wind up, are entitled
to share ratably in all assets remaining after payment of liabilities and
payment of accrued dividends and liquidation preferences on the preferred stock,
if any. Holders of common stock have no preemptive rights and have no rights to
convert their common stock into any other securities. All shares of common stock
outstanding upon completion of this offering are validly authorized and issued,
fully paid and nonassessable.

The class A common stock will be entitled to one vote for each share of
common stock held on all matters submitted to a vote of stockholders. Our
certificate of incorporation imposes no limitations on the transferability of
the class A common stock.

Each of the class B-1 common stock and class B-2 common stock will be
entitled to one vote for each share of common stock held on all matters
submitted to a vote of stockholders. The class B-1 shares will be restricted for
the 12 months following this offering, and the class B-2 shares will be
restricted for the 24 months following this offering, unless waived by the board
of directors. Following the expiration or waiver of each respective restriction
period, the class B-1 and class B-2 shares will automatically convert into
class A common stock.

Class B-1 common stock and the class B-2 common stock will be transferable
to permitted transferees from the time of issuance in accordance with our
bylaws. Permitted transferees are (A) a revocable trust created to hold shares
of the company for the benefit of a stockholder where the stockholder has
control over disposition and voting with regard to the trust, or, (B) an
irrevocable trust over which the stockholder has voting and dispositive control
that was created for the benefit of the stockholder or the spouse or descendent
of the stockholder, or, (C) any entity controlled by the stockholder, other than
a corporation, whose interests are owned by the stockholder and/or his/her
spouse and/or descendants, or, (D) a corporation that is wholly-owned by the
stockholder and/or one of the entities described in (A), (B) or (C) above.

PREFERRED STOCK

Our certificate of incorporation authorizes the issuance of up to 1,000,000
shares of preferred stock. Our board of directors has the authority to issue
shares of preferred stock from time to time on terms that it may determine, to
divide preferred stock into one or more classes or series, and to fix the
designations, voting powers, preferences and relative participating, optional or
other special rights of each class or series, and the qualifications,
limitations or restrictions of each class or series, to the fullest extent
permitted by Delaware law. The issuance of preferred stock could have the effect
of decreasing the market price of our stock, impeding or delaying a possible
takeover and adversely affecting the voting and other rights of the holders of
class A common stock and class B common stock.

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PROVISIONS OF DELAWARE LAW AND OUR CERTIFICATE OF INCORPORATION AND BYLAWS
THAT MAY HAVE ANTI-TAKEOVER EFFECTS

ANTI-TAKEOVER PROVISIONS

The provisions of our certificate of incorporation and bylaws described
below were put into place to help ensure that our board of directors plays a
role in attempts to acquire control of our company. In this way, the board can
protect the interests of the company and its stockholders as appropriate under
the circumstances. If the board determines that a change of control is in the
company's and stockholders' best interests, having the board involved enhances
its ability to maximize the value to be received by the stockholders upon such a
sale.

Although our board believes these provisions, referred to as anti-takeover
provisions, are beneficial to stockholders, their existence also may tend to
discourage open market purchases by a potential acquirer and some takeover bids.
As a result, our stockholders may be deprived of opportunities to sell some or
all of their shares at prices that are higher than prevailing market prices. The
provisions in theory may decrease the market price of our common stock by making
the stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. On the other hand,
defeating undesirable acquisition offers can be a very expensive and
time-consuming process. To the extent the provisions discourage undesirable
proposals, we may be able to avoid those expenditures of time and money.

The anti-takeover provisions may make it more difficult and time consuming
for a potential acquirer and existing stockholders to obtain control of the
company through replacing our board of directors and management. This is the
case even if a majority of the stockholders believes such replacement is in the
best interests of the company. As a result, these provisions may tend to
perpetuate the incumbent board of directors and management.

DELAWARE ANTI-TAKEOVER STATUTE

We are now, and after the merger will be, subject to Section 203 of the
Delaware General Corporation Law. Subject to specific exceptions, Section 203
prohibits a publicly-held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless:

- the "business combination," or the transaction in which the stockholder
became an "interested stockholder" is approved by the board of directors
prior to the date the "interested stockholder" attained that status;

- upon consummation of the transaction that resulted in the stockholder
becoming an "interested stockholder," the "interested stockholder" owned
at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced (excluding those shares owned by persons
who are directors and also officers, and employee stock plans in which
employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer); or

- on or subsequent to the date a person became an "interested stockholder,"
the "business combination" is approved by the board of directors and
authorized at an annual or special meeting of stockholders by the
affirmative vote of at least two-thirds of the outstanding voting stock
that is not owned by the "interested stockholder."

"Business combinations" include mergers, asset sales and other transactions
resulting in a financial benefit to the "interested stockholder." Subject to
various exceptions, an "interested stockholder" is a person who, together with
his or her affiliates and associates, owns, or within three years did own, 15%
or more of the corporation's outstanding voting stock. These restrictions

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could prohibit or delay the accomplishment of mergers or other takeover or
change-in-control attempts with respect to us and, therefore, may discourage
acquisition attempts.

The following are various provisions of our certificate of incorporation and
bylaws that may be deemed to have an anti-takeover effect.

AUTHORIZED CAPITAL STOCK

Our certificate of incorporation authorizes the issuance of up to 99,000,000
shares of our common stock. After the merger and this offering, our board of
directors may authorize the issuance of additional shares of our common stock
without further action by our stockholders, unless such action is required in a
particular case by applicable laws or regulations or by any stock exchange upon
which our capital stock may be listed. Our certificate of incorporation does not
provide preemptive rights to our stockholders.

The authority to issue additional shares of our common stock provides us
with the flexibility necessary to meet our future needs without the delay
resulting from seeking stockholder approval. The authorized but unissued shares
of common stock will be issuable from time to time for any corporate purposes,
including, without limitation, stock splits, stock dividends, employee benefit
and compensation plans, acquisitions, and public or private sales for cash as a
means of raising capital. Such shares could be used to dilute the stock
ownership of persons seeking to obtain control of our company. In addition, the
sale of a substantial number of shares of our common stock to persons who have
an understanding with us concerning the voting of such shares, or the
distribution or declaration of a dividend of shares of our common stock to
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of our company. The certificate of
incorporation does not provide preemptive rights to our stockholders.

CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING

Our certificate of incorporation provides that our board of directors is
divided into three classes, with each class to be as nearly equal in number as
possible. The directors in each class serve three-year terms of office.

The effect of our having a classified board of directors is that only
approximately one-third of the members of the board are elected each year.
Consequently, two annual meetings are effectively required for our stockholders
to change a majority of the members of the board.

Pursuant to our certificate of incorporation, each stockholder generally is
entitled to one vote for each share of our common stock held and is not entitled
to cumulative voting rights in the election of directors. With cumulative
voting, a stockholder would have the right to cast a number of votes equal to
the total number of such holders' shares multiplied by the number of directors
to be elected. The stockholder would have the right to cast all of such holder's
votes in favor of one candidate or to distribute such holder's votes in any
manner among any number of candidates. Directors are elected by a plurality of
the total votes cast by all stockholders. With cumulative voting, it may be
possible for minority stockholders to obtain representation on the board of
directors. Without cumulative voting, the holders of more than 50% of the shares
of our common stock generally have the ability to elect 100% of the directors.
As a result, the holders of the remaining common stock effectively may not be
able to elect any person to the board of directors. The absence of cumulative
voting, therefore, could make it more difficult for a stockholder who acquires
less than a majority of the shares of our common stock to obtain representation
on our board of directors.

REMOVAL OF DIRECTORS

Under our certificate of incorporation, any director or the entire board of
directors may be removed only for cause and only by the affirmative vote of the
holders of at least 67% of our voting

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stock. Also, under our bylaws, employee directors must resign as directors upon
termination of their employment.

SPECIAL MEETINGS OF STOCKHOLDERS

Our certificate of incorporation and bylaws provide that special meetings of
stockholders may be called at any time, but only by the board of directors or
the president. This provision, combined with other provisions of our certificate
of incorporation and the restriction on the removal of directors, would prevent
a substantial stockholder from compelling stockholder consideration of any
proposal (such as a proposal for a business combination) over the opposition of
our board of directors. Therefore, such stockholder would not be able to call a
special meeting of stockholders to replace the entire board with nominees who
were in favor of such proposal.

ACTIONS BY STOCKHOLDERS WITHOUT A MEETING

Our certificate of incorporation provides that any action required or
permitted to be taken by our stockholders must be effected at a duly called
meeting of stockholders and may not be effected by any written consent by the
stockholders. These provisions would prevent stockholders from taking action,
including action on a business combination, except at an annual meeting or
special meeting called by the board of directors or the president, even if a
majority of the stockholders were in favor of such action.

LIMITATION ON DIRECTORS' LIABILITY

Our certificate of incorporation provides that a director will have no
personal liability to the company or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability for any of the
following:

- any breach of the director's duty of loyalty to the corporation or its
stockholders;

- acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law; and

- under Section 174 of the Delaware General Corporations Law, the payment of
unlawful dividends and the making of unlawful stock purchases or
redemptions; or

- any transaction from which the director derived an improper personal
benefit.

INDEMNIFICATION

Our certificate of incorporation and bylaws provide that we will indemnify
our officers, directors, employees, and agents to the full extent permitted by
the Delaware General Corporation Law, subject to very limited exceptions. Under
Section 145 of the Delaware General Corporation Law as currently in effect,
other than in actions brought by or in the right of the company, such
indemnification would apply if it were determined in the specific case that the
proposed indemnitee acted in good faith and in a manner such person reasonably
believed to be in or not opposed to our best interests and, with respect to any
criminal proceeding, if such person had no reasonable cause to believe that the
conduct was unlawful. In actions brought by or in the right of the company, such
indemnification probably would be limited to reasonable expenses (including
attorneys' fees) and would apply if it were determined in the specific case that
the proposed indemnitee acted in good faith and in a manner such person
reasonably believed to be in or not opposed to our best interests, except that
no indemnification may be made with respect to any matter as to which such
person is adjudged liable to us, unless, and only to the extent that, the court
determines upon application that, in view of all the circumstances of the case,
the proposed indemnitee is fairly and reasonably entitled to indemnification for
such expenses as the court deems proper. To the extent that any director,
officer, employee, or agent of the company has been successful on the merits or
otherwise in defense of any action, suit, or proceedings, as discussed

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herein, whether civil, criminal, administrative, or investigative, such person
must be indemnified against reasonable expenses incurred by such person in
connection therewith.

We are also expressly authorized to carry directors' and officers' insurance
providing indemnification for our directors, officers and certain employees for
some liabilities. We believe that these indemnification provisions and insurance
are necessary to attract and retain qualified directors and executive officers.

