UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

(Mark One)

  X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

       FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                                      OR

       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

       FOR THE TRANSITION PERIOD FROM _____ TO _____

                        Commission File Number: 0-16159

                        WATSON WYATT & COMPANY HOLDINGS
            (Exact name of registrant as specified in its charter)

         Delaware                                     52-2211537
      (State or other                              (I.R.S. Employer
      jurisdiction of                             Identification No.)
     incorporation or
       organization)

                               1717 H Street NW
                           Washington, DC 20006-3900
         (Address of principal executive offices, including zip code)
                                (202) 715-7000
             (Registrant's telephone number, including area code)

Indicate  by check  mark  whether  the  registrant  (1) has filed all  reports
required to be filed by Section 13 or 15(d) of the Securities  Exchange Act of
1934  during the  preceding  12 months (or for such  shorter  period  that the
Registrant  was  required to file such  reports),  and (2) has been subject to
such filing requirements for the past 90 days:

                                   Yes X No

Indicate the number of shares  outstanding of each of the issuer's  classes of
common stock, as of November 14, 2000.

Class A Common Stock, $.01 par value                         6,440,000
------------------------------------                     ----------------
Class B Common Stock, $.01 par value                        26,488,710
------------------------------------                     ----------------
          Class                                          Number of Shares

<PAGE>
<TABLE>
<CAPTION>
                                          WATSON WYATT & COMPANY HOLDINGS
                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                (THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)

                                                                                      Three Months Ended September 30,
                                                                                      --------------------------------
                                                                                          2000                1999
                                                                                      ------------        ------------
                                                                                                (Unaudited)
<S>                                                                                   <C>                 <C>

Revenue                                                                               $    170,693        $    146,323
                                                                                      ------------        ------------

Costs of providing services:
     Salaries and employee benefits                                                         89,763              79,803
     Stock incentive bonus plan                                                                  -               6,000
     Professional and subcontracted services                                                11,179               9,796
     Occupancy, communications and other                                                    26,644              22,016
     General and administrative expenses                                                    15,131              13,178
     Depreciation and amortization                                                           5,917               4,907
                                                                                      ------------        ------------
                                                                                           148,634             135,700
                                                                                      ------------        ------------

Income from operations                                                                      22,059              10,623

Other:
     Interest income                                                                           577               1,036
     Interest expense                                                                         (273)               (390)

Income from affiliates                                                                       1,016                 988
                                                                                      ------------        ------------


Income before income taxes and minority interest                                            23,379              12,257


Provision for income taxes                                                                  10,031               5,919
                                                                                      ------------        ------------

Income before minority interest                                                             13,348               6,338


Minority interest in net (income) loss of consolidated subsidiaries                            (13)                 18
                                                                                      ------------        ------------

Net income                                                                            $     13,335        $      6,356
                                                                                      ============        ============



Earnings per share, net income, basic and fully diluted                               $       0.45        $       0.21
                                                                                      ============        ============

Weighted average shares of Common Stock, basic and fully diluted                            29,617              30,662
                                                                                      ============        ============



                                               See accompanying notes
                                                         F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                            WATSON WYATT & COMPANY HOLDINGS
                                              CONSOLIDATED BALANCE SHEETS
                                              (THOUSANDS OF U.S. DOLLARS)

                                                                                  September 30,     September 30,        June 30,
                                                                                      2000               2000              2000
                                                                                  -------------     -------------     -------------
                                                                                   Historical         Pro-Forma        Historical
                                                                                   (Unaudited)       (Unaudited)
                                                                                                     See Note 2

<S>                                                                              <C>                <C>                <C>

                                                         ASSETS

Cash and cash equivalents                                                         $      17,246     $      17,246      $     41,410
Receivables from clients:
     Billed, net of allowances of $6,346 and $2,832                                      94,424            94,424            76,729
     Unbilled, net of allowances of $2,229 and $676                                      75,097            75,097            66,009
                                                                                  -------------     -------------      ------------
                                                                                        169,521           169,521           142,738
Other current assets                                                                     13,800            13,800            11,705
                                                                                  -------------     -------------      ------------
     Total current assets                                                               200,567           200,567           195,853
Investment in affiliates                                                                 16,365            16,365            16,615
Fixed assets, net of accumulated depreciation of $87,132 and $83,211                     42,787            42,787            45,237
Deferred income taxes                                                                    53,355            53,355            53,355
Intangible assets, net of accumulated amortization of $15,682 and $15,288                13,183            13,183             8,721
Other assets                                                                             11,572            11,572            10,179
                                                                                  -------------     -------------      ------------

Total Assets                                                                      $     337,829     $     337,829      $    329,960
                                                                                  =============     =============      ============

                                          LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and accrued liabilities                                          $     139,295     $     139,295      $    167,803
Line of credit and book overdrafts                                                       21,886            21,886                30
Income taxes payable                                                                     14,249            14,249            11,843
                                                                                  -------------     -------------      ------------
     Total current liabilities                                                          175,430           175,430           179,676

Accrued retirement benefits                                                              80,678            80,678            79,462
Deferred rent and accrued lease losses                                                    4,886             4,886             5,456
Other noncurrent liabilities                                                             23,077            23,077            23,657
Minority interest in subsidiaries                                                           534               534               498
Redeemable Common Stock - $1 par value:
     25,000,000 shares authorized;
     14,807,306 and 14,805,145 issued
     and outstanding; at redemption value (historical)                                  115,497                             115,480
Permanent stockholders' equity:
Adjustment for redemption value less
     than amounts paid in by shareholders                                                (6,109)                             (6,097)

