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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2010
 or
 o
    
    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: 001-34594
 TOWERS WATSON & CO.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    27-0676603
(I.R.S. Employer
Identification No.)
 875 Third Avenue, New York, NY 10022
 (212) 725-7550
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredClass A Common Stock, $0.01 par value
    
    New York Stock Exchange and
NASDAQ Global Select Market
 Securities registered pursuant to Section 12(g) of the Act:
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE:




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##### 



TOWERS WATSON & CO.
INDEX TO ANNUAL REPORT ON FORM 10-K
  PART I.Item 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    11Item 1B. Unresolved SEC Comments
    
    
    23Item 2. Properties
    
    
    23Item 3. Legal Proceedings
    
    
    23Item 4. Reserved
    
    
    24PART II.Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    24Item 6. Selected Financial Data
    
    
    27Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    51Item 8. Financial Statements and Supplementary Data
    
    
    52Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    52Item 9A. Controls and Procedures
    
    
    52Item 9B. Other Information
    
    
    55PART III.Item 10. Directors, Executive Officers and Corporate Governance
    
    
    55Item 11. Executive Compensation
    
    
    55Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    55Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    55Item 14. Principal Accounting Fees and Services
    
    
    55PART IV.Item 15. Exhibits, Financial Statement Schedules
    
    
    55Signatures
    
    
    56Report of Independent Registered Public Accounting Firm
    
    
    57Consolidated Financial StatementsConsolidated Statements of OperationsFiscal year ended June 30, 2010, 2009, and 2008
    
    
    58Consolidated Balance SheetsJune 30, 2010 and June 30, 2009
    
    
    59Consolidated Statements of Cash FlowsFiscal year ended June 30, 2010, 2009, and 2008
    
    
    60Consolidated Statement of Changes in Stockholders EquityFiscal year ended June 30, 2010, 2009, and 2008
    
    
    61Notes to the Consolidated Financial Statements
    
    
    62CertificationsEX-21.1EX-23.1EX-31.1EX-31.2EX-32.1
  2




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Special Note Regarding Forward-Looking Statements
  
 PART I
 
 Item 1. Business.
 The Company
    The Merger
  3




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Access to Public Filings, Code of Business Conduct and Ethics and Board Committee Charters
  Business Overview
     4




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The Wall Street Journal The New York Times Financial Times BBC News CNBC .
  Principal Services
  Year ended June 30,2010
    
    
    2009
    
    
    2008Benefits
    
    
    64
    %
    
    
    69
    %
    
    
    69
    %Risk and Financial Services
    
    
    21
    
    
    
    17
    
    
    
    17Talent and Rewards
    
    
    15
    
    
    
    14
    
    
    
    14Total Segment Revenue
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  Benefits Segment
   
    
    Retirement;
    
    Health and Group Benefits;
    
    Technology and Administration Solutions; and
    
    International Consulting Group.
 Retirement
   5




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
    
    Retirement strategy and plan design;
    
    Actuarial services and related support;
    
    Retirement financial management;
    
    Settlement solutions;
    
    Compliance and governance strategies;
    
    Risk management; and
    
    Defined contribution solutions.
   Health and Group Benefits
     6




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
    
    Program strategy, design and pricing;
    
    Health condition management consulting;
    
    Pharmacy benefit management consulting;
    
    Workforce well-being evaluation and wellness and health promotion consulting;
    
    Performance measurement and monitoring;
    
    Development of funding strategies and forecasting, budgeting and reserve
setting;
    
    Vendor evaluation, selection and management; and
    
    Claims audits and pre- and post-implementation audits.
 Technology and Administration Solutions
   
    
    Pension and retirement plan administration; and
    
    Health and welfare administration.
     International Consulting Group
  7




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##### Table of Contents



Risk and Financial Services Segment
  
    
    Risk Consulting and Software;
    
    Investment Consulting and Solutions; and
    
    Reinsurance and Insurance Brokerage.
    Risk Consulting and Software
   Investment Consulting and Solutions
   8




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Reinsurance and Insurance Brokerage
    Talent and Rewards Segment
  
    
    Executive Compensation;
    
    Rewards, Talent and Communication; and
    
    Data, Surveys and Technology.
 Executive Compensation
  Rewards, Talent and Communication
   
    
    Talent Management. We help organizations develop integrated programs and
processes to identify clients leadership and workforce needs, develop leaders and
employees, and provide performance management to align goals and incentives for those
employees and leaders with the critical drivers of business performance. Also within this
practice, our human resources effectiveness services help clients implement the right human
resources structure, service delivery model and staff to meet the needs of both the
organization and employees efficiently and effectively.
    
    Rewards. We provide the strategy, design and execution support for compensation
programs to help clients optimize their reward spend and ensure their programs drive the
behaviors and performance required to meet key business goals. Within this practice, we
also have a sales effectiveness and rewards service offering focused on sales force
productivity and incentives.
 9




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
    
    Communication and Change Management. We offer deep expertise in change
management, organizational effectiveness and communication to support our consulting
services and help drive employee engagement and align behavior with business results.
 Data, Surveys and Technology
    Competition
     Employees
  As of June 30,2010
    
    
    2009Benefits
    
    
    6,165
    
    
    
    4,255Risk and Financial Services
    
    
    2,030
    
    
    
    985Talent and Rewards
    
    
    1,990
    
    
    
    1,035Other
    
    
    215
    
    
    
    225Business Services (incl. corporate and field support)
    
    
    2,350
    
    
    
    1,200Total associates
    
    
    12,750
    
    
    
    7,700
  10




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Item 1A  Risk Factors
  If we are not able to successfully integrate the operations of Towers Perrin and Watson Wyatt, we
may fail to realize the anticipated growth opportunities and other anticipated benefits of the
Merger.
  