AMENDING THE CERTIFICATE OF INCORPORATION AND BYLAWS

The Delaware General Corporation Law generally provides that the approval of
a corporation's board of directors and the affirmative vote of a majority of
(1) all shares entitled to vote and (2) the shares of any class of stock
entitled to vote as a class, is required to amend a corporation's certificate of
incorporation, unless the certificate specifies a greater voting requirement.
Our certificate of incorporation states that each of the following provisions in
the certificate of incorporation may be amended only by a vote of 67% of the
outstanding shares:

- classification and removal of directors;

- the prohibition on stockholder action by written consent; and

- the ability to call a special meetings of stockholders being vested solely
in our board of directors and the president.

Our certificate of incorporation also provides that the board of directors
has the power to adopt, amend, or repeal the bylaws. Stockholders also have the
power to adopt, amend or repeal bylaws, by a vote of 67% of the outstanding
shares.

TRADING ON THE NEW YORK STOCK EXCHANGE

Our class A common stock has been approved for listing on The New York Stock
Exchange under the symbol "WW."

RIGHTS PLAN

The board of directors has approved implementing a rights plan, although the
specific terms of the plan have not been determined. It is likely that under
such a plan stockholders will be issued rights to purchase shares of preferred
stock upon the occurrence of specified events such as the acquisition by a
person of 15% of our outstanding shares. The purpose of this plan is to ensure
that our board of directors has the opportunity to negotiate with persons
contemplating significant transactions with our company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is First Union
National Bank, and its address is 1525 West W.T. Harris Boulevard, Charlotte,
North Carolina 28262-1153.

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SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of common stock after this offering could
adversely affect the market price of the common stock and could impair our
future ability to raise capital through the sale of our equity securities. Upon
the consummation of this offering, we will have outstanding 5,600,000 shares of
class A common stock (assuming no exercise of the underwriters' over-allotment
option), 13,403,606 shares of class B-1 common stock and 13,403,606 shares of
class B-2 common stock. All of the shares of class A common stock sold in the
offering will be freely tradable under the Securities Act, unless purchased by
our "affiliates" as that term is defined under the Securities Act. The
class B-1 and class B-2 common stock is subject to transfer restrictions for
periods extending 12 months and 24 months, respectively, after this offering,
unless earlier waived by the board of directors. Pursuant to the terms of the
underwriting agreement, we have agreed that for a period of 180 days from the
date of the prospectus, the board will not waive the stock transfer restrictions
without the prior written consent of Deutsche Bank Securities Inc. Upon the
expiration of transfer restriction periods in the class B-1 and class B-2 common
stock, all of the shares of class B-1 and class B-2 common stock will convert
automatically to class A common stock and become eligible for sale, subject to
compliance with Rule 144 by persons deemed our affiliates.

Because the shares of class B-1 and class B-2 common stock are being issued
pursuant to a registration statement on Form S-4, they will be freely tradable
without restriction under the Securities Act following the expiration or waiver
of the transfer restriction periods included in our certificate of incorporation
except for any such shares acquired by an affiliate, which shares will remain
subject to the resale limitations of Rule 144.

Generally, Rule 144 provides that an affiliate who has beneficially owned
shares for at least one year may sell his or her shares on the open market in
brokers' transactions within any three-month period a number of shares that does
not exceed the greater of:

- 1% of the then outstanding shares of common stock; and

- the average weekly trading volume in the common stock on the open market
during the four calendar weeks preceding the sale.

Sales under Rule 144 will also be subject to post-sale notice requirements
and the availability of current public information about us.

In addition to the transfer restrictions contained in our certificate of
incorporation, at the request of the underwriters we entered into agreements
providing for additional transfer restrictions with stockholders holding
approximately 42% of our common stock prior to the offering (approximately 36%
of our common stock after the offering) including major stockholders, executive
officers and employee directors. The agreements restrict transfers of all shares
held by such persons immediately following the offering, and the restrictions
terminate as to 25% of such shares on each of the first, second, third and
fourth anniversaries of the consummation of the public offering. The transfer
restrictions contained in the agreements also terminate in the event of the
stockholder's death, retirement or involuntary termination of employment, or a
change of control of the company.

424B4 77th Page of 110 TOC 1st Previous Next ↓Bottom Just 77th
UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting
agreement dated October 10, 2000, the underwriters named below, for whom
Deutsche Bank Securities Inc., Banc of America Securities LLC and Robert W.
Baird & Co. Incorporated are acting as representatives, have severally but not
jointly agreed to purchase from us and the selling stockholders the following
respective number of shares of class A common stock:

[Download Table]

UNDERWRITERS NUMBER OF SHARES
------------ ----------------

Deutsche Bank Securities Inc................................ 2,464,000
Banc of America Securities LLC.............................. 1,344,000
Robert W. Baird & Co. Incorporated.......................... 672,000
CIBC World Markets Corp..................................... 100,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... 100,000
Morgan Stanley & Co. Incorporated........................... 100,000
PaineWebber Incorporated.................................... 100,000
Prudential Securities Incorporated.......................... 100,000
Robertson Stephens, Inc..................................... 100,000
Salomon Smith Barney Inc.................................... 100,000
Advest, Inc................................................. 70,000
William Blair & Company, L.L.C.............................. 70,000
Legg Mason Wood Walker, Incorporated........................ 70,000
Edgar M. Norris & Co. Inc................................... 70,000
Raymond James & Associates, Inc............................. 70,000
Shields & Company........................................... 70,000
---------
Total................................................. 5,600,000
=========

The underwriting agreement provides that the obligations of the underwriters
are subject to customary conditions precedent that must be satisfied by us
(including the delivery of opinions of counsel, officers' closing certificates
and lockup agreements) and that the underwriters will be obligated to purchase
all of the shares of the class A common stock offered hereby, other than those
shares covered by the over-allotment option described below, if any are
purchased. The underwriting agreement provides that, in the event of a default
by an underwriter, the purchase commitments of non-defaulting underwriters may
be increased or the underwriting agreement may be terminated.

The underwriting discount will be an amount equal to the public offering
price per share, less the amount paid per share by the underwriters to us or the
selling stockholders, as the case may be. The following table shows the
underwriting discount to be paid to the underwriters by us and the selling
stockholders in this offering. These amounts are shown assuming both no exercise
and

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full exercise of the underwriters' option to purchase additional shares of our
class A common stock to cover over-allotments.

[Enlarge/Download Table]

% OF INITIAL
PUBLIC OFFERING
NO EXERCISE FULL EXERCISE PRICE
----------- ------------- ---------------

Underwriting discount per share paid by us........... $ 1.75 $ 1.75 14.0%
Underwriting discount per share paid by the selling
stockholders....................................... -- -- --
Total underwriting discount.......................... $4,900,000 $5,635,000 7.0%

Offering expenses per share paid by us............... $ 0.54 $ 0.45 4.3%
Offering expenses per share paid by the selling
shareholders....................................... -- -- --
Total offering expenses.............................. $1,500,000 $1,500,000 2.1%

We will pay all offering expenses, including those of the selling
stockholders, estimated to be approximately $1.5 million in total. We also have
agreed to reimburse the selling stockholders for the underwriting discounts on
the shares sold by them in this offering. Offering expenses are expenses
incurred by us in connection with this offering and include registration and
filing fees, New York Stock Exchange listing fees, legal and accounting fees and
expenses, printing expenses, blue sky qualification fees and expenses, transfer
agent fees and other miscellaneous expenses.

We and a number of the selling stockholders have granted to the underwriters
an option expiring on the 30th day after the date of this prospectus to purchase
up to 840,000 additional shares of class A common stock at the initial public
offering price, less the underwriting discounts and commissions. Such option may
be exercised only to cover over-allotments in the sale of shares of class A
common stock. To the extent such option is exercised, each underwriter will
become obligated, subject to specified conditions, to purchase approximately the
same percentage of such additional shares of class A common stock as it was
obligated to purchase pursuant to the underwriting agreement.

We have been advised by the representatives that the underwriters propose to
offer the shares of class A common stock to the public initially at the public
offering price set forth on the cover page of this prospectus and, through the
representatives, to selling group members at such price less a concession of
$0.515 per share, and the underwriters and such selling group members may allow
a discount of $0.100 per share on sales to certain other broker-dealers. After
the offering, the public offering price and concession and discount to dealers
may be changed by the representatives.

A prospectus in electronic format is being made available on Internet web
sites maintained by one or more of the lead underwriters of this offering and
may be made available on web sites maintained by other underwriters. Other than
the prospectus in electronic format, the information on any underwriter's web
site and any information contained in any other web site maintained by an
underwriter is not part of the prospectus or the registration statement of which
the prospectus forms a part.

The representatives have informed us that they do not intend to confirm
sales in any account over which they exercise discretionary authority.

We, our officers and directors, and certain of our existing stockholders
have agreed that we and they will not offer, sell, contract to sell, pledge or
otherwise dispose of or transfer, directly or indirectly, or, in our case, file
with the Securities and Exchange Commission a registration statement relating
to, any shares of class A common stock or securities exchangeable or exercisable
for or convertible into shares of class A common stock, or publicly disclose the
intention to do any of the

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foregoing, without the prior written consent of Deutsche Bank Securities Inc.
for a period of 180 days after the date of this prospectus, except under certain
circumstances.

In addition to the transfer restrictions contained in our certificate of
incorporation, at the request of the underwriters we entered into agreements
providing for additional transfer restrictions with stockholders holding
approximately 42% of our common stock prior to the offering (approximately 36%
of our common stock after the offering) including employee directors, executive
officers and significant stockholders. The agreements restrict transfers of all
shares held by such persons immediately following the offering, and the
restrictions terminate as to 25% of such shares on each of the first, second,
third and fourth anniversaries of the consummation of the public offering. The
transfer restrictions contained in the agreements also terminate in the event of
the stockholder's death, retirement or involuntary termination of employment, or
change of a control of the company.

We and, in limited circumstances, the selling stockholders, have agreed to
indemnify the underwriters against liabilities, including civil liabilities
under the Securities Act, or to contribute to payments which the underwriters
may be required to make in respect thereof.

Our class A common stock has been approved for listing on the New York Stock
Exchange under the symbol "WW."

Prior to this offering, there has been no public market for the class A
common stock. The initial public offering price was determined by negotiation
between us and the representatives. The principal factors considered in
determining the initial public offering price included:

- the information set forth in this prospectus and otherwise available to
the representatives;

- our history, our prospects, and the industry in which we compete;

- an assessment of our management;

- the prospects for, and the timing of, our future earnings;

- the present state of our development and our current financial condition;

- the general condition of the securities markets at the time of the
offering;

- the recent market prices of, and the demand for, publicly-traded common
stock of companies in businesses similar to ours;

- market conditions for initial public offerings; and

- other relevant factors.

There can be no assurance that an active trading market will develop for the
class A common stock or that the class A common stock will trade in the market
after this offering at or above the initial public offering price.

The representatives, on behalf of the underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934. Specifically, the underwriters may over-allot shares of our class A
common stock in connection with this offering, thus creating a short sales
position in our class A common stock for their own account. A short sales
position results when an underwriter sells more shares of stock than that
underwriter is committed to purchase. A short sales position may involve either
"covered" short sales or "naked" short sales.