Preferred Stock - No par value:
1,000,000 shares authorized;
None issued and outstanding                                                                                     -
Class A Common Stock - $.01 par value:
69,000,000 shares authorized;
None issued and outstanding                                                                                     -
Class B-1 Common Stock - $.01 par value:
15,000,000 shares authorized;
14,807,306 issued and outstanding (pro-forma)                                                                 148
Class B-2 Common Stock - $.01 par value:
15,000,000 shares authorized;
14,807,306 issued and outstanding (pro-forma)                                                                 148
Additional paid-in capital                                                                                109,092
Retained deficit                                                                        (50,991)          (50,991)          (64,223)
Cumulative translation adjustment (accumulated other comprehensive loss)                 (5,173)           (5,173)           (3,949)
Commitments and contingencies
                                                                                  -------------     -------------      ------------

Total Liabilities and Stockholders' Equity                                        $     337,829     $     337,829      $    329,960
                                                                                  =============     =============      ============




                                                 See accompanying notes
                                                          F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                               WATSON WYATT & COMPANY HOLDINGS
                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                 (THOUSANDS OF U.S. DOLLARS)


                                                                                           Three Months Ended September 30,
                                                                                           --------------------------------
                                                                                               2000               1999
                                                                                           -------------      -------------
                                                                                                     (Unaudited)

<S>                                                                                        <C>                <C>

Cash flows used for operating activities:
     Net income                                                                            $      13,335       $      6,356
     Adjustments to reconcile net income to net cash
       provided by operating activities:

         Provision for doubtful receivables from clients                                           5,963              4,397
         Depreciation                                                                              5,388              4,519
         Amortization of intangible assets                                                           529                388
         Income from affiliates                                                                   (1,016)              (988)
         Minority interest in net income (loss) of consolidated subsidiaries                          13                (18)
         (Increase) decrease in assets (net of discontinued operations):
             Receivables from clients                                                            (32,746)           (15,326)
             Other current assets                                                                 (2,095)               445
             Other assets                                                                         (1,393)              (397)
         (Decrease) increase in liabilities (net of discontinued operations):
             Accounts payable and accrued liabilities                                            (28,156)           (26,978)
             Income taxes payable                                                                  2,406             (9,981)
             Accrued retirement benefits                                                           1,216             (2,269)
             Deferred rent and accrued lease losses                                                 (570)              (192)
             Other noncurrent liabilities                                                           (428)               178
          Other, net                                                                                 597                (72)
          Discontinued operations, net                                                              (102)              (637)
                                                                                           -------------      -------------
          Net cash used for operating activities                                                 (37,059)           (40,575)
                                                                                           -------------      -------------
Cash flows used in investing activities:
     Purchases of fixed assets                                                                    (3,109)            (2,645)
     Acquisitions                                                                                 (5,908)            (2,700)
     Distributions from affiliates                                                                   907                297
                                                                                           -------------      -------------
Net cash used in investing activities                                                             (8,110)            (5,048)
                                                                                           -------------      -------------

Cash flows from financing activities:
     Borrowings and book overdrafts                                                               21,856             31,314
     Issuances of Common Stock                                                                       134                  -
     Repurchases of Common Stock                                                                    (232)            (7,771)
                                                                                           -------------      -------------
          Net cash from financing activities                                                      21,758             23,543
                                                                                           -------------      -------------
Effect of exchange rates on cash                                                                    (753)               (70)
                                                                                           -------------      -------------

Decrease in cash and cash equivalents                                                            (24,164)            22,150)

Cash and cash equivalents at beginning of period                                                  41,410             35,985
                                                                                           -------------      -------------

Cash and cash equivalents at end of period                                                 $      17,246      $      13,835
                                                                                           =============      =============





                                                   See accompanying notes
                                                             F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>



                                         WATSON WYATT & COMPANY HOLDINGS
                      CONSOLIDATED STATEMENTS OF CHANGE IN PERMANENT STOCKHOLDERS' EQUITY
                                           (THOUSANDS OF U.S. DOLLARS)
                                                   (Unaudited)

                                                                                 Adjustment for
                                                                                Redemption Value
                                                                  Cumulative    Less Than Amounts
                                                   Retained      Translation       Paid in by
                                                    Deficit          Loss         Stockholders       Total
                                                 ------------     ----------       ----------      ---------
<S>                                              <C>              <C>              <C>             <C>

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

Comprehensive Income:
Net income                                             13,335              -                -         13,335
Foreign currency translation adjustment                     -         (1,224)               -         (1,224)
                                                                                                   ---------
Total Comprehensive Income                                                                            12,111
Effect of repurchases of 17,839 shares of
     redeemble common stock                              (103)             -              103              -
Adjustment of redemption value for change
     in Formula Book Value per share                        -              -             (115)          (115)
                                                 ------------     ----------       ----------      ---------

Balance at September 30, 2000                    $    (50,991)    $   (5,173)      $   (6,109)     $ (62,273)
                                                 ============     ==========       ==========      =========






                                             See accompanying notes
                                                      F-5

</TABLE>
<PAGE>

                        WATSON WYATT & COMPANY HOLDINGS

                Notes to the Consolidated Financial Statements
                                  (Unaudited)

1.   The accompanying  unaudited  quarterly  consolidated financial statements
     of Watson Wyatt & Company  Holdings and our  subsidiaries,  (collectively
     referred to as "we",  "Watson Wyatt" or the "Company"),  are presented in
     accordance  with the rules and regulations of the Securities and Exchange
     Commission  ("SEC") and do not include  all of the  disclosures  normally
     required by Generally Accepted Accounting  Principles.  In the opinion of
     management, these statements reflect all adjustments,  consisting only of
     normal recurring adjustments, which are necessary for a fair presentation
     of the consolidated  financial  statements for the interim  periods.  The
     consolidated  financial statements should be read in conjunction with the
     audited consolidated  financial statements and notes thereto contained in
     the Company's Annual Report on Form 10-K/A for the fiscal year ended June
     30, 2000.