    
    Loss of key officers and employees;
    
    Loss of key clients;
    
    Loss of revenues; and
    
    Increases in operating, tax or other costs.
  The effects of the Merger may be dilutive to our earnings per share in the short term, and our
estimates of the operational cost savings we expect to result from the Merger and of the costs we
expect will be required to achieve such savings are inherently uncertain and may not be accurate,
and we may not be able to achieve the operational cost savings in the expected time frame or at
all.
  Changes in Towers Watsons compensation structure relative to each of Towers Perrins and Watson
Wyatts current compensation structures could impair Towers Watsons ability to retain certain
current associates of each of Towers Perrin and Watson Wyatt.
  11




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The loss of key associates could damage or result in the loss of client relationships and could
result in such associates competing against Towers Watson.
   Our clients could terminate or reduce our services at any time, which could decrease associate
utilization, adversely impacting our profitability and results of operations.
  Our quarterly revenues could fluctuate while our expenses are relatively fixed.
  
    
    The significance of client engagements commenced and completed during a
quarter;
    
    The seasonality of certain types of services. For example, our retirement
revenues typically are more heavily weighted toward the first and fourth quarters of the
calendar year, when annual actuarial valuations are required to be completed for calendar
year-end companies and the related services are performed;
    
    The number of business days in a quarter;
    
    Associate hiring and utilization rates;
    
    Clients ability to terminate engagements without penalty;
    
    The size and scope of assignments; and
    
    General economic conditions.
  Improper management of our engagements could hurt our financial results.
  12




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The trend of employers shifting from defined benefit plans to defined contribution plans could
materially adversely affect our business and results of operations.
  Our business will be negatively affected if we are not able to anticipate and keep pace with rapid
changes in government regulations or if government regulations decrease the need for our services
or increase our costs.
    Our business could be negatively affected by currently proposed or future legislative or regulatory
activity concerning compensation consultants.
    13




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Competition could result in loss of our market share and reduced profitability.
  Consolidation in the industries that we serve could materially adversely affect our business.
  We are subject to risks of doing business internationally.
  
    
    Currency exchange rate fluctuations;
    
    Unexpected increases in taxes or changes in U.S. or foreign tax laws;
    
    Compliance with a variety of international laws and regulations, such as data
privacy, employment regulations, trade barriers and restrictions on the import and export
of technologies, as well as U.S. laws affecting the activities of U.S. companies abroad,
including the Foreign Corrupt Practices Act of 1977 and sanctions programs administered by
the U.S. Department of the Treasury Office of Foreign Assets Control;
    
    Absence in some jurisdictions of effective laws to protect our intellectual
property rights;
    
    New regulatory requirements or changes in policies and local laws that
materially affect the demand for our services or directly affect our foreign operations;
    
    Local economic and political conditions, including unusual, severe, or
protracted recessions in foreign economies and inflation risk;
    
    The length of payment cycles and potential difficulties in collecting accounts
receivable, particularly in light of the number of insolvencies in the current economic
environment and the numerous bankruptcy laws to which they are subject;
    
    Unusual and unexpected monetary exchange controls, price controls or
restrictions on transfers of cash; or
    
    Civil disturbance, terrorism or other catastrophic events that reduce business
activity in other parts of the world.
  Our inability to successfully recover should we experience a disaster or other business continuity
problem could cause material financial loss, loss of human capital, regulatory actions,
reputational harm or legal liability.
  14




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Demand for our services could decrease for various reasons, including a continued general economic
downturn, a decline in a clients or an industrys financial condition or prospects, or a decline
in defined benefit pension plans that could materially adversely affect our results of operations.
    The unaudited pro forma financial data included in this Annual Report are illustrative and the
actual financial condition and results of operations of Towers Watson may differ materially from
the historical financial statements of Watson Wyatt and the unaudited pro forma financial data
included in this Annual Report.
  Our growth strategy depends, in part, on our ability to make acquisitions, and if we have
difficulty in acquiring, overpay for, or are unable to acquire other businesses, our business may
be materially adversely affected.
  We face risks when we acquire businesses, and may have difficulty integrating or managing acquired
businesses, which may harm our business, financial condition, results of operations or reputation.
  15




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
    
    Diversion of management attention;
    
    Amortization of intangible assets, adversely affecting our reported results of
operations;
    
    Inability to retain the management, key personnel and other employees of the
acquired business;
    
    Inability to establish uniform standards, controls, systems, procedures and
policies;
    
    Inability to retain the acquired companys clients;
    
    Exposure to legal claims for activities of the acquired business prior to
acquisition; and
    
    Incurrence of additional expenses in connection with the integration process.
  Damage to our reputation could damage our businesses.
   We could be subject to claims arising from our work, as well as government inquiries and
investigations, which could materially adversely affect our reputation, business and financial
condition.
   
    
    Claims that actuarial assumptions were unreasonable or that there were
computational errors leading to pension plan underfunding or under-reserving for insurance
claim liabilities;
    
    Claims of failure to review adequately or detect deficiencies in data, which
could lead to an underestimation of pension plan or insurance claim liabilities; and
    
    Claims that employee benefit plan documents were misinterpreted or plan
amendments were faulty, leading to unintended plan benefits or overpayments to
beneficiaries.
 16




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We advise or act on behalf of clients regarding investments whose results are not guaranteed, and
clients that experience investment return shortfalls may assert claims against us.
  Our investment activities may require specialized operational competencies, and if we fail to
properly execute our role in cash and investment management, our clients or third parties may
assert claims against us.
  Towers Watson may be engaged in providing services outside the core human capital and risk
management business currently conducted by Towers Perrin and Watson Wyatt, which may carry greater
risk of liability.
  Our business faces rapid technological change, and our failure to respond to this change quickly
could materially adversely affect our business.
  17