Covered short sales are sales made for an amount not greater than the
underwriters' over-allotment option to purchase additional shares in the
offering described above. The underwriters may close out any covered short
position by either exercising their over-allotment option or purchasing shares
in the open market. In determining the source of shares to close out

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the covered short position, the underwriters will consider, among other things,
the price of shares available for purchase in the open market as compared to the
price at which they may purchase shares through the over-allotment option.

Naked short sales are sales in excess of the over-allotment option. The
underwriters will have to close out any naked short position by purchasing
shares in the open market. A naked short position is more likely to be created
if the underwriters are concerned that there may be downward pressure on the
price of the shares in the open market after pricing that could adversely affect
investors who purchase in the offering.

Accordingly, to cover these short sales positions or to stabilize the market
price of our class A common stock, the underwriters may bid for, and purchase,
shares of our class A common stock in the open market. These transactions may be
effected on the New York Stock Exchange or otherwise. Additionally, the
representatives, on behalf of the underwriters, may also reclaim selling
concessions allowed to an underwriter or dealer if the underwriting syndicate
repurchases shares distributed by that underwriter or dealer. Similar to other
purchase transactions, the underwriter's purchase to cover the syndicate short
sales or to stabilize the market price of our class A common stock may have the
effect of raising or maintaining the market price of our class A common stock or
preventing or mitigating a decline in the market price of our class A common
stock. As a result, the price of the shares of our class A common stock may be
higher than the price that might otherwise exist in the open market. The
underwriters are not required to engage in these activities and, if commenced,
may end any of these activities at any time.

We currently maintain a senior secured revolving credit facility with an
affiliate of Banc of America Securities LLC.

LEGAL MATTERS

The validity of the issuance of the shares of class A common stock offered
by the prospectus will be passed upon for us by Cadwalader, Wickersham & Taft.
Certain legal matters in connection with this offering will be passed upon for
the underwriters by Winston & Strawn.

EXPERTS

The consolidated financial statements of Watson Wyatt & Company as of
June 30, 2000 and 1999, and for each of the three years in the period ended
June 30, 2000, included in and incorporated by reference in this prospectus have
been so included or incorporated by reference in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the U.S. Securities and Exchange Commission a
registration statement on Form S-3 under the Securities Act relating to the
shares of class A common stock being offered by this prospectus. This prospectus
is part of that registration statement and, as allowed by SEC rules, does not
include all of the information you can find in the registration statement or the
exhibits to the registration statement. For further information about us and the
class A common stock offered, see the registration statement and its exhibits.
We have also filed a registration statement on Form S-4 with the SEC relating to
the proposed merger of Watson Wyatt & Company with its indirect wholly-owned
subsidiary which will result in Watson Wyatt & Company becoming a wholly-owned
subsidiary of Watson Wyatt & Company Holdings.

The SEC allows us to incorporate by reference into this prospectus the
information we file with the SEC. This means that we can disclose important
information to you by referring you to those

424B4 81st Page of 110 TOC 1st Previous Next ↓Bottom Just 81st
documents. The information incorporated by reference is considered to be part of
this prospectus. If we subsequently file updating or superseding information in
a document that is incorporated by reference into this prospectus, the
subsequent information will also become part of this prospectus and will
supersede the earlier information. We are incorporating by reference our annual
report on Form 10-K/A for the fiscal year ended June 30, 2000 (file no. 0-20724)
which we have filed with the SEC.

We also are incorporating by reference into the prospectus all of our future
filings with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act until this offering is completed. You may obtain a copy of any or all of our
filings which are incorporated by reference, at no cost, by writing to or
telephoning us at the following address:

Watson Wyatt & Company Holdings
6707 Democracy Boulevard, Suite 800
Bethesda, Maryland 20817
Attention: Secretary
Telephone: (301) 581-4600

AFTER OCTOBER 27, 2000:
1717 H Street, NW
Washington, DC 20006
Telephone: (202) 715-7000

You should rely only on the information provided in this prospectus or
incorporated by reference. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the first page of
the prospectus. We are offering to sell, and seeking offers to buy, the class A
common stock only in jurisdictions where such offers are permitted. We are not
making this offer of securities in any state or country in which the offer or
sale is not permitted.

424B4 82nd Page of 110 TOC 1st Previous Next ↓Bottom Just 82nd
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

[Download Table]

PAGE
------------

Consolidated Financial Statements of Watson Wyatt & Company

Report of Independent Accountants......................... F-2

Financial Statements:

Consolidated Statements of Operations for each of the
three years in the period
ended June 30, 2000................................... F-3

Consolidated Balance Sheets at June 30, 2000 and 1999... F-4

Consolidated Statements of Cash Flows for each of the
three years in the period
ended June 30, 2000................................... F-5

Consolidated Statements of Changes in Permanent
Shareholders' Equity for each of the three years in
the period ended June 30, 2000........................ F-6

Notes to the Consolidated Financial Statements.......... F-7

Valuation and Qualifying Accounts and Reserves (Schedule
II)..................................................... F-29

F-1

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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholders of Watson Wyatt & Company

In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Watson
Wyatt & Company and its subsidiaries at June 30, 2000 and 1999, and the results
of their operations and their cash flows for each of the three years in the
period ended June 30, 2000, in conformity with accounting principles generally
accepted in the United States. In addition, in our opinion, the financial
statement schedule listed in the accompanying index presents fairly, in all
material respects, the information, set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinions expressed above.

PricewaterhouseCoopers LLP

Washington, D.C.
August 4, 2000

F-2

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WATSON WYATT & COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

[Enlarge/Download Table]

YEAR ENDED JUNE 30,
---------------------------------
2000 1999 1998
--------- --------- ---------

Revenue..................................................... $624,583 $556,860 $512,660
-------- -------- ---------
Costs of providing services:
Salaries and employee benefits............................ 332,339 298,915 268,611
Stock incentive bonus plan................................ 30,283 22,610 --
Non-recurring compensation charge (see Note 12)........... -- -- 69,906
Professional and subcontracted services................... 49,608 47,863 49,907
Occupancy, communications and other....................... 100,099 92,668 88,840
General and administrative expenses....................... 63,596 56,578 51,759
Depreciation and amortization............................. 17,878 15,248 24,994
-------- -------- ---------
593,803 533,882 554,017
-------- -------- ---------
Income (loss) from operations (see Note 12)................. 30,780 22,978 (41,357)
Other:
Interest income........................................... 1,823 944 901
Interest expense.......................................... (1,876) (2,646) (2,768)
Income from affiliates...................................... 3,116 2,524 258
-------- -------- ---------

Income (loss) before income taxes and minority interest (see
Note 12).................................................. 33,843 23,800 (42,966)

Provision for income taxes:
Current................................................... 12,344 18,744 15,116
Deferred.................................................. 2,851 (7,296) (1,982)
-------- -------- ---------
15,195 11,448 13,134
-------- -------- ---------
Income (loss) before minority interest (see Note 12)........ 18,648 12,352 (56,100)
Minority interest in net income of consolidated
subsidiaries.............................................. (115) (217) (112)
-------- -------- ---------
Income (loss) from continuing operations (see Note 12)...... 18,533 12,135 (56,212)

Discontinued operations:

Loss from operations of discontinued Outsourcing Business
(less applicable income tax benefit of $5,053 for the year
ended
June 30, 1998)............................................ -- -- (6,821)

Adjustment (loss) on disposal of discontinued Outsourcing
Business
(1999 adjustment is net of applicable income tax expense
of $6,322; 1998 loss is net of applicable income tax
benefit of $46,715)....................................... -- 8,678 (63,085)
-------- -------- ---------
Net income (loss) (see Note 12)............................. $ 18,533 $ 20,813 $(126,118)
======== ======== =========
Earnings (loss) per share, continuing operations, basic and
fully diluted............................................. $ 1.24 $ 0.80 $ (3.27)
======== ======== =========
Earnings (loss) per share, discontinued operations, basic
and fully diluted......................................... --...... $ 0.57 $ (4.07)
======== ======== =========
Earnings (loss) per share, net income (loss), basic and
fully diluted............................................. $ 1.24 $ 1.37 $ (7.34)
======== ======== =========
Pro forma earnings per share (unaudited):

Continuing operations, basic and fully diluted............ $ 0.62
========

Discontinued operations, basic and fully diluted.......... --
========

Net income, basic and fully diluted....................... $ 0.62
========

See accompanying notes

F-3

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WATSON WYATT & COMPANY

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

[Download Table]

JUNE 30, JUNE 30,
2000 1999
--------- ---------

ASSETS
Cash and cash equivalents................................... $ 41,410 $ 35,985
Receivables from clients:
Billed, net of allowances of $2,832 and $3,701............ 76,729 72,798
Unbilled, net of allowances of $676 and $796.............. 66,009 63,068
-------- --------
142,738 135,866
Other current assets........................................ 11,705 10,834
-------- --------
Total current assets...................................... 195,853 182,685

Investment in affiliates.................................... 16,615 15,306
Fixed assets, net of accumulated depreciation of $83,211 and
$80,368................................................... 45,237 42,797
Deferred income taxes....................................... 53,355 56,206
Intangible assets, net of accumulated amortization of
$15,288 and $13,904....................................... 8,721 7,455
Other assets................................................ 10,179 9,511
-------- --------
Total Assets................................................ $329,960 $313,960
======== ========

LIABILITIES, REDEEMABLE COMMON STOCK AND PERMANENT SHAREHOLDERS' EQUITY

Accounts payable and accrued liabilities.................... $167,833 $152,619
Income taxes payable........................................ 11,843 18,374
-------- --------
Total current liabilities................................. 179,676 170,993
Accrued retirement benefits................................. 79,462 77,140
Deferred rent and accrued lease losses...................... 5,456 9,270
Other noncurrent liabilities................................ 23,657 22,608
Minority interest in subsidiaries........................... 498 669
Redeemable Common Stock--$1 par value: 25,000,000 shares
authorized; 14,805,145 and 16,112,416 issued and
outstanding; at redemption value.......................... 115,480 107,631
Permanent shareholders' equity:
Adjustment for redemption value (greater)/less than amounts
paid in by shareholders................................... (6,097) 11,420
Retained deficit............................................ (64,223) (83,209)
Cumulative translation adjustment (accumulated other
comprehensive loss)....................................... (3,949) (2,562)
Commitments and contingencies
-------- --------
Total Liabilities, Redeemable Common Stock and Permanent
Shareholders' Equity...................................... $329,960 $313,960
======== ========

See accompanying notes

F-4

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WATSON WYATT & COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

[Enlarge/Download Table]