     The results of operations  for the three months ended  September 30, 2000
     are not  necessarily  indicative  of the results that can be expected for
     the  entire  fiscal  year  ending  June 30,  2001.  The  results  reflect
     anticipated tax rates and bonuses paid at the discretion of the Company's
     Board of Directors.  Certain prior year amounts have been reclassified to
     conform to the current year's presentation.

2.   In October 2000, we  commenced  an initial public  offering  of our class
     A common stock. In conjunction with this offering, on October 16, 2000 we
     completed  changes in our  corporate  structure  involving  the merger of
     Watson  Wyatt & Company with WW Merger  Subsidiary,  Inc., a wholly owned
     subsidiary of Watson Wyatt & Company Holdings.  As a result, Watson Wyatt
     & Company  is now a wholly  owned  subsidiary  of Watson  Wyatt & Company
     Holdings.

     At the time of the reorganization, each share of Watson Wyatt & Company's
     Redeemable  Common Stock was converted into one share of class B-1 common
     stock and one share of class B-2 common  stock of Watson  Wyatt & Company
     Holdings.  The  class B common  stock is  divided  into  two  classes  to
     accommodate two different  transfer  restriction  periods.  The class B-1
     shares  are  subject  to a  transfer  restriction  period  of  12  months
     following  the  public  offering  date,  while the class B-2  shares  are
     subject  to a  transfer  restriction  period of 24 months  following  the
     public offering date, unless waived by the Board of Directors.  The Board
     of  Directors  waived the transfer  restrictions  on a total of 1,559,250
     class B-1 and 1,559,250 class B-2 shares to allow for conversion into the
     class A  shares  sold  by  selling  stockholders  in the  initial  public
     offering  described  below.  Following  the  expiration  or waiver of the
     respective  transfer  restriction  periods,  the remaining  class B-1 and
     class B-2 shares will automatically convert into class A common stock.

     The  two-for-one  share  conversion,  the  elimination  of the redeemable
     feature  of Watson  Wyatt &  Company's  Redeemable  Common  Stock and the
     reclassification  of stock to  permanent  stockholders'  equity  has been
     reflected in the Pro-Forma column of the  Consolidated  Balance Sheets as
     of September  30, 2000, as if the  conversion  was effected on that date,
     and  also  has been  reflected  in all  earnings  per  share  data on the
     Consolidated   Statements  of  Operations  for  the  three  months  ended
     September 30, 2000 and 1999, as if the  conversion  were effective at the
     beginning of each period.

     A total of 5,600,000 shares of class A common stock were offered and sold
     in our initial public  offering at an offering price of $12.50 per share.
     Of the  shares  included  in this  transaction,  Watson  Wyatt &  Company
     Holdings   offered   2,800,000   newly-issued   shares  and  the  selling
     stockholders offered the remaining 2,800,000 shares. On November 8, 2000,
     our underwriters  exercised their over-allotment option. As a result, the
     underwriters purchased 840,000 shares of class A common stock from us and

                                       -6-
<PAGE>

     from the selling  stockholders  at the initial  public  offering price of
     $12.50 per share less the underwriting  discount.  Of the shares included
     in  this  transaction,  Watson  Wyatt &  Company  Holdings  sold  521,500
     newly-issued shares and the selling stockholders sold 318,500 shares.

     Net proceeds to the Company from these  transactions  were $33.5 million,
     net of underwriting discounts, commissions and other offering, merger and
     restructuring  costs.  We did not receive any  proceeds  from the sale of
     shares by the selling stockholders.

3.   In the  third  quarter of fiscal year 1998, we  discontinued our benefits
     administration  outsourcing  business,  including  our  investment in our
     affiliate,  Wellspring Resources, LLC ("Wellspring").  We believe we have
     adequate   provisions  for  any  remaining  costs   associated  with  our
     obligations related to the benefits administration  outsourcing business.
     All  Wellspring  related  activity is reflected on the  Statement of Cash
     Flows as discontinued operations.

 4.  We have adopted SFAS No.131, "Disclosures about Segments of an Enterprise
     and   Related   Information."   The   Company  is   primarily   organized
     geographically and has 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

The Company evaluates the performance of its segments and allocates  resources
to them based on net  operating  income.  Prior and current year data has been
restated  to  be  consistent  with  current  classifications  for  comparative
purposes.

                                       -7-
<PAGE>

The table below presents  specified  information about reported segments as of
and for the three months ended September 30, 2000 (in thousands):

<TABLE>
<CAPTION>

                   U.S.      U.S.    U.S.       Asia-               Latin      Data
                   East    Central   West      Pacific   Canada    America   Services   Total
                   ----    -------   ----      -------   ------    -------   --------   -----
<S>              <C>       <C>       <C>       <C>       <C>       <C>       <C>        <C>
Revenue (net of
  reimbursable
  expenses)      $ 57,510  $ 49,800  $ 22,420  $ 16,684  $ 11,365  $  1,950  $  3,921   $ 163,650
Net operating
  income           16,872    13,505     4,066     3,559       834        30     2,038      40,904

Receivables        60,741    54,462    19,809    16,867     13,898    2,943         -     168,720

</TABLE>

<TABLE>
<CAPTION>

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

                   U.S.      U.S.    U.S.       Asia-               Latin      Data
                   East    Central   West      Pacific   Canada    America   Services   Total
                   ----    -------   ----      -------   ------    -------   --------   -----
<S>              <C>       <C>       <C>       <C>       <C>       <C>       <C>        <C>
Revenue (net of
  reimbursable
  expenses)      $ 51,788  $ 40,346  $ 19,514  $ 13,425  $ 9,726   $ 1,565   $  3,626   $ 139,990
Net operating
  income/(loss)    15,027     6,978     2,354     1,598     (208)     (298)     1,882      27,333