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Limited protection of our intellectual property could harm our business, and we face the risk that
our services or products may infringe upon the intellectual property rights of others.
  We could have liability or our reputation could be damaged if we do not protect client data or
information systems or if our information systems are breached.
  Insurance may become more difficult or expensive to obtain.
  Towers Watson and its subsidiaries could encounter significant obstacles in securing adequate
insurance coverage for errors and omissions liability risks on favorable or acceptable terms.
   18




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We have material pension liabilities that can fluctuate significantly.
  Towers Perrin and Towers Watson are defendants in several lawsuits commenced by former Towers
Perrin shareholders.
 Dugan Action Dugan Action
 Dugan
Action Allen
Action Dugan Action
 Pao Action Dugan Action Dugan Action
  Our reinsurance brokerage business could be subject to claims arising from its work, which could
materially adversely affect our reputation and business.
  19




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
    
    Place the reinsurance coverage requested by the client;
    
    Report claims on a timely basis or as required by the reinsurance contract or
program;
    
    Communicate complete and accurate information to reinsurers relating to the
risks being reinsured; or
    
    Appropriately model or advise our clients in relation to the extent and scope
of reinsurance coverage that is advisable for a clients needs.
  Reinsurance brokerage revenue is influenced by factors that are beyond our control, and volatility
or declines in premiums or other trends in the insurance and reinsurance markets could
significantly undermine the profitability of our reinsurance brokerage business.
    We may not be able to obtain financing on favorable terms or at all.
  Our revolving credit facility contains a number of restrictive covenants that restrict our
operations.
  
    
    Incur liens or additional indebtedness (including guarantees or contingent
obligations);
    
    Engage in mergers and other fundamental changes;
    
    Sell or otherwise dispose of property or assets;
    
    Pay dividends and other distributions; and
    
    Change the nature of our business.
  20




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We rely on third parties to provide services and their failure to perform the services could harm
our business.
  If we are not able to implement any recommended improvements in our internal control over financial
reporting or favorably assess the effectiveness of our internal control over financial reporting,
or if our independent registered public accounting firm is not able to provide an unqualified
attestation report on the effectiveness of our internal control over financial reporting, our
business, financial condition or results of operations could be materially adversely affected.
   The stock price of Class A common stock may be volatile.
  
    
    General market and economic conditions, including market conditions in the human capital
and risk and financial management consulting industries and regulatory developments in the
United States, foreign countries or both;
    
    Actual or expected variations in our quarterly results of operations and in the
quarterly results of operations of companies perceived to be similar to us;
    
    Differences between actual results of operations and those expected by investors and
analysts;
    
    Changes in recommendations by securities analysts;
    
    Operations and stock performance of competitors;
 21




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
    
    Accounting charges, including charges relating to the impairment of goodwill or other
intangible assets;
    
    Significant acquisitions, dispositions or strategic alliances by us or by competitors;
    
    Sales of the Class A common stock, including sales by our directors and officers or
significant investors;
    
    Incurrence of additional debt;
    
    Dilutive issuance of equity;
    
    Recruitment or departure of key personnel;
    
    Loss or gain of key clients;
    
    Litigation involving us, our general industry or both; and
    
    Changes in reserves for professional liability claims.
  Shares of Towers Watson common stock eligible for public sale could adversely affect the stock
price.
    We will only pay dividends if and when declared by our board of directors.
  22




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We have various mechanisms in place that could prevent a change in control that a stockholder might
favor.
  
    
    Authorize the issuance of preferred stock without fixed characteristics, which could be
issued by our board of directors pursuant to a stockholder rights plan and deter a takeover
attempt;
    
    Provide that only the Chief Executive Officer, President or our board of directors may
call a special meeting of stockholders;
    
    Limit business at special stockholder meetings to such business as is brought before the
meeting by or at the direction of our board of directors;
    
    Prohibit stockholder action by written consent, and require all stockholder actions to
be taken at an annual or special meeting of the stockholders;
    
    Provide our board of directors with exclusive power to change the number of directors;
    
    Provide that all vacancies on our board of directors, including new directorships, may
only be filled by a resolution adopted by a majority of the directors then in office;
    
    Do not opt out of Section 203 of the Delaware General Corporation Law, which prohibits
business combinations between a corporation and any interested stockholder for a period of
three years following the time that such stockholder became an interested stockholder;
    
    Require a supermajority vote for the stockholders to amend the bylaws; and
    
    Prohibit any stockholder from presenting a proposal or director nomination at an annual
stockholders meeting unless such stockholder provides us with sufficient advance notice.
 
 Item 1B. Unresolved SEC Comments
  
 Item 2. Properties.
   
 Item 3. Legal Proceedings.
  23




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Item 4. Reserved.
 
 Part II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 Market Information
   High
    
    
    LowFiscal Year 2010Third quarter (January 4, 2010  March 31, 2010)
    
    $
    51.48
    
    
    $
    42.72Fourth quarter (April 1, 2010  June 30, 2010)
    
    $
    50.00
    
    
    $
    38.85Fiscal Year 2011First quarter (July 1, 2010  August 30, 2010)
    
    $
    48.29
    
    
    $
    38.04
 Holders
  Dividends
   24




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Performance Graph
  
 6/05
    
    
    6/06
    
    
    6/07
    
    
    6/08
    
    
    6/09
    
    
    12/09Watson Wyatt Worldwide, Inc.
    
    $
    100.00
    
    
    $
    138.48
    
    
    $
    200.22
    
    
    $
    211.03
    
    
    $
    150.72
    
    
    $
    191.47NYSE Composite
    
    
    100.00
    
    
    
    115.70
    
    
    
    142.85
    
    
    
    128.22
    
    
    
    90.12
    
    
    
    110.88Peer Group
    
    
    100.00
    
    
    
    122.31
    
    
    
    167.39
    
    
    
    165.17
    
    
    
    134.41
    
    
    
    163.33
 25




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1/4/10
    
    
    6/30/10Towers Watson & Co.
    