YEAR ENDED JUNE 30,
-------------------------------
2000 1999 1998
-------- -------- ---------

Cash flows from operating activities:
Net income (loss)......................................... $18,533 $20,813 $(126,118)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Non-cash non-recurring compensation charge.............. -- -- 69,906
Net (adjustment) loss from Discontinued Operations...... -- (8,678) 69,906
Provision for doubtful receivables from clients......... 6,338 9,086 6,158
Depreciation............................................ 16,025 13,680 12,849
Amortization of deferred software and development costs
and other intangible assets........................... 1,852 1,568 12,143
Provision for (benefit from) deferred income taxes...... 2,851 (7,295) (1,982)
Income from affiliates.................................. (3,116) (2,524) (258)
Minority interest in net income of consolidated
subsidiaries.......................................... 115 217 112
(Increase) decrease in assets (net of discontinued
operations):
Receivables from clients.............................. (13,210) (25,071) (11,660)
Income taxes receivable............................... -- 2,216 4,558
Other current assets.................................. (871) (3,889) 342
Other assets.......................................... (717) 480 76
Increase (decrease) in liabilities (net of discontinued
operations):
Accounts payable and accrued liabilities.............. 15,871 52,149 13,576
Income taxes payable.................................. (6,531) 12,052 (3,563)
Accrued retirement benefits........................... 2,322 (5,388) (4,169)
Deferred rent and accrued lease losses................ (3,814) (3,406) (2,262)
Other noncurrent liabilities.......................... 1,810 1,132 840
Other, net.............................................. 563 514 1,603
Discontinued operations, net............................ (1,090) (5,537) (18,554)
------- ------- ---------
Net cash from operating activities...................... 36,931 52,119 23,503
------- ------- ---------
Cash flows used in investing activities:
Purchases of fixed assets................................. (20,235) (19,684) (16,034)
Proceeds from sales of fixed assets....................... 495 237 623
Acquisitions.............................................. (3,069) (6,207) --
Investment in software and development costs.............. -- -- (3,000)
Distributions from affiliates............................. 1,187 4,220 3,076
Discontinued operations................................... -- -- (14,750)
------- ------- ---------
Net cash used in investing activities................... (21,622) (21,434) (30,085)
------- ------- ---------
Cash flows used in financing activities:
Net borrowings (repayments) on line of credit............. -- (9,000) 9,000
Issuances of Redeemable Common Stock...................... 132 15,451 1,005
Repurchases of Redeemable Common Stock.................... (9,347) (15,124) (13,141)
------- ------- ---------
Net cash used in financing activities................... (9,215) (8,673) (3,136)
------- ------- ---------
Effect of exchange rates on cash............................ (669) 568 (3,134)
------- ------- ---------
Increase (decrease) in cash and cash equivalents............ 5,425 22,580 (12,852)
Cash and cash equivalents at beginning of period............ 35,985 13,405 26,257
------- ------- ---------
Cash and cash equivalents at end of period.................. $41,410 $35,985 $ 13,405
======= ======= =========

See accompanying notes

F-5

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WATSON WYATT & COMPANY

CONSOLIDATED STATEMENTS OF CHANGES IN PERMANENT SHAREHOLDERS' EQUITY

(IN THOUSANDS)

[Enlarge/Download Table]

ADJUSTMENT FOR
REDEMPTION VALUE
CUMULATIVE (GREATER)/LESS THAN
RETAINED TRANSLATION AMOUNTS PAID IN
DEFICIT LOSS BY SHAREHOLDERS TOTAL
--------- ----------- ------------------- ---------

Balance at June 30, 1997................ $ 24,633 $ 836 $(37,674) $ (12,205)
Comprehensive Loss:
Net loss.............................. (126,118) -- -- (126,118)
Foreign currency translation
adjustment.......................... -- (3,752) -- (3,752)
---------
Total Comprehensive Loss................ -- -- -- (129,870)
Effect of repurchases of 2,410,425
shares of common stock (various prices
per share)............................ (5,349) -- 5,349 --
Adjustment of redemption value for
change in formula book value per
share................................. -- -- (12,341) (12,341)
Adjustment of redemption value for non-
recurring compensation charge
(see Note 12)......................... -- -- 69,906 69,906
--------- ------- -------- ---------
Balance at June 30, 1998................ (106,834) (2,916) 25,240 (84,510)

Comprehensive Income:
Net income............................ 20,813 -- -- 20,813
Foreign currency translation
adjustment.......................... -- 354 -- 354
---------
Total Comprehensive Income.............. -- -- -- 21,167
Effect of repurchases of 2,361,542
shares of common stock (various prices
per share)............................ 2,812 -- (2,812) --
Adjustment of redemption value for
change in Formula Book Value per
share................................. -- -- (11,008) (11,008)
--------- ------- -------- ---------
Balance at June 30, 1999................ (83,209) (2,562) 11,420 (74,351)
Comprehensive Income:
Net income............................ 18,533 -- -- 18,533
Foreign currency translation
adjustment.......................... -- (1,387) -- (1,387)
---------
Total Comprehensive Income.............. -- -- -- 17,146
Effect of repurchases of 1,326,971
shares of common stock (various prices
per share)............................ 453 -- (453) --
Adjustment of redemption value for
change in Formula Book Value per
share................................. -- -- (17,064) (17,064)
--------- ------- -------- ---------

Balance at June 30, 2000................ $ (64,223) $(3,949) $ (6,097) $ (74,269)
========= ======= ======== =========

See accompanying notes

F-6

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF THE BUSINESS--Watson Wyatt & Company (collectively referred to as
"we," "Watson Wyatt" or the "Company"), together with its subsidiaries, is an
international company engaged in the business of providing professional
consultative services on a fee basis, primarily in the human resource areas of
employee benefits and compensation, but also in other areas of specialization
such as human capital consulting and human resource related technology
consulting. Substantially all of our stock is held by or for the benefit of
employees.

In 1998, the Company discontinued its benefits administration outsourcing
business as further described in Note 14. The Consolidated Statements of
Operations in 1999 and 1998 reflect the charges recorded for that
discontinuation as well as for the operating results of the discontinued
operations in 1998 prior to discontinuation.

USE OF ESTIMATES--Preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates. Estimates are used
when accounting for revenue, allowances for uncollectible receivables,
investments in affiliates, depreciation and amortization, profits on long-term
contracts, asset write-downs, employee benefit plans, taxes and discontinued
operations.

PRINCIPLES OF CONSOLIDATION--Our consolidated financial statements include
the accounts of the Company and our majority-owned and controlled subsidiaries
after elimination of intercompany accounts and transactions. Investments in
affiliated companies over which we have the ability to exercise significant
influence are accounted for using the equity method.

RECLASSIFICATIONS--Certain amounts previously presented have been
reclassified to conform to the current presentation.

CASH AND CASH EQUIVALENTS--We consider short-term, highly liquid investments
with original maturities of 90 days or less to be cash equivalents. Such
investments were $23,500,000 at June 30, 2000, and $21,700,000 at June 30, 1999.

RECEIVABLES FROM CLIENTS--Billed receivables from clients are presented at
their billed amount less an allowance for doubtful accounts. Unbilled
receivables are stated at full billing rates less an allowance for estimated
uncollectible amounts.

REVENUE RECOGNITION--For consulting services, fees from clients are recorded
as services are performed and are presented net of write-offs and estimated
uncollectible amounts. Services rendered are generally billed on a monthly basis
using fee arrangements defined at the inception of the project. Revenue from
long-term contracts is recognized on the percentage of completion basis.
Anticipated contract losses are recognized as they become known. We recognize
revenue for administrative and recordkeeping operations as earned.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101 "Revenue
Recognition in Financial Statements" (SAB 101) which summarizes certain of the
staff's views on revenue recognition. Our revenue recognition policies have been
and continue to be in accordance with SAB 101.

F-7

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSETS--Intangible assets consist primarily of goodwill related
to the excess cost over net assets of purchased companies. Goodwill is generally
amortized on a straight-line basis over seven to fifteen years. We regularly
assess the recoverability of unamortized goodwill and other long-lived assets by
comparing the probable future cash flows with the net book value of the
underlying assets. Losses so identified are then measured as the difference
between the net book value of the asset and the discounted present value of the
cash flows and are recorded as identified.

EMPLOYEE RECEIVABLES--We had outstanding employee receivables included in
other current and noncurrent assets of $2,173,000 and $2,440,000 at June 30,
2000 and June 30, 1999, respectively, related primarily to employee relocations.

FOREIGN CURRENCY TRANSLATION--Gains and losses on foreign currency
transactions are recognized currently in the consolidated statements of
operations. Assets and liabilities of our subsidiaries outside the United States
are translated into the reporting currency, the U.S. dollar, based on exchange
rates at the balance sheet date. Revenue and expenses of our subsidiaries
outside the United States are translated into U.S. dollars at the average
exchange rates during the year. Gains and losses on translation of our equity
interests in our subsidiaries outside the United States are not included in the
consolidated statements of operations but are reported separately and
accumulated as the cumulative translation gain or loss within permanent
shareholders' equity in the consolidated balance sheets. Foreign currency
translation gains or losses on intercompany receivables and payables are not
recognized because such amounts are considered to be permanent and are not
expected to be liquidated.

FAIR VALUE OF FINANCIAL INSTRUMENTS--The carrying amount of our cash and
cash equivalents, short-term investments, receivables from clients and notes and
accounts payable and accrued liabilities approximates fair value because of the
short maturity and ready liquidity of those instruments. We had no borrowings
outstanding under our revolving credit agreement at June 30, 2000 and June 30,
1999. We know of no event of default that would require us to satisfy the
guarantees described in Notes 9 and 16 other than as reflected in the
Consolidated Financial Statements.

CONCENTRATION OF CREDIT RISK--Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of
certain cash and cash equivalents, short-term investments and receivables from
clients. We invest our excess cash with high quality financial institutions.
Concentrations of credit risk with respect to receivables from clients are
limited due to our large number of customers and their dispersion across many
industries and geographic regions.

STOCK-BASED COMPENSATION--We have elected to follow Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees, for the stock
option plan adopted in fiscal year 2000. See Note 17. Compensation expense, if
any, would be recorded and measured as the difference between the fair market
value of the stock at the date of the grant and the option price. The
compensation expense would be recognized over the five-year vesting period
identified in the plan. For any cash based, non-stock awards, such as stock
appreciation rights, compensation expense will be recognized over the vesting
period to the extent that the market price of the stock

F-8

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
increases. We have elected the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation.
Management expects any compensation expense recognized under the stock option
plan to be immaterial to our financial statements.

EARNINGS PER SHARE--The computation of earnings per share is based upon the
weighted average number of shares of redeemable common stock outstanding. The
number of shares (in thousands) used in the computation is 15,000 in fiscal year
2000, 15,215 in fiscal year 1999, and 17,170 in fiscal year 1998.