Receivables        58,459    44,369    18,398    13,552   11,386     2,639          -     148,803

</TABLE>


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

                                       -8-
<PAGE>

A  reconciliation  of the information  reported by segment to the consolidated
amounts follow for the three month period ended September 30:

<TABLE>
<CAPTION>

                                                                         Three Months Ended September 30,
                                                                         --------------------------------
                                                                            2000                   1999
                                                                            ----                   ----
<S>                                                                     <C>                    <C>
Revenue:
--------
Total segment revenue                                                   $  163,650             $  139,990
Reimbursable expenses not included in total segment revenue                  7,017                  6,227
Other, net                                                                      26                    106
                                                                        ----------             ----------
Consolidated revenue                                                    $  170,693             $  146,323
                                                                        ==========             ==========

Net Operating Income:
---------------------
Total segment net operating income                                      $   40,904             $   27,333
Income from affiliates                                                       1,016                    988
Differences in allocation methods for depreciation, G&A and
  pension costs                                                               (132)                 1,789
Gain on sale of business units                                                 400                      -
Discretionary compensation (including stock incentive bonus plan
  during the three months ended September 30, 1999 only)                   (19,100)               (21,200)
Other, net                                                                     291                  3,347
                                                                        ----------             ----------
Consolidated pretax income from continuing operations                   $   23,379             $   12,257
                                                                        ==========             ==========

Receivables:
------------
Total segment receivables - billed and unbilled                         $  168,720             $  148,803
Net valuation differences and receivables of discontinued
  operations
                                                                               801                 (2,007)
                                                                        ----------             ----------
Total billed and unbilled receivables                                      169,521                146,796
Assets not reported by segment                                             168,308                157,590
                                                                        ----------             ----------
Consolidated assets                                                     $  337,829             $  304,386
                                                                        ==========             ==========

</TABLE>


5.   In  December  1999,  the SEC issued  Staff  Accounting  Bulletin  ("SAB")
     No. 101, "Revenue Recognition in  Financial Statements" 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.

6.   On October 10, 2000, we granted  ,720,000  stock options to associates at
     an exercise price equal to the public  offering  price.  The  granting of
     these  options includes no  uncertainties  that  would  require  variable
     accounting under Generally Accepted Accounting Principles.

7.   In  October  2000, we incurred  a  non-recurring  charge of  $3.7 million
     resulting from agreements with our employee  stockholders  related to our
     initial  public  offering. This expense will be  recognized in the second
     quarter.


Item 2. MANAGMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

GENERAL

Watson Wyatt & Company  Holdings,  including our  subsidiaries,  (collectively
referred to as "we",  "Watson Wyatt" or the "Company") 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

                                       -9-
<PAGE>

America.  We provide  services in three  principal  practice  areas:  employee
benefits,  human resources  technologies and human capital consulting.  Watson
Wyatt & Company was  incorporated  in Delaware on February  17,  1958.  Watson
Wyatt & Company  Holdings  was  incorporated  in  Delaware on January 7, 2000.
Including our  predecessors,  we have been in business since 1946. In 1995, we
entered  into an alliance  agreement  with R. Watson & Sons (now Watson  Wyatt
Partners),  a United  Kingdom-based  actuarial,  benefits and human  resources
consulting  partnership that was founded in 1878. We conducted business as The
Wyatt Company until  changing our corporate  name to Watson Wyatt & Company in
connection  with the  establishment  of the Watson Wyatt  Worldwide  alliance.
Since 1995,  we have  marketed  our services  globally  under the Watson Wyatt
Worldwide  brand,  sharing  resources,  technologies,  processes  and business
referrals.

In October 2000, we moved our principal executive offices to 1717 H Street NW,
Washington,  DC 20006, from 6707 Democracy Boulevard,  Suite 800, Bethesda, MD
20817. Our web site is www.watsonwyatt.com.


GLOBAL OPERATIONS

We are primarily  organized based on the following  geographic  regions:  U.S.
East, U.S.  Central,  U.S. West,  Asia-Pacific,  Canada and Latin America.  We
employ approximately 4,100 associates as follows:

         U.S. East                1,020
         U.S. Central             1,000
         U.S. West                  450
         Asia-Pacific               740
         Canada                     470
         Latin America               70
         Data Services               50
         Corporate/Other            300
                                 ------
                                  4,100
                                 ======

On a worldwide basis, we are primarily managed through the geographic  regions
listed  above.  Like  many   professional   services  firms,  we  also  use  a
practice-based  matrix  form  of  organization  within  some  regions.  We are
developing  and  implementing  systems  and  management  reporting  to improve
practice-specific information on a company-wide basis.


PRINCIPAL SERVICES

Within  the  past  three  fiscal  years,  we have  divested  several  non-core
businesses   -  including   benefits   administration   outsourcing,   defined
contribution record-keeping and risk management consulting services - in order
to focus on our core consulting areas. These core areas are as follows:

BENEFITS  CONSULTING:  The Benefits  Consulting  practice  provides  analysis,
design and implementation of retirement programs, including actuarial services
and required reporting of plan contributions and funding levels,  group health
benefit  plan design and  provider  selection  and defined  contribution  plan
design and related services.

HR TECHNOLOGIES  CONSULTING:  The HR Technologies Consulting practice develops
technology-based  solutions  to reduce  employer  costs and  improve  employee
service in human resources administration, including web-based applications.