    $
    100.00
    
    
    $
    77.96NYSE Composite
    
    
    100.00
    
    
    
    91.14Peer Group
    
    
    100.00
    
    
    
    91.64
   Issuer Purchases of Equity Securities
   26




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Item 6. Selected Consolidated Financial Data
  Year Ended June 30,2010 (a)
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Statement of Operations Data:(amounts are in thousands, except per share data)Revenue
    
    $
    2,387,829
    
    
    $
    1,676,029
    
    
    $
    1,760,055
    
    
    $
    1,486,523
    
    
    $
    1,271,811Costs of providing services:Salaries and employee benefits
    
    
    1,540,417
    
    
    
    1,029,299
    
    
    
    1,052,992
    
    
    
    879,341
    
    
    
    699,049Professional and subcontracted services
    
    
    163,848
    
    
    
    119,323
    
    
    
    138,983
    
    
    
    116,527
    
    
    
    84,165Occupancy
    
    
    109,454
    
    
    
    72,566
    
    
    
    83,255
    
    
    
    75,704
    
    
    
    164,140General and administrative expenses
    
    
    220,937
    
    
    
    172,010
    
    
    
    185,624
    
    
    
    178,411
    
    
    
    147,122Depreciation and amortization
    
    
    101,084
    
    
    
    73,448
    
    
    
    72,428
    
    
    
    57,235
    
    
    
    44,918Transaction and integration expenses
    
    
    87,644
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,223,384
    
    
    
    1,466,646
    
    
    
    1,533,282
    
    
    
    1,307,218
    
    
    
    1,139,394Income from operations
    
    
    164,445
    
    
    
    209,383
    
    
    
    226,773
    
    
    
    179,305
    
    
    
    132,417(Loss)/Income from affiliates
    
    
    (1,274
    )
    
    
    8,350
    
    
    
    2,325
    
    
    
    (5,500
    )
    
    
    1,135Interest income
    
    
    2,950
    
    
    
    2,022
    
    
    
    5,584
    
    
    
    4,066
    
    
    
    4,325Interest expense
    
    
    (7,508
    )
    
    
    (2,778
    )
    
    
    (5,977
    )
    
    
    (1,581
    )
    
    
    (4,093
    )Other non-operating income/(loss)
    
    
    11,304
    
    
    
    4,926
    
    
    
    464
    
    
    
    178
    
    
    
    (2,081
    )Income from continuing operations before income taxes
    
    
    169,917
    
    
    
    221,903
    
    
    
    229,169
    
    
    
    176,468
    
    
    
    131,703Provision for income taxes
    
    
    50,907
    
    
    
    75,276
    
    
    
    73,470
    
    
    
    60,193
    
    
    
    45,585Income from continuing operations
    
    
    119,010
    
    
    
    146,627
    
    
    
    155,699
    
    
    
    116,275
    
    
    
    86,118Discontinued operations (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,073Net income before non-controlling interests
    
    
    119,010
    
    
    
    146,627
    
    
    
    155,699
    
    
    
    116,275
    
    
    
    87,191Net income/(loss) attributable to non-controlling
interests
    
    
    (1,587
    )
    
    
    169
    
    
    
    258
    
    
    
    
    
    
    
    Net income attributable to controlling interests
    
    $
    120,597
    
    
    $
    146,458
    
    
    $
    155,441
    
    
    $
    116,275
    
    
    $
    87,191Earnings per share, continuing operations, basic
    
    $
    2.01
    
    
    $
    3.43
    
    
    $
    3.65
    
    
    $
    2.74
    
    
    $
    2.08Earnings per share, continuing operations, diluted
    
    $
    2.00
    
    
    $
    3.42
    
    
    $
    3.50
    
    
    $
    2.60
    
    
    $
    1.99Earnings per share, discontinued operations, basic
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.03Earnings per share, discontinued operations, diluted
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02Earnings per share, net income attributable to
controlling interests, basic
    
    $
    2.04
    
    
    $
    3.43
    
    
    $
    3.65
    
    
    $
    2.74
    
    
    $
    2.11Earnings per share, net income attributable to
controlling interests, diluted
    
    $
    2.03
    
    
    $
    3.42
    
    
    $
    3.50
    
    
    $
    2.60
    
    
    $
    2.01Dividends declared per share
    
    $
    0.30
    
    
    $
    0.30
    
    
    $
    0.30
    
    
    $
    0.30
    
    
    $
    0.30Weighted average shares of common stock, basic
    
    
    59,257
    
    
    
    42,690
    
    
    
    42,577
    
    
    
    42,413
    
    
    
    41,393Weighted average shares of common stock, diluted
    
    
    59,372
    
    
    
    42,861
    
    
    
    44,381
    
    
    
    44,684
    
    
    
    43,297
 27




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##### Table of Contents



As of June 30,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Balance Sheet and Other Data:Cash and cash equivalents
    
    $
    600,466
    
    
    $
    209,832
    
    
    $
    124,632
    
    
    $
    248,186
    
    
    $
    165,345Working capital
    
    
    479,688
    
    
    
    231,938
    
    
    
    172,241
    
    
    
    326,354
    
    
    
    197,312Goodwill and Intangible Assets
    
    
    2,410,652
    
    
    
    728,987
    
    
    
    870,943
    
    
    
    594,651
    
    
    
    511,116Total assets
    
    
    4,573,450
    
    
    
    1,626,319
    
    
    
    1,715,976
    
    
    
    1,529,709
    
    
    
    1,240,359Revolving credit facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    105,000
    
    
    
    30,000Dividends declared
    
    
    17,661
    
    
    
    12,785
    
    
    
    12,768
    
    
    
    12,717
    
    
    
    12,667Stockholders equity
    
    
    1,955,607
    
    
    
    853,638
    
    
    
    984,395
    
    
    