PRO FORMA EARNINGS PER SHARE (UNAUDITED)--On June 26, 2000, shareholders
approved a Company reorganization whereby each share of Watson Wyatt & Company's
currently outstanding stock will be converted into one share of class B-1 and
one share of class B-2 common stock of Watson Wyatt & Company Holdings
contingent upon the consummation of the public offering of Class A common stock
of Watson Wyatt & Company Holdings. See Note 17. Pro forma earnings per share
information gives effect to the reorganization as if it occurred July 1, 1999.
On a pro forma basis, the number of shares (in thousands) used in the
computation is 30,000 in fiscal year 2000.

COMPREHENSIVE INCOME--In fiscal year 1999, we adopted Statement of Financial
Accounting Standards ("SFAS") No. 130 "Reporting Comprehensive Income."
Comprehensive income includes net income and changes in the cumulative foreign
currency translation gain or loss. For the years ended June 30, 2000, 1999 and
1998, comprehensive income (loss) totaled $17,146,000, $21,167,000 and
$(129,870,000), respectively.

NOTE 2--CASH FLOW INFORMATION

Net cash from operating activities in the consolidated statements of cash
flows includes cash payments for:

[Download Table]

YEAR ENDED JUNE 30
------------------------------
2000 1999 1998
-------- -------- --------

Interest expense................................ $ 1,879 $1,889 $ 2,639
Income taxes.................................... $21,707 $5,462 $18,679

NOTE 3--INVESTMENTS IN AFFILIATES

Entities accounted for under the equity method are:

[Download Table]

JUNE 30
OWNERSHIP -------------------
INTEREST 2000 1999
--------- -------- --------

Watson Wyatt Partners......................... 10.0% $11,113 $ 9,265
Watson Wyatt Holdings (Europe) Limited........ 25.0% 5,502 6,041
------- -------
Total Investment in Affiliates................ $16,615 $15,306
======= =======

F-9

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 3--INVESTMENTS IN AFFILIATES (CONTINUED)
On April 1, 1995, we transferred our United Kingdom ("U.K.") operations to
Watson Wyatt Partners, formerly R. Watson & Sons ("Watsons"), an actuarial
partnership based in the U.K., and received a beneficial interest in Watsons and
a 10% interest in a defined profit pool of Watsons. We also transferred our
Continental European operations to a newly-formed holding company, Watson Wyatt
Holdings (Europe) Limited ("WWHE"), jointly owned and controlled by us and
Watsons, in exchange for 50.1% of its shares. The Company's historical basis in
the assets and liabilities carried over. Effective July 1, 1998, we sold one
half of our investment in WWHE to Watsons; no gain or loss was recognized on the
transaction.

Our interest in Watsons is an investment in a general partnership. We retain
the ability to exercise significant influence over WWHE. As a result, both
investments are accounted for under the equity method.

At June 30, 2000, our investments in WWHE and Watsons exceeded our share of
the underlying net assets by $2,047,000 due primarily to the capitalization of
external transaction costs incurred by us. This basis differential is being
amortized over periods of 10 to 15 years.

The Company's pre-tax income from affiliates includes the following:

[Download Table]

YEAR ENDED JUNE 30
------------------------------
2000 1999 1998
-------- -------- --------

Equity in income from affiliates.................... $3,326 $2,760 $724
Amortization of basis differential.................. (210) (236) (466)
------ ------ ----
Income from affiliates.............................. $3,116 $2,524 $258
====== ====== ====

Combined summarized balance sheet information at June 30 for the Company's
affiliates follows:

[Download Table]

2000 1999
--------- ---------

Current assets........................................ $155,980 $117,717
Noncurrent assets..................................... 17,920 17,286
-------- --------
Total assets........................................ $173,900 $135,003
======== ========

Current liabilities................................... $ 64,640 $ 65,171
Noncurrent liabilities................................ 52,283 30,810
Shareholders' equity.................................. 56,977 39,022
-------- --------
Total liabilities & shareholders' equity............ $173,900 $135,003
======== ========

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 3--INVESTMENTS IN AFFILIATES (CONTINUED)
Our operating results include our proportionate share of income from equity
investments from the dates of investment. Combined summarized operating results
for the years ended June 30, reported by the affiliates follow:

[Download Table]

2000 1999 1998
--------- --------- ---------

Revenue..................................... $224,507 $206,463 $173,012
Operating expenses.......................... 166,265 155,330 135,577
-------- -------- --------
Income before tax........................... $ 58,242 $ 51,133 $ 37,435
======== ======== ========
Net income.................................. $ 58,312 $ 51,116 $ 38,176
======== ======== ========

NOTE 4--FIXED ASSETS

Furniture, fixtures, equipment and leasehold improvements are recorded at
cost, and presented net of accumulated depreciation or amortization. Furniture,
fixtures and equipment are depreciated using straight-line and accelerated
methods over lives ranging from three to seven years. Leasehold improvements are
amortized on a straight-line basis over the shorter of the assets' lives or
lease terms.

The components of fixed assets are:

[Download Table]

JUNE 30
-------------------
2000 1999
-------- --------

Furniture, fixtures and equipment........................ $98,578 $96,096
Leasehold improvements................................... 29,870 27,069
------- -------
128,448 123,165
Less: accumulated depreciation and amortization.......... (83,211) (80,368)
------- -------
Net fixed assets......................................... $45,237 $42,797
======= =======

NOTE 5--PENSION AND SAVINGS PLANS

In fiscal year 1999, we adopted the revised disclosure requirements of SFAS
No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits." SFAS 132 standardized the disclosure of pensions and other
postretirement benefits but did not change the accounting for these benefits.
Prior years' information has been reclassified to conform to the 1999 disclosure
format.

F-11

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 5--PENSION AND SAVINGS PLANS (CONTINUED)
The noncurrent portions of accrued costs related to our principal retirement
plans are:

[Download Table]

JUNE 30
-------------------
2000 1999
-------- --------

Defined benefit retirement plans......................... $27,905 $28,149
Canadian Separation Allowance Plan....................... 6,116 5,953
Postretirement benefits other than pensions.............. 45,441 43,038
------- -------
Accrued retirement benefits.............................. $79,462 $77,140
======= =======

DEFINED BENEFIT PLANS

We sponsor both qualified and non-qualified non-contributory defined benefit
pension plans covering substantially all of our associates. Under our principal
plans (U.S., Canada, and Hong Kong), benefits are based on the number of years
of service and the associate's compensation during the three highest paid
consecutive years of service.

Contributions are limited to amounts that are currently deductible for tax
purposes, and the excess of expense over such contributions and direct payments
under non-qualified plan provisions is accrued.

Net periodic pension cost consists of the following components:

[Download Table]

YEAR ENDED JUNE 30
------------------------------
2000 1999 1998
-------- -------- --------

Service cost................................... $23,968 $22,976 $18,340
Interest cost.................................. 26,163 23,909 22,302
Expected return on plan assets................. (40,138) (37,437) (31,910)
Amortization of transition obligation.......... 201 201 201
Amortization of net unrecognized gains......... (6,188) (5,979) (6,316)
Amortization of prior service cost............. 2,012 1,841 1,794
------- ------- -------
Net periodic pension cost...................... $ 6,018 $ 5,511 $ 4,411
======= ======= =======

During fiscal year 1999, we acquired a portion of KPMG's actuarial
consulting services. In connection with this transaction, we recognized
additional pension expense of $665,000.

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 5--PENSION AND SAVINGS PLANS (CONTINUED)
The following tables set forth the changes in the projected pension benefit
obligation and fair value of the pension plan assets:

[Download Table]

JUNE 30
---------------------
2000 1999
--------- ---------

Benefit obligation at beginning of year............... $377,407 $353,658
Service cost.......................................... 23,968 22,976
Interest cost......................................... 26,163 23,909
Actuarial gains....................................... (13,959) (8,503)
Benefit payments...................................... (21,352) (14,539)
Plan amendments....................................... 1,948 --
Foreign currency adjustment........................... (151) (94)
-------- --------
Benefit obligation at end of year..................... $394,024 $377,407
======== ========

[Download Table]

JUNE 30
---------------------
2000 1999
--------- ---------

Fair value of plan assets at beginning of year........ $411,102 $381,398
Actual return on plan assets.......................... 58,077 36,473
Divestitures.......................................... (254) --
Company contributions................................. 12,786 7,889
Benefit payments...................................... (21,352) (14,539)
Foreign currency adjustment........................... (205) (119)
-------- --------
Fair value of plan assets at end of year.............. $460,154 $411,102
======== ========

Pension plan assets consist of domestic equity, international equity and
fixed income securities.

The following table sets forth selected information for plans with
accumulated benefit obligations in excess of plan assets:

[Download Table]

JUNE 30
-------------------
2000 1999
-------- --------

Projected benefit obligation............................. $86,620 $86,703
Accumulated benefit obligation........................... 46,892 42,740
Fair value of plan assets................................ -- --

F-13

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 5--PENSION AND SAVINGS PLANS (CONTINUED)
The accrued pension benefit cost recognized in the Company's consolidated
balance sheets is computed as follows:

[Download Table]

JUNE 30
-------------------
2000 1999
-------- --------

Funded status at end of year........................... $ 66,384 $ 33,695
Unrecognized prior service cost........................ 9,187 9,255
Unrecognized net gain.................................. (101,248) (75,579)
Unrecognized transition obligation..................... 592 793
-------- --------
Net accrued pension liability.......................... $(25,085) $(31,836)
======== ========

Prepaid pension benefit cost........................... $ 38,918 $ 26,691
Accrued pension benefit liability...................... (64,003) (58,527)
Intangible assets...................................... -- --
Accumulated other comprehensive income................. -- --
-------- --------
Net accrued pension liability.......................... $(25,085) $(31,836)
======== ========

Assumptions used in the valuation for the U.S. plan, which comprises the
majority of the principal defined benefit pension plans, include:

[Download Table]

JUNE 30
------------------------------
2000 1999 1998
-------- -------- --------

Discount rate, projected benefit obligation...... 7.25% 7.00% 6.75%
Discount rate, net periodic pension cost......... 7.00% 6.75% 7.50%
Expected long-term rate of return on assets...... 10.00% 10.00% 10.00%
Rate of increase in compensation levels.......... 5.34% 5.34% 5.80%

DEFINED CONTRIBUTION PLANS

We sponsor a savings plan which provides benefits to substantially all U.S.
associates and under which we match employee contributions at 50% of the first
6% of total pay, which includes base salary, overtime and annual
performance-based bonuses. Vesting of the Company match occurs after three years
for new employees and is 100% for all employees hired before January 1, 1997.
The expense in fiscal years 2000, 1999 and 1998 for the match was $5.6 million,
$4.5 million and $5.1 million, respectively. Under the plan, we also have the
ability to make discretionary profit-sharing contributions. We made no profit
sharing contributions during fiscal years 2000, 1999 or 1998. We also sponsor a
Canadian Separation Allowance Plan (CSAP) which provides benefits to
substantially all Canadian associates. The CSAP is an unfunded book reserve
arrangement; as such, the amounts due to associates are recorded as a liability
in the consolidated balance sheets of the Company. CSAP expense for fiscal years
2000, 1999 and 1998 amounted to $372,000, $377,000 and $293,000, respectively.