                                       -10-
<PAGE>

HUMAN CAPITAL  CONSULTING:  The Human  Capital  Consulting  practice  provides
comprehensive  consulting in compensation plan design, executive compensation,
salary management and organizational effectiveness consulting.

DATA SERVICES: We also produce custom and standard compensation,  benefits and
best practices  surveys and reference  works to clients  throughout the world.
Over 5,000 companies  participate in our surveys and our services include over
70  remuneration,  benefits and employment  practices  references  utilized by
global and local companies in 50 countries.

While we group services into functional  categories,  management  believes our
primary strength is the ability to deliver services without boundaries to meet
the requirements of our clients.


WATSON WYATT WORLDWIDE ALLIANCE

Recognizing  that a global  organization  is essential to service the needs of
our clients, we established operations throughout Europe in the late 1970's 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 agreement with R. Watson & Sons (now
Watson Wyatt Partners), a 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 5,800  employees.  Watson Wyatt & Company  Holdings
operates 60 offices in 18 countries in North America,  Asia-Pacific  and Latin
America.  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 Watson Wyatt and 75% owned by
Watson Wyatt Partners.


FINANCIAL STATEMENT OVERVIEW

Watson Wyatt's fiscal year ends June 30. The financial statements contained in
this quarterly  report  reflect a Consolidated  Balance Sheet as of the end of
the first  quarter of fiscal  year 2001  (September  30,  2000),  a  pro-forma
Consolidated  Balance Sheet as of September 30, 2000 to reflect the changes in
our capital structure as a result of our reorganization  (but not the issuance
of additional shares in the initial public offering),  a Consolidated  Balance
Sheet  as of the  end of  fiscal  year  2000  (June  30,  2000),  Consolidated
Statements of Operations for the three month periods ended  September 30, 2000
and 1999,  Consolidated  Statements  of Cash Flows for the three month periods
ended  September 30, 2000 and 1999 and  Consolidated  Statements of Changes in
Permanent  Stockholders' Equity for the three month period ended September 30,
2000.

Although we operate globally as an alliance with our affiliates,  the revenues
and operating  expenses in the Consolidated  Statements of Operations  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

                                       -11-
<PAGE>

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 performed.  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  50% 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 and continuing  through
fiscal year 2000,  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 were accrued in fiscal year 1999
and fiscal year 2000.  The  payment of the amount  accrued in fiscal year 2000
will be made in January  2001.  Following  the  initial  public  offering,  we
terminated the stock incentive bonus plan.

In  October 2000, we incurred a non-recurring charge of $3.7 million resulting
resulting  from  agreements  with our employee  stockholders  related  to  our
initial public offering. This expense will be recognized in the second quarter.
See Note 2 of  the Consolidated Financial  Statements for  further information
regarding the initial public offering.

                                       -12-
<PAGE>

Results of Operations.  The table  below  sets forth Consolidated Statement of
of  Operations  data as  a  percentage  of  revenue for the periods indicated:
<TABLE>
<CAPTION>

                                                September 30,     September 30,
                                                    2000              1999
                                                -------------     -------------
<S>                                                    <C>               <C>
Revenue                                                100.0%            100.0%

Costs of providing services:
   Salaries and employee benefits                       52.6              54.5
   Stock incentive bonus plan                             --               4.1
   Professional and subcontracted services               6.5               6.7
   Occupancy, communications and other                  15.6              15.0
   General and administrative expenses                   8.9               9.0
   Depreciation and amortization                         3.5               3.4
                                                       -----             -----
                                                        87.1              92.7
                                                       -----             -----

Income from operations                                  12.9               7.3

Other:
   Interest income                                       0.3               0.7
   Interest expense                                     (0.1)             (0.3)

Income from affiliates                                   0.6               0.7
                                                       -----             -----

Income before income taxes and minority interest        13.7               8.4

Provision for income taxes                               5.9               4.1
                                                       -----             -----

Income before minority interest                          7.8               4.3

Minority interest in net income of consolidated
   subsidiaries                                           --                --
                                                       -----             -----

Net income                                               7.8%              4.3%
                                                       =====             =====

</TABLE>

THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1999

REVENUE.  Revenue from continuing  operations was $170.7 million for the first
three  months of fiscal year 2001,  compared  to $146.3  million for the first
three months of fiscal year 2000, an increase of $24.4  million,  or 17%. This
revenue growth was primarily due to a $9.5 million, or 24% increase in revenue
generated  by our U.S.  Central  region,  a $5.7  million,  or 11% increase in
revenue generated by our U.S. East region, a $2.9 million,  or 15% increase in
our U.S. West region, a $1.7 million, or 18% increase in  revenue generated by
our Canadian region,  and a $0.3 million,  or 8% increase in revenue generated
by Data Services.  The revenue  increase in the North American regions was due
primarily to the  realization  of net rate  increases,  due to robust  demand,
particularly  in high-end  assignments,  accounting  for  approximately  $13.1

                                       -13-
<PAGE>

million,  increased  chargeable hours accounting for $3.6 million and improved
management of the scope of projects,  resulting in $3.3 million.  In addition,
our Asia-Pacific  region generated $3.3 million, or 25% higher revenue than in
the first quarter of fiscal year 2000 and our Latin American region  generated
$0.4 million,  or 25% higher  revenue than in the first quarter of fiscal year
2000.  Within North America the following  individual  practice areas, not all
inclusive,  showed the following  trends:  revenue for our Benefits  Group was
$87.0  million  for the first three  months of fiscal  year 2001,  compared to
$79.3  million in the first  quarter of fiscal year 2000,  an increase of $7.7
million,  or 10%; revenue for our HR Technologies  Group was $24.9 million for
the first three months of fiscal year 2001,  compared to $19.7  million in the
first quarter of fiscal year 2000,  an increase of $5.2  million,  or 26%; and
revenue for our Human  Capital Group was $14.0 million in the first quarter of
fiscal  year 2001,  compared to $10.7  million in the first  quarter of fiscal
year 2000, an increase of $3.3 million, or 30%.