    787,519
    
    
    
    648,761Shares outstanding
    
    
    74,204
    
    
    
    42,657
    
    
    
    43,578
    
    
    
    42,299
    
    
    
    42,386
 
 (a)
    
    Includes the effect of the Merger as of January 1, 2010.(b)
    
    In fiscal year 2006, we revised our estimates related to remaining future obligations and
costs associated with the discontinuation in 1998 of our benefits administration outsourcing
business. As a result, we reduced the amount of our liability for losses from disposal, less
the associated income tax expense. 28




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Executive Overview
 General
  Segments
  Benefits Segment
  
    
    Retirement;
    
    Health and Group Benefits;
    
    Technology and Administration Solutions; and
    
    International Consulting.
  Risk and Financial Services Segment
 
    
    Risk Consulting and Software (RCS);
    
    Investment Consulting and Solutions (Investment); and
    
    Reinsurance and Insurance Brokerage (Brokerage).
  29




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##### Table of Contents



Talent and Rewards Segment
 
    
    Executive Compensation
    
    Rewards, Talent and Communication; and
    
    Data, Surveys and Technology.
  Financial Statement Overview
   Fiscal YearGeographic Region
    
    2010
    
    
    2009
    
    
    2008United States
    
    
    52
    %
    
    
    43
    %
    
    
    41
    %United Kingdom
    
    
    22
    
    
    
    32
    
    
    
    32Canada
    
    
    6
    
    
    
    4
    
    
    
    4Germany
    
    
    4
    
    
    
    4
    
    
    
    5Netherlands
    
    
    3
    
    
    
    3
    
    
    
    4
     30




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##### Table of Contents



Critical Accounting Policies and Estimates
  Revenue Recognition
     31




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##### Table of Contents



Valuation of Billed and Unbilled Receivables from Clients
  Discretionary Compensation
   Income Taxes
 Income Taxes
 Pension Assumptions
  32




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##### Table of Contents



Assumptions Used in the Valuations of the Defined Benefit Pension Plans
   Year Ended June 30, 2010
    
    
    Year Ended June 30, 2009
    
    
    Year Ended June 30, 2008North
    
    
    
    
    
    
    North
    
    
    
    
    
    
    NorthAmerica
    
    
    Europe
    
    
    America
    
    
    Europe
    
    
    America
    
    
    EuropeDiscount rate
    
    
    6.43
    %
    
    
    6.03
    %
    
    
    6.91
    %
    
    
    6.47
    %
    
    
    6.25
    %
    
    
    5.72
    %Expected long-term rate of return on
assets
    
    
    8.11
    %
    
    
    6.48
    %
    
    
    8.61
    %
    
    
    6.53
    %
    
    
    8.61
    %
    
    
    6.74
    %Rate of increase in compensation levels
    
    
    3.93
    %
    
    
    5.09
    %
    
    
    4.08
    %
    
    
    5.36
    %
    
    
    3.84
    %
    
    
    4.73
    %
 33




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##### Table of Contents



June 30, 2010
    
    
    June 30, 2009North
    
    
    
    
    
    
    NorthAmerica
    
    
    Europe
    
    
    America
    
    
    EuropeDiscount rate
    
    
    5.86
    %
    
    
    5.25
    %
    
    
    7.21
    %
    
    
    6.29
    %Rate of increase in compensation levels
    
    
    3.88
    %
    
    
    3.88
    %
    
    
    3.29
    %
    
    
    5.15
    %
    Effect on FY2011Change in Assumption
    
    Pre-Tax Pension Expense25 basis point decrease in discount rate
    
    +$3.0 million25 basis point increase in discount rate
    
    -$2.9 million25 basis point decrease in expected return on assets
    
    +$2.8 million25 basis point increase in expected return on assets
    
    -$2.8 million
   Effect on FY2011Change in Assumption
    
    Pre-Tax Pension Expense25 basis point decrease in discount rate
    
    +$2.7 million25 basis point increase in discount rate
    
    -$2.6 million25 basis point decrease in expected return on assets
    
    +$1.0 million25 basis point increase in expected return on assets
    
    -$1.0 million
  Incurred But Not Reported Claims
  Goodwill and Intangible Assets
  34




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##### Table of Contents



Results of Operations
    35




---



##### Table of Contents



Historical Results of Operations
  Consolidated Statements of Operations
 Year Ended June 30,2010
    
    
    2009
    
    
    2008Revenue
    
    $
    2,387,829
    
    
    
    100
    %
    
    $
    1,676,029
    
    
    
    100
    %
    
    $
    1,760,055
    
    
    
    100
    %Costs of providing services:Salaries and employee benefits
    
    
    1,540,417
    
    
    
    65
    %
    
    
    1,029,299
    
    
    
    61
    %
    
    
    1,052,992
    
    
    
    60
    %Professional and subcontracted
services
    
    
    163,848
    
    
    
    7
    
    
    
    119,323
    
    
    
    7
    
    
    
    138,983
    
    
    
    8Occupancy
    
    
    109,454
    
    
    
    5
    
    
    
    72,566
    
    
    
    4
    
    
    
    83,255
    
    
    
    5General and administrative expenses
    
    
    220,937
    
    
    
    9
    
    
    
    172,010
    
    
    
    10
    
    
    
    185,624
    
    
    
    11Depreciation and amortization
    
    
    101,084
    
    
    
    4
    
    
    
    73,448
    
    
    
    4
    
    
    
    72,428
    
    
    
    4Transaction and integration expenses
    
    
    87,644
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,223,384
    
    
    
    93
    
    
    
    1,466,646
    
    
    
    88
    
    
    
    1,533,282
    
    
    
    87Income from operations
    
    
    164,445
    
    
    
    7
    
    
    
    209,383
    
    
    
    12
    
    
    
    226,773
    
    
    