F-14

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 6--BENEFITS OTHER THAN PENSIONS

HEALTH CARE BENEFITS

We sponsor a contributory health care plan that provides hospitalization,
medical and dental benefits to substantially all U.S. associates. We accrue a
liability for estimated incurred but unreported claims based on projected use of
the plan as well as paid claims of prior periods. The liability totaled
$2,483,000 at June 30, 2000 and $2,495,000 at June 30, 1999, and is included in
accounts payable and accrued liabilities in the consolidated balance sheets.

POSTRETIREMENT BENEFITS

We provide certain health care and life insurance benefits for retired
associates. The principal plans cover associates in the U.S. and Canada who have
met certain eligibility requirements. Our principal plans are unfunded.

Net periodic postretirement benefit cost consists of the following
components:

[Download Table]

YEAR ENDED JUNE 30
------------------------------
2000 1999 1998
-------- -------- --------

Service cost...................................... $1,877 $1,898 $1,848
Interest cost..................................... 2,216 2,178 2,133
Amortization of transition obligation............. 46 46 46
Amortization of net unrecognized gains............ (683) (488) (584)
Amortization of prior service cost................ (127) (127) (127)
------ ------ ------
Net periodic postretirement benefit cost.......... $3,329 $3,507 $3,316
====== ====== ======

The following tables set forth the changes in the accumulated postretirement
benefit obligation, Company contributions and benefit payments. Actuarial gains
primarily relate to a 0.25% increase in the discount rate used in the valuation
of the U.S. plan.

[Download Table]

JUNE 30
-------------------
2000 1999
-------- --------

Benefit obligation at beginning of year................ $ 34,981 $ 32,326
Service cost........................................... 1,877 1,898
Interest cost.......................................... 2,216 2,178
Participant contributions.............................. 267 175
Actuarial gains........................................ (3,102) (563)
Acquisitions........................................... -- 245
Benefit payments....................................... (1,413) (1,267)
Foreign currency adjustment............................ (16) (11)
-------- --------
Benefit obligation at end of year...................... $ 34,810 $ 34,981
======== ========

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 6--BENEFITS OTHER THAN PENSIONS (CONTINUED)

[Download Table]

JUNE 30
-------------------
2000 1999
-------- --------

Fair value of plan assets at beginning of year......... $ -- $ --
Company contributions.................................. 1,146 1,092
Participant contributions.............................. 267 175
Benefit payments....................................... (1,413) (1,267)
-------- --------
Fair value of plan assets at end of year............... $ -- $ --
======== ========

The accrued other postretirement benefit cost recognized in the Company's
consolidated balance sheets is computed as follows:

[Download Table]

JUNE 30
-------------------
2000 1999
-------- --------

Funded status at end of year........................... $(34,810) $(34,981)
Unrecognized prior service cost........................ (1,198) (1,325)
Unrecognized net gain.................................. (11,163) (8,763)
Unrecognized transition obligation..................... 604 650
-------- --------
Net accrued postretirement liability................... $(46,567) $(44,419)
======== ========

Prepaid postretirement benefit cost.................... $ -- $ --
Accrued postretirement benefit liability............... (46,567) (44,419)
Intangible assets...................................... -- --
Accumulated other comprehensive income................. -- --
-------- --------
Net accrued postretirement liability................... $(46,567) $(44,419)
======== ========

Assumptions used in the valuation for the U.S. plan, which comprises the
majority of the principal postretirement plans, include:

[Download Table]

JUNE 30
------------------------------
2000 1999 1998
-------- -------- --------

Health care cost trend, accumulated benefit
obligation:
Pre-65 benefits
(decreasing to 5.00% for 2005 and thereafter)..... 8.00% 7.70% 8.40%
Post-65 benefits
(decreasing to 5.00% for 2008 and thereafter)..... 9.00% 7.10% 7.70%
Discount rate, accumulated benefit obligation
postretirement benefit............................ 7.25% 7.00% 6.75%
Discount rate, net periodic cost.................... 7.00% 6.75% 7.50%

F-16

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 6--BENEFITS OTHER THAN PENSIONS (CONTINUED)
A one percentage point change in the assumed health care cost trend rates
would have the following effect:

[Download Table]

1% INCREASE 1% DECREASE
----------- -----------

Effect on net periodic postretirement benefit cost
in fiscal year 2000............................... $ 266 $ (76)
Effect on accumulated postretirement benefit
obligation as of June 30, 2000.................... 1,651 (1,714)

NOTE 7--ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of:

[Download Table]

JUNE 30
---------------------
2000 1999
--------- ---------

Accounts payable and accrued liabilities.............. $ 58,653 $ 53,834
Accrued salaries and bonuses.......................... 83,357 68,405
Current portion of defined benefit retirement plans
and postretirement benefits other than pensions..... 2,491 9,948
Accrued vacation...................................... 14,840 13,578
Advance billings...................................... 8,492 6,854
-------- --------
Total accounts payable and accrued liabilities........ $167,833 $152,619
======== ========

NOTE 8--LEASES

We lease office space, furniture and selected computer equipment under
operating lease agreements with terms generally ranging from one to ten years.
We have entered into sublease agreements for some of our excess leased space.
The rental expense was $44,563,000, $43,631,000 and $43,133,000 for fiscal years
2000, 1999 and 1998, respectively. Sublease income was $3,534,000, $4,208,000
and $3,905,000 for fiscal years 2000, 1999 and 1998, respectively.

Future cash outlays for operating lease commitments and cash inflows for
sublease income are:

[Download Table]

LEASE SUBLEASE
COMMITMENTS INCOME
----------- --------

2001................................................. $ 46,633 $4,537
2002................................................. 39,908 3,866
2003................................................. 28,113 116
2004................................................. 21,593 --
2005................................................. 16,512 --
Thereafter........................................... 36,310 --
-------- ------
$189,069 $8,519
======== ======

F-17

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 8--LEASES (CONTINUED)
As a result of relocations and the subleasing of excess office space, we
recognized lease termination losses of $0, $341,000 and $790,000 in fiscal years
2000, 1999 and 1998, respectively.

NOTE 9--NOTE PAYABLE

We have a $120,000,000 credit facility with a group of banks at an interest
rate that varies with LIBOR and/or the Prime Rate, plus an annual commitment fee
that varies with our financial leverage and is paid on the unused portion of the
credit facility. No amounts were outstanding under the revolving portion of the
credit facility as of June 30, 2000 or 1999. The credit facility requires us to
observe certain covenants (including requirements as to minimum net worth and
other financial and restrictive covenants) and is secured by a blanket lien on
all assets. At June 30, 2000 we were in compliance with all covenants under the
credit facility. The revolving portion of the credit facility is scheduled to
mature on June 30, 2003.

Of the total credit line, $95,000,000 is available to us as revolving credit
for operating needs, $2,225,000 of which is unavailable as a result of support
required for letters of credit issued under the credit line. The remaining
$25,000,000 is available to secure loans to associates for the purchase of
redeemable common stock made available under our Stock Purchase Program. We
guarantee these loans to our shareholders, the aggregate outstanding balances of
which totaled $14,385,000 and $20,316,000 at June 30, 2000 and 1999,
respectively. Shares totaling 3,273,000 and 4,735,000 of the Company's
redeemable common stock were pledged by shareholders to secure these loans at
June 30, 2000 and 1999, respectively.

NOTE 10--REDEEMABLE COMMON STOCK

Substantially all of our redeemable common stock is held by or for the
benefit of our employees and, pursuant to our bylaws, is subject to certain
restrictions. In connection with these restrictions, we have the following
rights and obligations regarding purchases and sales of our common stock:

a) The Company has the first option to purchase, or to designate associates who
are eligible to purchase, any shares offered for sale by a shareholder.
Shares not purchased by the Company or its designees may be sold to
identified transferees, subject to the restrictions contained in the bylaws.

b) Upon the termination of employment, bankruptcy of a shareholder, or the
imposition of a lien or attachment on any stock, the shares held by the
shareholder or subject to attachment are considered to be offered for sale.
In these circumstances, the Company is obligated to purchase any such
shares.

Pursuant to our bylaws, the price for all sales by the Company of redeemable
common stock is the formula book value per share (defined in the bylaws as
"Formula Book Value") of such stock as of the last day of the preceding year.
Amounts paid by the Company to repurchase redeemable common stock are equal to
the formula book value as of the prior year end, adjusted to reflect the pro
rata appreciation in the formula book value per share from the last day of the
preceding year to the end of the current year and pro rata dividends paid during
the year.

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 10--REDEEMABLE COMMON STOCK (CONTINUED)
Formula book value as used herein means the net book value of our redeemable
common stock as of June 30, 1996, increased or decreased by net income or
losses, and all other Generally Accepted Accounting Principles ("GAAP") basis
increases or decreases to net book value occurring after June 30, 1996, adjusted
to (i) spread the economic impact of certain real estate sublease losses over
the remaining life of the sublease, (ii) eliminate annual changes in the
currency translation adjustment occurring after June 30, 1996, and
(iii) eliminate the after tax increases or decreases in net book value recorded
in accordance with GAAP as a result of the discontinuation of the benefits
administration outsourcing business. The formula book value was $7.80 at
June 30, 2000 and $6.68 at June 30, 1999.

The following schedule computes the formula book value per share at
June 30:

[Download Table]

2000 1999
--------- ---------

Consolidated net worth[1]................................... $ 46,200 $ 36,882
Adjustment for the compensation survey items:
50% of consolidated income received from compensation survey
business.................................................. 5,915 5,915
Add: Adjustment for after-tax effect of discontinuation of
benefits administration outsourcing business.............. 61,228 61,228
Add: Adjustment for after-tax effect of lease losses........ 2,137 3,606
-------- --------
Formula book value of redeemable common stock............... $115,480 $107,631
======== ========
Number of shares of redeemable common stock outstanding..... 14,805 16,112
======== ========
Formula book value per share of redeemable common stock..... $ 7.80 $ 6.68
======== ========

------------------------

[1] After adjusting for currency translation as specified in the Company's
bylaws of $4,989 in 2000 and $3,602 in 1999 and redemption value of
redeemable common stock of $115,480 at June 30, 2000, and $107,631 at June
30, 1999.

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 10--REDEEMABLE COMMON STOCK (CONTINUED)
In view of our obligation to repurchase our redeemable common stock, the
Securities and Exchange Commission requires that the redemption value of
outstanding shares be classified as redeemable common stock and not be portrayed
as permanent capital. The amount presented as redeemable common stock outside
the permanent shareholders' equity section is stated as the amount at which we
would be required to repurchase shares at the most recent fiscal year end
formula book value per share. In the permanent shareholders' equity section, the
"adjustment for redemption value less (greater) than amounts paid/deemed paid in
by shareholders" represents the amount that the redeemable value is less than
(exceeds) the cost of the stock.