SALARIES AND EMPLOYEE BENEFITS. Salaries and employee benefit expenses for the
first  quarter  of fiscal  year 2001 were  $89.8  million,  compared  to $79.8
million  for the first  quarter of fiscal  year  2000,  an  increase  of $10.0
million,  or 13%. The  increase  was mainly due to a $9.3 million  increase in
compensation,  which is partly the result of annual salary increases averaging
5% and a 7%  increase  in  headcount.  The  remainder  of the  difference  was
attributable to a $0.3 million increase in pension expenses and a $0.3 million
increase in wage taxes.  As a  percentage  of revenue,  salaries  and employee
benefits  decreased to 52.6% from 54.5%.  The improvements in margins resulted
from  increases in  realized  rates and  better  leveraging  of our  operating
personnel.

STOCK INCENTIVE BONUS PLAN. The stock incentive bonus plan was discontinued in
conjunction  with our  initial  public  offering.  Accordingly,  there  was no
accrued bonus under this plan for the quarter ended September 30, 2000.

PROFESSIONAL  AND  SUBCONTRACTED  SERVICES.   Professional  and  subcontracted
services used in consulting  operations were $11.2 million for the first three
months of fiscal year 2001,  compared to $9.8 million for the first quarter of
fiscal  year 2000,  an  increase  of $1.4 million,  or 14%.  The  increase  is
primarily  due to an  increase  in client  chargeable  work  performed  by our
national  practice  groups.  As a  percentage  of  revenue,  professional  and
subcontracted  services  decreased to 6.5% from 6.7%,  as we  leveraged  these
expenses over a higher revenue base.

OCCUPANCY,  COMMUNICATIONS  AND  OTHER.  Occupancy,  communications  and other
expenses  were  $26.6  million  for the first  quarter  of fiscal  year  2001,
compared  to $22.0  million  for the first  quarter of fiscal  year  2000,  an
increase of $4.6 million,  or 21%. The increase was mainly  attributable  to a
$1.8  million  increase  in travel  expenses,  which was  mainly due to higher
expenses incurred for our annual leadership  conference held in Europe for the
first time, a $1.2 million  increase in rent,  attributable  to an increase in
the amount of space  required to support our expanding  operations  and higher
real  estate  tax and  operating  expenses,  a $1.0  million  investment  in a
strategic relationship, a $0.3 million increase in duplicating expenses, and a
$0.3 million increase in furniture and equipment  rentals.  As a percentage of
revenue, occupancy,  communications and other expenses increased to 15.6% from
15.0%.

GENERAL AND ADMINISTRATIVE  EXPENSES.  General and administrative expenses for
the first  quarter of fiscal year 2001 were $15.1  million,  compared to $13.2
million  for the first  quarter  of fiscal  year  2000,  an  increase  of $1.9
million,  or 14%. The increase was mainly due to higher  compensation  of $1.9
million,  which is primarily  the result of a 23% increase in  headcount.  One
third of this increase can be attributed to the  reorganization  of staff from
our consulting offices to general and administrative offices. The remainder of
the increase can be attributed  to the hiring of corporate  staff in our Human
Resource,  Marketing and Knowledge Management  departments mainly to carry out
corporate  initiatives  involving our knowledge  sharing and financial systems

                                       -14-
<PAGE>

infrastructure.  As  a  percentage  of  revenue,  general  and  administrative
expenses decreased to 8.9% from 9.0%.

DEPRECIATION AND AMORTIZATION.  Depreciation and amortization  expense for the
first  three  months of fiscal  year 2001 was $5.9  million,  compared to $4.9
million  for the first three  months of fiscal year 2000,  an increase of $1.0
million,  or 20%. The variance is primarily due to increased  additions to our
capital  base.  As a  percentage  of revenue,  depreciation  and  amortization
expenses increased slightly to 3.5% from 3.4%.

INTEREST  INCOME.  Interest  income for the first three  months of fiscal year
2001 was $0.6 million,  compared to $1.0 million for the first three months of
fiscal  year 2000,  a decrease  of $0.4  million,  or 40%.  The  decrease  was
attributable  to the receipt of interest of $0.5 million  related to a federal
tax refund  received  during the first quarter of fiscal year 2000,  partially
offset by increased  interest  earned on a higher average  investment  balance
during the first quarter of fiscal year 2001.

INTEREST  EXPENSE.  Interest expense for the first quarter of fiscal year 2001
was $0.3  million,  compared to $0.4  million for the first  quarter of fiscal
year 2000, a decrease of $0.1 million, or 25%.

INCOME FROM AFFILIATES. Income from affiliates for the first quarter of fiscal
year 2001 was $1.0 million, unchanged from the prior year.

PROVISION FOR INCOME TAXES.  Income taxes for the first three months of fiscal
year 2001 were $10.3  million,  compared  to $5.9  million for the first three
months of fiscal  year 2000.  Our  effective  tax rate was 42.9% for the first
quarter of fiscal year 2001, compared to 48.3% for the first quarter of fiscal
year  2000.  The change was due to the  utilization  of federal  and state tax
credits,  a decrease in operating  losses of certain  foreign  affiliates  and
higher pre-tax earnings. 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.

NET  INCOME.  Net income for the first  three  months of fiscal  year 2001 was
$13.3  million,  compared to $6.4 million for the first quarter of fiscal year
2000,  an increase of $6.9 million,  or 108%. As a percentage of revenue,  net
income  increased to 7.8% from 4.3%. The increase is mainly due to our revenue
growth,  improved  margins and the absence of the stock  incentive  bonus plan
accrual in fiscal year 2001.


LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash  equivalents  at September 30, 2000 totaled  $17.2  million,
compared to $41.4 million at June 30, 2000. The $24.2 million decrease in cash
from June 30, 2000 to September 30, 2000 was mainly attributable to the fiscal
year end bonus payment of $51.3 million,  $7.1 million spent for  acquisitions
and fixed  assets,  corporate  tax  payments of $6.7  million and  payments to
retirees of $0.4 million,  partially  offset by borrowings  against our credit
line of $21.9  million  and $20.3 million of  cash received as a result of our
operations.

CASH USED FOR OPERATING ACTIVITIES. Cash used for operating activities for the
first quarter of fiscal year 2001 was $37.1 million, compared to cash used for
operating  activities  of $40.6  million for the first three  months of fiscal
year  2000.  The  variance  is due to $12.4  million  in lower  corporate  tax
payments  net of  accruals  and higher net income of $7.0  million,  partially
offset by higher  receivables  of $17.4  million.  The  allowance for doubtful
accounts  increased  $3.5  million  and the  allowance  for  work  in  process
increased $1.5 million from June 30, 2000 to September 30, 2000. This increase
is typical of our historical patterns, where our receivables,  work in process
and related allowances are substantially reduced at year end from an increased

                                       -15-
<PAGE>

emphasis  on  collections  and timely  billings.  The  receivable  and work in
process balances and the related allowances usually decrease in the last three
months of the fiscal  year.  The number of months of accounts  receivable  and
work in process outstanding was 3.0 at September 30, 2000 and 3.2 at September
30, 1999.

CASH USED IN INVESTING  ACTIVITIES.  Cash used in investing activities for the
first quarter of fiscal year 2001 was $8.1  million,  compared to $5.0 million
for the first three months of fiscal year 2000. The increase in cash usage can
be attributed to higher acquisition costs of $3.2 million, which is mainly due
to the  acquisition  of two of KPMG's  Canadian  consulting  practices  and an
investment made in conjunction with our business  initiative  targeted towards
emerging growth companies.

CASH FROM  FINANCING  ACTIVITIES.  Cash  from  financing activities  was $21.8
million for the first  quarter of fiscal year 2001, compared to $23.5  million
for the  first  quarter  of  fiscal  year  2000.  This change  reflects  lower
borrowings  and book  overdrafts of $9.4 million and lower repurchases  of our
common stock of $7.6 million.

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,  $3.0  million  is  unavailable  as a result of support
required  for  letters  of credit  issued  under the credit  line.  The credit
facility was amended on October 6, 2000 to reflect  changes due to the initial
public offering.  We had borrowings  outstanding at September 30, 2000 of $5.0
million. There were no borrowings outstanding at June 30, 2000.

Anticipated  commitments  of funds for capital  expenditures  are estimated at
$41.0  million  for the  remainder  of fiscal year 2001,  mainly for  computer
hardware  purchases,  office  relocations  and  renovations,  development  and
upgrade of financial and knowledge management systems, and acquisition related
payments.  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 expect cash  from operations  in conjunction  with the net
proceeds  from our  initial public 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, $16.1 million of the total cash balance of $17.2
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.

The Company  continues to  guarantee  certain  leases for office  premises and
equipment for Wellspring.  Minimum remaining  payments  guaranteed under these
leases at  September  30, 2000 total $46.7  million,  which  expire at various
dates through 2007. These leases are also jointly and severally  guaranteed by
the Company's former partner in Wellspring, State Street Bank & Trust Company.
The estimated  loss from the potential  exercise of these  guarantees has been
included  in  the  fiscal   year  1998  loss  on  disposal  of  the   benefits
administration outsourcing business.

                                       -16-
<PAGE>

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.

DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS

Forward-looking  statements regarding  substantial risks and uncertainties are
contained in the following  sections of this report: In Note 2 on page 6; Note
3 on page 7; Note 7 on page 9;  Financial  Statement  Overview on pages 11 and
12; the sixth paragraph under Liquidity and Capital  Resources on page 16; the
first paragraph of Part II, Item 1 ("Legal  Proceedings") on page 17; and Part
II, Item 2 ("Changes in  Securities  and Use of  Proceeds") on page 18 and 19.
You can identify these statements and other forward-looking statements in this
filing by words  such as "may,"  "will,"  "expect,"  "anticipate,"  "believe,"
"estimate,"  "plan,"  "intend,"  "continue" or similar words.  You should read
these  statements  carefully  because they contain  projections  of our future
results of operations or financial condition, or state other "forward-looking"
information.  A number of risks and  uncertainties  exist  which  could  cause
actual  results  to differ  materially  from the  results  reflected  in these
forward-looking  statements.  Such factors include, but are not limited to our
continued ability to recruit and retain highly qualified associates,  outcomes
of  litigation,  no  significant  decrease  in the demand  for the  consulting
services we offer,  actions by competitors offering human resources consulting
services,   including  public  accounting  and  consulting  firms,  technology
consulting  firms  and   internet/intranet   development  firms,   regulatory,
legislative and  technological  developments that may affect the demand for or
costs of our services and other factors  discussed under "risk factors" in our
prospectus  dated October 11, 2000,  which is on file with the  Securities and
Exchange  Commission.  These  statements are based on assumptions  that may no
come true. All  forward-looking  disclosure is speculative by its nature.  The
Company  undertakes  no  obligation  to  update  any  of  the  forward-looking
information included in this release,  whether as a result of new information,
future events, changed expectations or otherwise.