    13(Loss)/income from affiliates
    
    
    (1,274
    )
    
    
    
    
    
    
    8,350
    
    
    
    
    
    
    
    2,325
    
    
    
    Interest income
    
    
    2,950
    
    
    
    
    
    
    
    2,022
    
    
    
    
    
    
    
    5,584
    
    
    
    Interest expense
    
    
    (7,508
    )
    
    
    
    
    
    
    (2,778
    )
    
    
    
    
    
    
    (5,977
    )
    
    
    Other non-operating income
    
    
    11,304
    
    
    
    
    
    
    
    4,926
    
    
    
    
    
    
    
    464
    
    
    
    Income before income taxes
    
    
    169,917
    
    
    
    7
    
    
    
    221,903
    
    
    
    13
    
    
    
    229,169
    
    
    
    13Provision for income taxes
    
    
    50,907
    
    
    
    2
    
    
    
    75,276
    
    
    
    4
    
    
    
    73,470
    
    
    
    4Net income before non-controlling interests
    
    
    119,010
    
    
    
    5
    
    
    
    146,627
    
    
    
    9
    
    
    
    155,699
    
    
    
    9Net (loss)/income attributable to non-controlling
interests
    
    
    (1,587
    )
    
    
    
    
    
    
    169
    
    
    
    
    
    
    
    258
    
    
    
    Net income attributable to controlling interests
    
    $
    120,597
    
    
    
    5
    %
    
    $
    146,458
    
    
    
    9
    %
    
    $
    155,441
    
    
    
    9
    %
 36




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##### Table of Contents



Historical Results of Operations for the Fiscal Year Ended June 30, 2010 Compared to Fiscal Year
Ended June 30, 2009
    Net income attributable to controlling interests.
  Earnings per share.
  Non-U.S. GAAP Measures
    37




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##### Table of Contents



Year Ended June 30,2010
    
    
    2009
    
    
    2008(In thousands)Reconciliation of EBITDA and Adjusted EBITDA to net income
before non-controlling interests:Net income before non-controlling interests
    
    $
    119,010
    
    
    $
    146,627
    
    
    $
    155,699Provision for income taxes
    
    
    50,907
    
    
    
    75,276
    
    
    
    73,470Interest, net
    
    
    4,558
    
    
    
    756
    
    
    
    393Depreciation and amortization
    
    
    101,084
    
    
    
    73,448
    
    
    
    72,428EBITDA
    
    
    275,559
    
    
    
    296,107
    
    
    
    301,990Transaction and integration expenses
    
    
    87,644
    
    
    
    
    
    
    
    Stock-based compensation (b)
    
    
    48,006
    
    
    
    
    
    
    
    Other non-operating income (a)
    
    
    (10,030
    )
    
    
    (13,276
    )
    
    
    (2,789
    )Adjusted EBITDA
    
    $
    401,179
    
    
    $
    282,831
    
    
    $
    299,201
 
 (a)
    
    Other non-operating income includes (income)/loss from affiliates, and other non-operating
income.(b)
    
    Stock-based compensation awarded to former Towers Perrin employees in connection with the
Merger is included in salaries and employee benefits expense.  Year EndedJune 30, 2010(In thousands, except share and pershare amounts)Net Income Attributable to Controlling Interests
    
    $
    120,597Adjusted for expenses as a result of the Merger (c):Amortization of intangible assets
    
    
    21,020Transaction and integration expenses including severance
    
    
    58,214Gain on sale of investment
    
    
    (5,760
    )Stock-based compensation from Restricted Class A Shares
    
    
    31,636Other merger-related tax items
    
    
    (17,013
    )Loss of Medicare Part D subsidy
    
    
    10,598Adjusted Net Income Attributable to Controlling Interests
    
    $
    219,292Weighted Average Shares of Common Stock  Diluted (000)
    
    
    59,372Earnings Per Share  Diluted, As Reported
    
    $
    2.03Adjusted for expenses as a result of the Merger:Amortization of intangible assets
    
    
    0.36Transaction and integration expenses including severance
    
    
    0.98Gain on sale of investment
    
    
    (0.10
    )Stock-based compensation from Restricted Class A Shares
    
    
    0.53Other merger-related tax items
    
    
    (0.29
    )Loss of Medicare Part D subsidy
    
    
    0.18Adjusted Earnings Per Share  Diluted
    
    $
    3.69
 
 (c)
    
    The expenses that are adjusted as a result of the Merger for the year ended June 30, 2010
are net of tax. In calculating the net of tax amounts, the effective tax rate for amortization
of intangible assets is 32.8%, transaction and integration expenses including severance is
35.1%, stock-based compensation from Restricted Class A shares is 34.1%. The $10.6 million
related to the loss of Medicare Part D subsidy and $17.0 million of other Merger-related tax
items are items included in the consolidated statement of operations under provision for income
taxes. 38




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##### Table of Contents



Historical Results of Operations for the Fiscal Year Ended June 30, 2009 Compared to Fiscal Year
Ended June 30, 2008
 Revenue
    
    
    Benefits revenue decreased $33.3 million, or 3%, compared with fiscal year 2008 due to
the strengthening of the U.S. dollar. On a constant currency basis, revenue increased 4%
over fiscal year 2008 due to increased demand for our services.
    
    Technology and Administration Solutions revenue increased $5.1 million, or 3%, compared
with fiscal year 2008, due to increases in both North America and Europe. On a constant
currency basis, Technology and Administration Solutions revenue increased 12% over fiscal
year 2008. In Europe, revenue increased primarily as a result of new clients. In North
America, revenue increased due to additional project work at existing clients as well as to
an increase in the number of projects in on-going service delivery.
    
    Human Capital Group revenue decreased $23.2 million, or 12%, compared with fiscal year
2008. On a constant currency basis, revenue decreased 8% over fiscal year 2008 due to
decreases in demand for compensation, data and organizational effectiveness services.
    