[Enlarge/Download Table]

NUMBER OF REDEEMABLE
SHARES COMMON STOCK
---------- ------------

Balance at June 30, 1997.................................... 18,130,430 $ 96,091
Redemption of shares........................................ (2,410,425) (13,141)
Issuance of shares.......................................... 196,752 1,005
Adjustment of redemption value for change in formula book
value per share........................................... -- 12,341
---------- --------
Balance at June 30, 1998.................................... 15,916,757 $ 96,296
Redemption of shares........................................ (2,361,542) (15,124)
Issuance of shares.......................................... 2,557,201 15,451
Adjustment of redemption value for change in formula book
value per share........................................... -- 11,008
---------- --------
Balance at June 30, 1999.................................... 16,112,416 $107,631
Redemption of shares........................................ (1,326,971) (9,347)
Issuance of shares.......................................... 19,700 132
Adjustment of redemption value for change in formula book
value per share........................................... -- 17,064
---------- --------
Balance at June 30, 2000.................................... 14,805,145 $115,480
========== ========

We sponsor a Stock Purchase Plan ("SPP") which allows virtually all
associates to become shareholders. There was no formal stock sale under the SPP
in fiscal year 2000, although during this period we received $132,000 from four
private placements of an aggregate of 19,700 shares of stock under Section 4(2)
of the Securities Act. During the fiscal year ended June 30, 1999, we received
$15,451,000 from the sale of 2,557,201 shares of stock under the SPP.

NOTE 11--INCOME TAXES

The provision for income taxes is based upon reported income before income
taxes. Deferred income tax assets and liabilities reflect the effect of
temporary differences between the assets and liabilities recognized for
financial reporting purposes and the amounts recognized for income tax purposes.
The Company recognizes deferred tax assets if it is more likely than not that a
benefit will be realized.

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 11--INCOME TAXES (CONTINUED)
The components of the continuing operations income tax provision before
minority interest and discontinued operations include:

[Enlarge/Download Table]

YEAR ENDED JUNE 30
------------------------------
2000 1999 1998
-------- -------- --------

Current tax expense:
U.S....................................................... $ 5,276 $10,817 $ 9,972
State and local........................................... 438 4,050 3,324
Foreign................................................... 6,630 3,877 1,820
------- ------- -------
12,344 18,744 15,116
------- ------- -------
Deferred tax (benefit) expense:
U.S....................................................... 1,601 (5,776) (337)
State and local........................................... 3,231 (1,407) (1,706)
Foreign................................................... (1,981) (113) 61
------- ------- -------
2,851 (7,296) (1,982)
------- ------- -------
Total provision for income taxes............................ $15,195 $11,448 $13,134
======= ======= =======

Current foreign tax expense attributable to income from continuing
operations was net of approximately $180,000, representing the tax benefit of a
net operating loss carryover for the year ended June 30, 2000. There was no such
benefit in the years ended June 30, 1999 and 1998.

Deferred income tax assets (liabilities) included in the consolidated
balance sheets at June 30, 2000 and June 30, 1999 are comprised of the
following:

[Download Table]

JUNE 30
-------------------
2000 1999
-------- --------

Foreign temporary differences............................... $ (722) $(2,595)
------- -------
Gross deferred tax liabilities............................ (722) (2,595)
------- -------
Cash method of accounting for U.S. income tax purposes...... 2,475 3,744
Difference between book and tax depreciation................ 4,573 3,202
Accrued retirement benefits................................. 33,817 37,137
Amortization of deferred rent............................... 3,804 5,697
Foreign temporary differences............................... 5,125 6,367
Foreign net operating loss carryforwards.................... 1,617 1,989
Discontinued operations exit costs.......................... 6,562 7,230
Tax credit carryforwards.................................... 1,042 --
Other....................................................... 241 317
------- -------
Gross deferred tax assets................................. 59,256 65,683
------- -------
Deferred tax assets valuation allowance................... (5,179) (6,882)
------- -------
Net deferred tax asset.................................... $53,355 $56,206
======= =======

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 11--INCOME TAXES (CONTINUED)

At June 30, 2000 we had foreign tax credit carryforwards for U.S. tax
purposes of $393,000, which expire in 2002 through 2005. At June 30, 2000, we
had unused loss carryforwards for tax purposes in various jurisdictions outside
the U.S. amounting to $5,749,000, of which $4,171,000 can be indefinitely
carried forward under local statutes. The remaining foreign loss carryforwards
will expire, if unused, in varying amounts from 2001 through 2008. The valuation
allowance applies to the tax effect of the foreign net operating loss
carryforwards $(1,617,000), the tax effect of certain foreign temporary expenses
$(3,169,000) and foreign tax credit carryovers $(393,000) for which
realizability is considered uncertain.

The net change in the valuation allowance of $1,703,000 in fiscal year 2000
and $611,000 in fiscal year 1999 is due primarily to the tax effect of the
change in realizable foreign net operating losses, foreign tax credits and
non-deductible foreign expenses.

Domestic and foreign components of income (loss) before taxes, minority
interest and discontinued operations for each of the three years ended June 30
are as follows:

[Download Table]

2000 1999 1998
-------- -------- --------

Domestic...................................... $22,581 $15,203 $(47,435)
Foreign....................................... 11,262 8,597 4,469
------- ------- --------
$33,843 $23,800 $(42,966)
======= ======= ========

The reported income tax provision for continuing operations differs from the
amounts that would have resulted had the reported income before income taxes
been taxed at the U.S. federal statutory rate. The principal reasons for the
differences between the actual amounts provided and those which would have
resulted from the application of the U.S. federal statutory tax rate are as
follows:

[Enlarge/Download Table]

YEAR ENDED JUNE 30
------------------------------
2000 1999 1998
-------- -------- --------

Tax provision (benefit) at U.S. federal statutory tax rate
of 35%.................................................... $11,845 $ 8,330 $(15,038)
Increase (reduction) resulting from:
Non-deductible compensation expense....................... -- -- 24,467
Foreign income subject to higher (lower) foreign tax
rates................................................... 432 (377) (324)
Tax benefit of foreign losses reserved, net............... 275 881 852
State income taxes, net of federal tax effect............. 2,384 1,207 1,618
Non-deductible amortization and other expenses............ 1,323 849 758
Tax credits............................................... (1,282) -- (353)
Other..................................................... 218 558 1,154
------- ------- --------
Income tax provision........................................ $15,195 $11,448 $ 13,134
======= ======= ========

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 12--NON-RECURRING COMPENSATION CHARGE

In accordance with generally accepted accounting principles, we recorded a
charge against operating results of $69,906,000 in fiscal year 1998 as
compensation expense. This charge arises because we changed the method of
calculation of our formula book value during fiscal year 1998, through a
shareholder vote, to eliminate from the formula book value calculation the
effect of the charge taken for discontinued operations resulting from the
discontinuation of our benefits administration outsourcing business.

The non-recurring compensation charge does not represent a call against
Company resources and will not recur unless we modify our formula book value
calculation again. We have separately disclosed in the Statement of Operations
the amount of the charge so that readers of the financial statements may
consider its effect on earnings and its infrequent nature.

NOTE 13--SEGMENT INFORMATION

We are primarily organized geographically and have seven reportable
segments:

(1) U.S. East

(2) U.S. Central

(3) U.S. West

(4) Asia/Pacific

(5) Canada

(6) Latin America

(7) Data Services

We evaluated the performance of the segments and allocated resources to them
based on net operating income. Prior year data has been restated to be
consistent with current year classifications for comparative purposes.

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 13--SEGMENT INFORMATION (CONTINUED)
The table below presents specified information about reported segments as of
and for the year ended June 30, 2000 (in thousands):

[Enlarge/Download Table]

U.S. U.S. U.S. ASIA/ LATIN DATA
EAST CENTRAL WEST PACIFIC CANADA AMERICA SERVICES TOTAL
--------- --------- -------- -------- -------- -------- -------- ---------

Revenue (net of
reimbursable
expenses)............ $214,223 $176,135 $79,127 $59,747 $43,975 $8,082 $12,337 $593,626
Net operating income... 56,806 34,517 9,058 10,187 3,739 460 4,318 119,085
Interest expense....... 1,307 1,027 205 -- 229 152 -- 2,920
Depreciation &
amortization......... 6,123 4,796 3,483 1,444 1,389 214 148 17,597
Receivables............ 48,287 44,668 14,811 15,259 11,723 2,979 -- 137,727
Income from
affiliates........... -- -- -- -- -- -- -- 3,116

The table below presents specified information about reported segments as of
and for the year ended June 30, 1999 (in thousands):

[Enlarge/Download Table]

U.S. U.S. U.S. ASIA/ LATIN DATA
EAST CENTRAL WEST PACIFIC CANADA AMERICA SERVICES TOTAL
--------- --------- -------- -------- -------- -------- -------- ---------

Revenue (net of
reimbursable
expenses) $188,697 $154,937 $73,453 $48,688 $41,525 $7,115 $12,593 $527,008
Net operating income 45,522 27,351 1,382 6,258 2,772 141 4,241 87,667
Interest expense 1,158 856 471 17 300 98 -- 2,900
Depreciation &
amortization 5,950 4,414 3,351 1,281 1,186 143 177 16,502
Receivables 47,198 39,905 18,730 12,729 12,491 2,527 -- 133,580
Income from affiliates -- -- -- -- -- -- -- 2,524

The table below presents specified information about reported segments as of
and for the year ended June 30, 1998 (in thousands):

[Enlarge/Download Table]

U.S. U.S. U.S. ASIA/ LATIN DATA
EAST CENTRAL WEST PACIFIC CANADA AMERICA SERVICES TOTAL
--------- --------- -------- -------- -------- -------- -------- ---------

Revenue (net of
reimbursable
expenses)............ $157,524 $140,935 $82,286 $42,374 $40,664 $7,215 $13,253 $484,251
Net operating income... 28,286 25,127 10,476 65 4,315 574 3,742 72,585
Interest expense....... 963 710 494 33 314 68 14 2,596
Depreciation &
amortization......... 5,801 3,758 2,822 1,458 1,077 149 166 15,231
Receivables............ 36,044 33,113 21,375 11,719 11,992 2,097 -- 116,340
Income from
affiliates........... -- -- -- -- -- -- -- 258

Information about interest income and tax expense is not presented as a
segment expense because it is not considered a responsibility of the segment's
operating management.