PART II. OTHER INFORMATION

Item 1.  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. Management believes, 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
the 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 June 1994,  in the Queen's Bench  Judicial  Center of
Regina, 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 to begin in January 2001. The Administrative Board
seeks approximately $26 million in damages, plus interest.

                                       -17-
<PAGE>

CITY OF MILWAUKEE, WISCONSIN. 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 the Company.  In April 1999, the matter was removed to
the United States District Court,  District of Connecticut.  The action claims
that  errors in  valuations  from 1991  through  1998  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 to begin in January 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.  Unless
a  settlement  is  reached,  proceedings  might be  commenced  later this year
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.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

On  October  10,  2000,  our  Registration  Statement  on Form S-3  (File  No.
333-94973),  covering up to 6,440,000 shares of class A common stock at $12.50
per share to be issued in connection  with our initial  public  offering,  was
declared effective. On October 16, 2000, we completed changes in our corporate
structure in  conjunction  with the initial  public  offering.  The changes in
corporate  structure  involved  the merger of Watson  Wyatt & Company  with WW
Merger  Subsidiary,  Inc., a wholly owned subsidiary of Watson Wyatt & Company
Holdings.  Watson Wyatt & Company is now a wholly owned  subsidiary  of Watson
Wyatt & Company Holdings.

At the time of the  reorganization,  each  share of Watson  Wyatt &  Company's
Redeemable Common Stock was converted into one share of class B-1 common stock
and one share of class B-2 common  stock of Watson  Wyatt & Company  Holdings.
The class B common  stock is  divided  into two  classes  to  accommodate  two
different transfer  restriction periods. The class B-1 shares are subject to a
transfer  restriction  period of 12 months following the public offering date,
while the class B-2 shares are subject to a transfer  restriction period of 24
months  following  the public  offering  date,  unless  waived by the Board of
Directors.  The  Company  waived  the  transfer  restrictions  on a  total  of
1,559,250  class B-1 and  1,559,250  class B-2 shares to allow for  conversion
into the class A shares sold by selling  stockholders  in the  initial  public
offering described below. Following the expiration or waiver of the respective
transfer  restriction  periods,  the remaining  class B-1 and class B-2 shares
will automatically convert into class A common stock.

                                       -18-
<PAGE>

A total of  5,600,000  shares of class A common stock were offered and sold in
our initial public  offering at an offering price of $12.50 per share,  for an
aggregate  offering  price of $70.0  million.  Of the shares  included in this
transaction,  Watson Wyatt & Company Holdings offered  2,800,000  newly-issued
shares and the selling stockholders offered the remaining 2,800,000 shares. On
November 8, 2000, our underwriters exercised their over-allotment option. As a
result, the underwriters purchased 840,000 shares of class A common stock from
us and from the selling  stockholders  at the initial public offering price of
$12.50 per share less the  underwriting  discount,  for an aggregate  offering
price of $10.5 million.  Of the shares  included in this  transaction,  Watson
Wyatt & Company  Holdings  sold  521,500  newly-issued  shares and the selling
stockholders  sold 318,500 shares.  The managing  underwriters of the offering
were Deutsche Banc Alex. Brown, Banc of America  Securities LLC, and Robert W.
Baird & Co.

As a result of the these transactions and upon completion of the offering,  we
received  gross  proceeds  of  $41.5  million,  and the  selling  stockholders
received  gross  proceeds of $39.0  million.  Net proceeds to the Company were
$33.5  million,  which  is net of  $5.3  million  in  underwriting  discounts,
commissions and other offering costs, as well as $2.7 million that the Company
paid  to  selling   shareholders  as  reimbursement  for  commission  payments
resulting from the sale of their shares.

From the time of receipt through November 14, 2000, proceeds from the offering
of $17.7 million were applied to the  repayment of short-term  debt and a $0.8
million  installment  payment  was made for an  acquisition  related to our HR
Technologies  Consulting  practice.  The  remainder  of the  net  proceeds  is
invested in high-grade interest-bearing securities. The Company intends to use
the remainder of the net proceeds for capital  expenditures,  working  capital
and other general corporate purposes.  In addition,  a portion of the proceeds
could be used for strategic acquisitions of complementary businesses.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

ITEM 5.  OTHER INFORMATION
None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

a.    Exhibits

      3.1  Amended and Restated  Certificate of  Incorporation of Watson Wyatt
           & Company Holdings1
      3.2  Amended and Restated Bylaws of Watson Wyatt & Company Holdings1
      4    Form of Certificate Representing Common Stock1
      10.1 Amended  Credit  Agreement  Among Bank of America,  N.A. and Others
           dated October 6, 2000
      10.2 Form of  agreement  among  Watson  Wyatt & Company,  Watson Wyatt &
           Company  Holdings and employee  directors,  executive  officers and
           significant stockholders restricting the transfer of shares1

b.    Reports on Form 8-K
      None.

--------
1     Incorporated by reference from Registrant's Form S-3, Amendment No. 5
      (File No. 33-394973), filed on September 14, 2000

                                       -19-
<PAGE>

Signatures


Pursuant to the  requirements  of the Securities and Exchange Act of 1934, the
registrant  has duly  caused  this  report to be  signed on its  behalf by the
undersigned thereunto duly authorized.

Watson Wyatt & Company Holdings
(Registrant)




/S/ John J. Haley                                            November 14, 2000
-----------------                                            -----------------
Name:             John J. Haley                              Date
Title:            President and Chief
                  Executive Officer

/S/ Carl D. Mautz                                            November 14, 2000
-----------------                                            -----------------
Name:             Carl D. Mautz                              Date
Title:            Vice President and
                  Chief Financial Officer

/S/ Peter L. Childs                                          November 14, 2000
-------------------                                          -----------------
Name:             Peter L. Childs                            Date
Title:            Controller

                                       -20-