    Investment Consulting revenue decreased $8.4 million, or 5%, compared with fiscal year
2008. On a constant currency basis, revenue increased 11% over fiscal year 2008 due
primarily to increased demand for investment strategy advice and implemented consulting
services.
    
    Insurance and Financial Services revenue decreased $1.4 million, or 1%, compared with
fiscal year 2008. On a constant currency basis, revenue increased 12% over fiscal year 2008
due primarily to additional project work.
 Salaries and Employee Benefits
  Professional and Subcontracted Services
  Occupancy
  General and Administrative Expenses
  39




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##### Table of Contents



Depreciation and Amortization
  Income From Affiliates
  Interest Income
  Interest Expense
  Other Non-Operating Income
  Income before Income Taxes
  Provision for Income Taxes
  Net Income Before Non-Controlling Interests
  Net Income Attributable to Controlling Interests
  Diluted Earnings Per Share
  40




---



##### Table of Contents



UNAUDITED SUPPLEMENTAL PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
   
    
    related Merger consideration;
    
    adjustments made to record the assets and liabilities of Towers
Perrin at their estimated fair values;
    
    reclassifications made to conform Towers Perrins and Watson Wyatts
historical financial statement presentation to Towers Watsons; and
    
    the consolidation of Professional Consultants Insurance Company,
Inc., which we refer to as PCIC.
       41




---



##### Table of Contents



Unaudited Supplemental Pro Forma Combined Statement of Operations
Year Ended June 30, 2010
 Year Ended
    
    
    Six Months Ended
    
    
    Year EndedJune 30, 2010
    
    
    December 31, 2009
    
    
    June 30, 2010As Reported
    
    
    Historical
    
    
    Pro FormaTowers Watson
    
    
    Towers Perrin
    
    
    PCIC
    
    
    Adjustments
    
    
    As Adjusted(In thousands, except share and per share data)Revenue
    
    $
    2,387,829
    
    
    $
    798,131
    
    
    $
    12,750
    
    
    $
    (9,404
    )         H
    
    $
    3,180,916(8,390
    )             KCosts of providing services:Salaries and employee benefits
    
    
    1,540,417
    
    
    
    558,855
    
    
    
    107
    
    
    
    46,832
    B
    
    
    2,146,211Professional and subcontracted services
    
    
    163,848
    
    
    
    79,421
    
    
    
    483
    
    
    
    
    
    
    
    243,752Occupancy
    
    
    109,454
    
    
    
    35,406
    
    
    
    
    
    
    
    1,835
    A
    
    
    146,695General and administrative expenses
    
    
    220,937
    
    
    
    40,351
    
    
    
    16,924
    
    
    
    (9,404
    )             H
    
    
    268,808Depreciation and amortization
    
    
    101,084
    
    
    
    19,007
    
    
    
    
    
    
    
    11,508
    A
    
    
    131,599Transaction and integration expenses
    
    
    87,644
    
    
    
    15,734
    
    
    
    
    
    
    
    (103,378
    )           E
    
    
    2,223,384
    
    
    
    748,774
    
    
    
    17,514
    
    
    
    (52,607
    )
    
    
    2,937,065Income (loss) from operations
    
    
    164,445
    
    
    
    49,357
    
    
    
    (4,764
    )
    
    
    34,813
    
    
    
    243,851Loss from affiliates
    
    
    (1,274
    )
    
    
    (164
    )
    
    
    
    
    
    
    353
    J
    
    
    (1,085
    )Interest income
    
    
    2,950
    
    
    
    530
    
    
    
    1,517
    
    
    
    (266
    )               C
    
    
    4,731Interest expense
    
    
    (7,508
    )
    
    
    (1,536
    )
    
    
    
    
    
    
    (2,000
    )             D
    
    
    (11,991
    )(947
    )               GOther non-operating income
    
    
    11,304
    
    
    
    5,281
    
    
    
    
    
    
    
    
    
    
    
    16,585Income before income taxes
    
    
    169,917
    
    
    
    53,468
    
    
    
    (3,247
    )
    
    
    31,953
    
    
    
    252,091Provision for income taxes
    
    
    50,907
    
    
    
    9,779
    
    
    
    (1,187
    )
    
    
    8,419
    F
    
    
    67,918Net income (loss) before non-controlling interest
    
    $
    119,010
    
    
    $
    43,689
    
    
    $
    (2,060
    )
    
    $
    23,534
    
    
    $
    184,173Net loss attributable to non-controlling interests
    
    $
    (1,587
    )
    
    $
    
    
    
    $
    
    
    
    $
    (559
    )         I
    
    $
    (2,146
    )Net income (loss) attributable to controlling interests
    
    $
    120,597
    
    
    $
    43,689
    
    
    $
    (2,060
    )
    
    $
    24,093
    
    
    $
    186,319Earnings per share:Net income attributable to controlling interests  basic
    
    $
    2.04
    
    
    
    
    
    
    
    
    
    
    
    
    L
    
    $
    3.14Net income attributable to controlling interests 
diluted
    
    $
    2.03
    
    
    
    
    
    
    
    
    
    
    
    
    L
    
    $
    3.14Weighted average shares of common stock,
basic (000)
    
    
    59,257
    
    
    
    
    
    
    
    
    
    
    
    
    L
    
    
    59,257Weighted average shares of common stock,
diluted (000)
    
    
    59,372
    
    
    
    
    
    
    
    
    
    
    
    
    L
    
    
    59,372
 42




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##### Table of Contents



Unaudited Supplemental Pro Forma Combined Statement of Operations
Year Ended June 30, 2009
 HistoricalPro FormaWatson Wyatt
    