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 13--SEGMENT INFORMATION (CONTINUED)
A reconciliation of the information reported by segment to the consolidated
amounts follows for the years ended June 30:

[Enlarge/Download Table]

2000 1999 1998
--------- --------- ---------

REVENUE:
Total segment revenue....................................... $593,626 $527,008 $484,251
Reimbursable expenses not included in segment revenue....... 30,829 30,426 28,686
Other, net.................................................. 128 (574) (277)
-------- -------- --------
Consolidated revenue........................................ $624,583 $556,860 $512,660
======== ======== ========
NET OPERATING INCOME:
Total segment income........................................ $119,085 $ 87,667 $ 72,585
Non-recurring compensation charge........................... -- -- (69,906)
Sublease loss............................................... -- (341) (790)
Income from affiliates...................................... 3,116 2,524 258
Differences in allocation methods for depreciation, G&A and
pension costs............................................. (3,218) 1,277 (6,208)
Gain on sale of business units.............................. 583 2,723 3,093
Bonuses and stock incentive bonus plan...................... (81,560) (67,194) (37,400)
Other, net.................................................. (4,163) (2,856) (4,598)
-------- -------- --------
Consolidated pretax income (loss) from continuing
operations................................................ $ 33,843 $ 23,800 $(42,966)
======== ======== ========
INTEREST EXPENSE:
Total segment expense....................................... $ 2,920 $ 2,900 $ 2,596
Differences in allocation method............................ (1,044) (254) 172
-------- -------- --------
Consolidated interest expense............................... $ 1,876 $ 2,646 $ 2,768
======== ======== ========
DEPRECIATION & AMORTIZATION:
Total segment expense....................................... $ 17,597 $ 16,502 $ 15,231
Capitalized software amortization, not allocated to
segments.................................................. -- -- 12,267
Goodwill amortization, not allocated to segments............ 1,852 1,568 549
Differences in allocation method and other.................. (1,571) (2,822) (3,053)
-------- -------- --------
Consolidated depreciation and amortization expense.......... $ 17,878 $ 15,248 $ 24,994
======== ======== ========
RECEIVABLES:
Total segment receivables--billed and unbilled.............. $137,727 $133,580 $116,340
Net valuation differences and receivables of discontinued
operations................................................ 5,011 2,286 13,056
-------- -------- --------
Total billed and unbilled receivables....................... 142,738 135,866 129,396
Assets not reported by segment.............................. 187,222 178,094 138,914
-------- -------- --------
Consolidated assets......................................... $329,960 $313,960 $268,310
======== ======== ========

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 13--SEGMENT INFORMATION (CONTINUED)
The following represents total fees and long lived assets information by
geographic area as of and for the years ended June 30:

[Enlarge/Download Table]

REVENUE LONG LIVED ASSETS
--------------------------------- ------------------------------
2000 1999 1998 2000 1999 1998
--------- --------- --------- -------- -------- --------

United States.................. $512,826 $464,521 $424,246 $50,772 $53,618 $48,108
Foreign........................ 111,757 92,339 88,414 29,980 21,451 19,882
-------- -------- -------- ------- ------- -------
$624,583 $556,860 $512,660 $80,752 $75,069 $67,990
======== ======== ======== ======= ======= =======

Revenue is based on the country of domicile for the legal entity that
originated the revenue. Exclusive of the United States, revenue from no single
country constituted more than 10% of consolidated revenue. Revenue from no
single customer constituted more than 4% of consolidated revenue.

NOTE 14--DISCONTINUED OPERATIONS

During fiscal year 1998, we discontinued our benefits administration
outsourcing business, including our investment in our affiliate, Wellspring
Resources LLC ("Wellspring"), pursuant to a Redemption, Restructuring, and
Indemnity Agreement ("the Restructuring Agreement") by which Wellspring redeemed
our 50% interest in Wellspring effective April 1, 1998. The restructuring
effected, pursuant to the Restructuring Agreement, the implementation of a
discontinuation plan approved by our Board of Directors on February 18, 1998.
Under the Restructuring Agreement, certain outsourcing contracts retained by us
when Wellspring was initially formed in 1996 ("Retained Clients") continued to
be performed until their respective contract expirations.

In connection with the restructuring, we agreed to indemnify Wellspring for
certain costs and losses as a result of services provided by Wellspring on our
behalf. Further, we were released from certain liabilities relating to the
Wellspring business in connection with the redemption.

In 1998, we recorded a pre-tax loss on discontinuation of $109,800,000,
which included the $45,200,000 write-off of our investment in Wellspring, a
$14,000,000 write-off of net capitalized software development costs for the
retained clients and a $50,600,000 provision for completion of any obligations
to clients, vendors or our former venture partner.

In October 1998, we consummated agreements with the remaining retained
clients, Wellspring, and our former venture partner to transfer operating
responsibility for these clients to Wellspring, clarifying the remaining future
obligations and costs related to the discontinuation. Management believes that
savings of $25,000,000 compared with initial estimates made in the third quarter
of fiscal 1998 and $15,000,000 from the amount provided at June 30, 1998 will be
realized from these events. We reduced the amount of its provision for losses
from disposal of the benefits administration outsourcing business in the second
quarter of fiscal year 1999. A credit to income of $15,000,000, less the
associated tax expense of $6,322,000, is reflected in the Consolidated Statement
of Operations for fiscal year 1999 in the line "Adjustment (loss) on disposal of
discontinued outsourcing business."

F-26

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 15--RELATED PARTY TRANSACTIONS

In connection with the contractual servicing of the retained clients (as
defined in Note 16 of this report) which continued through September 1998,
Wellspring provided the services to those clients on our behalf. Expenses
charged to us by Wellspring for such services for fiscal 1999 and 1998 were
$11,600,000 and $41,811,000, respectively. Our obligation to service the
retained clients ceased during fiscal year 1999 and there were no amounts due to
Wellspring at either June 30, 2000 or 1999.

NOTE 16--COMMITMENTS AND CONTINGENT LIABILITIES

We are a defendant in certain lawsuits arising in the normal course of
business, some of which are in their earliest stages. There are no such matters
that management believes will have a material impact on our financial
statements.

As of June 30, 2000 and 1999, we and our affiliates had outstanding letters
of credit of $2,225,000.

We continue to guarantee certain leases for office premises and equipment
for Wellspring. Minimum remaining payments guaranteed under these leases at
June 30, 2000 total $49,300,000, which expire at various dates through 2007.
These leases are also jointly and severally guaranteed by our former partner in
Wellspring, State Street Bank and Trust Company. The estimated loss from the
potential exercise of these guarantees has been included in the loss on disposal
of the benefits administration outsourcing business.

NOTE 17--COMPANY REORGANIZATION AND LONG TERM INCENTIVE PLAN

On June 26, 2000, at a special meeting of the shareholders of Watson Wyatt &
Company, the shareholders approved the following two proposals.

The first proposal was to adopt an Agreement and Plan of Merger among Watson
Wyatt & Company, Watson Wyatt & Company Holdings and WW Merger Subsidiary, Inc.
Under the merger agreement, among other things, the merger subsidiary will merge
into Watson Wyatt & Company, and each share of Watson Wyatt & Company's
currently outstanding common stock will be converted into one share of
class B-1 and one share of class B-2 common stock of Watson Wyatt & Company
Holdings, contingent on the consummation of the public offering of class A
common stock of Watson Wyatt & Company Holdings.

The second proposal was to adopt the 2000 Long Term Incentive Plan. The plan
provides for grants of stock options and stock appreciation rights to be made by
Watson Wyatt & Company Holdings to eligible employees of Watson Wyatt & Company
Holdings and its subsidiaries, including Watson Wyatt & Company. This proposal
is contingent on the approval of the merger, the consummation of the merger and
the completion of the public offering. The Plan provides for the grant of
options to employees and directors to purchase up to 4,500,000 shares of
class A common stock at fair value at the date of grant. The options will expire
seven years after date of grant, subject to early termination in specific
circumstances and will vest on a pro-rata basis over five years.

F-27

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WATSON WYATT & COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(TABULAR AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PERCENTAGE DATA)

NOTE 17--COMPANY REORGANIZATION AND LONG TERM INCENTIVE PLAN (CONTINUED)
Because the Plan provides for stock options with an exercise price that is
equal to fair market value of the common stock at the date of grant and because
there are no uncertainties that would require variable accounting, no
compensation expense will result. In a few foreign jurisdictions where option
grants are impractical, we will issue stock appreciation rights, which will
result in the recognition of compensation expense over a vesting period to the
extent that the market price of the stock increases. Management believes that
any compensation expense resulting from the issuance of stock appreciation
rights will be immaterial.

At June 30, 2000, no options have been granted.

F-28

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NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR
TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON ANY
UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS AN OFFER TO SELL
THE SHARES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND IN JURISDICTIONS
WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
CURRENT ONLY AS OF ITS DATE.

TABLE OF CONTENTS

[Download Table]

PAGE
--------

Prospectus Summary.................... 1
Risk Factors.......................... 6
Special Note Regarding Forward-
Looking Statements.................. 13
Use of Terminology.................... 13
Use of Proceeds....................... 14
Dividend Policy....................... 14
Capitalization........................ 15
Dilution.............................. 17
Selected Consolidated Financial
Data................................ 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 20
Business.............................. 31
Management............................ 45
Long Term Incentive Plan.............. 52
Transactions with Management and
Others.............................. 53
Common Stock Purchase Arrangements
Before Public Offering.............. 53
Corporate Reorganization.............. 54
Security Ownership of Management and
Others.............................. 56
Selling Stockholders.................. 57
Description of Capital Stock,
Certificate of Incorporation and
Bylaws.............................. 70
Shares Eligible for Future Sale....... 75
Underwriting.......................... 76
Legal Matters......................... 79
Experts............................... 79
Where You Can Find More Information... 79
Index to Consolidated Financial
Statements.......................... F-1

THROUGH AND INCLUDING NOVEMBER 5, 2000 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN
ACTING AS AN UNDERWRITER AND WITH RESPECT TO AN UNSOLD ALLOTMENT OR
SUBSCRIPTION.

[LOGO]

WATSON WYATT & COMPANY HOLDINGS

5,600,000 SHARES

CLASS A COMMON STOCK

DEUTSCHE BANC ALEX. BROWN

BANC OF AMERICA SECURITIES LLC

ROBERT W. BAIRD & CO.

PROSPECTUS

OCTOBER 11, 2000

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘424B4’ Filing	Date	First	Last	Other Filings

	6/30/03	15	99	10-K, 4, 4/A, 5
	5/1/01	50
	4/30/01	46
	11/5/00	110
	10/27/00	81
	10/16/00	1		S-8
Filed on:	10/11/00	1	110
	10/10/00	77
	8/4/00	83
	6/30/00	2	109
	6/26/00	53	108
	1/7/00	33
	7/1/99	6	90
	6/30/99	6	108
	1/1/99	46
	7/1/98	54	91
	6/30/98	6	107
	4/1/98	22	107
	2/18/98	107
	6/30/97	19	101
	1/1/97	95
	6/30/96	19	100
	4/1/95	54	91
				List all Filings

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Filing Submission 0000912057-00-044400 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Towers Watson Delaware Holdings Inc. – ‘424B4’ on 10/11/00

On: Wednesday, 10/11/00, at 1:17pm ET · Accession #: 912057-0-44400 · File #: 333-94973

Prospectus — Rule 424(b)(4)Filing Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Prospectus — Rule 424(b)(4)
Filing Table of Contents