    
    Towers Perrin
    
    
    PCIC
    
    
    Adjustments
    
    
    As Adjusted(In thousands, except share and per share data)Revenue
    
    $
    1,676,029
    
    
    $
    1,586,299
    
    
    $
    39,873
    
    
    $
    (27,804
    )         H
    
    $
    3,251,323(23,074
    )            KCosts of providing services:Salaries and employee benefits
    
    
    1,029,299
    
    
    
    1,107,619
    
    
    
    147
    
    
    
    99,397
    B
    
    
    2,236,462Professional and subcontracted services
    
    
    119,323
    
    
    
    172,825
    
    
    
    1,144
    
    
    
    
    
    
    
    293,292Occupancy
    
    
    72,566
    
    
    
    68,157
    
    
    
    
    
    
    
    3,669
    A
    
    
    144,392General and administrative expenses
    
    
    172,010
    
    
    
    200,047
    
    
    
    19,226
    
    
    
    (27,804
    )            H
    
    
    352,109(11,370
    )            EDepreciation and amortization
    
    
    73,448
    
    
    
    38,758
    
    
    
    
    
    
    
    24,308
    A
    
    
    136,514Transaction and integration expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    E
    
    
    1,466,646
    
    
    
    1,587,406
    
    
    
    20,517
    
    
    
    88,200
    
    
    
    3,162,769Income (loss) from operations
    
    
    209,383
    
    
    
    (1,107
    )
    
    
    19,356
    
    
    
    (139,078
    )
    
    
    88,554Income from affiliates
    
    
    8,350
    
    
    
    5,257
    
    
    
    
    
    
    
    (13,313
    )            J
    
    
    294Interest income
    
    
    2,022
    
    
    
    4,708
    
    
    
    4,924
    
    
    
    (3,087
    )             C
    
    
    8,567Interest expense
    
    
    (2,778
    )
    
    
    (3,489
    )
    
    
    
    
    
    
    (4,000
    )             D
    
    
    (12,160
    )(1,893
    )             GOther non-operating income
    
    
    4,926
    
    
    
    14,884
    
    
    
    
    
    
    
    
    
    
    
    19,810Income before income taxes
    
    
    221,903
    
    
    
    20,253
    
    
    
    24,280
    
    
    
    (161,371
    )
    
    
    105,065Provision for income taxes
    
    
    75,276
    
    
    
    40,223
    
    
    
    8,268
    
    
    
    (63,251
    )            F
    
    
    60,516Net income (loss) before non-controlling interests
    
    $
    146,627
    
    
    $
    (19,970
    )
    
    $
    16,012
    
    
    $
    (98,120
    )
    
    $
    44,549Net income attributable to non-controlling interests
    
    $
    169
    
    
    $
    
    
    
    $
    
    
    
    $
    4,346
    I
    
    $
    4,515Net income (loss) attributable to controlling interests
    
    $
    146,458
    
    
    $
    (19,970
    )
    
    $
    16,012
    
    
    $
    (102,466
    )
    
    $
    40,034Earnings per share:Net income attributable to controlling interests  basic
    
    $
    3.43
    
    
    
    
    
    
    
    
    
    
    
    
    L
    
    $
    0.68Net income attributable to controlling interests 
diluted
    
    $
    3.42
    
    
    
    
    
    
    
    
    
    
    
    
    L
    
    $
    0.67Weighted average shares of common stock,
basic (000)
    
    
    42,690
    
    
    
    
    
    
    
    
    
    
    
    
    L
    
    
    59,257Weighted average shares of common stock,
diluted (000)
    
    
    42,861
    
    
    
    
    
    
    
    
    
    
    
    
    L
    
    
    59,372
 43




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##### Table of Contents



Pro Forma Adjustments
  A)
    
    Reflects estimated amortization of Towers Perrins acquired
intangible assets on an accelerated amortization basis over their estimated
useful lives. Customer-related intangible assets are amortized over a 12-year
estimated life and developed technology intangible assets are amortized over a
weighted-average four-year estimated life. The trademark and trade names
intangible asset has an indefinite life. Also reflects one year of an adjustment
to rent expense to approximate fair value.B)
    
    Reflects non-cash compensation expense in connection with the
issuance of Towers Watson restricted Class A common stock to Towers Perrin RSU
holders in the Merger and $4.6 million of Class A common stock issued pursuant
to the acceleration of vesting of Watson Wyatts outstanding stock options and
RSU awards due to change-in-control provisions. The graded method of expense
methodology assumes that the restricted shares are issued to Towers Perrin RSU
holders in equal amounts of shares which vest over one year, two years and three
years. The current estimate of total non-cash compensation expense relating to
Towers Watson restricted Class A common stock for the three-year period is
$158.2 million. This estimate was determined assuming a 10% annual forfeiture
rate based on actual and expected attrition.C)
    
    Reflects interest income forgone as a result of the cash
consideration of $200 million paid to Towers Perrin Class R Participants in
conjunction with the redemption of Towers Watson Class R common stock.D)
    
    Reflects interest accrued on $200 million principal amount of Towers
Watson Notes issued to Towers Perrin Class R Participants. Interest on the
Towers Watson Notes accrued at a 2.0% fixed rate per annum, compounded annually.E)
    
    Reflects the elimination of Merger-related transaction costs
(including financial advisory, legal and valuation fees). Because transaction
costs will not have a continuing impact, they are not reflected in the unaudited
pro forma condensed combined statement of operations.F)
    
    Reflects the provision for taxes, adjustments to deferred tax asset,
deferred tax liability, goodwill and retained earnings as a result of the
Merger, fair value adjustments to the net assets of Towers Perrin and other
acquisition accounting adjustments. On January 1, 2010, Towers Watson recorded
deferred taxes and other tax adjustments as part of the accounting for the
Merger, including deferred taxes of $235.7 million related to the estimated fair
value adjustments for the acquired assets and liabilities. The deferred taxes
have been calculated based on the U.S. and foreign statutory tax rates for
jurisdictions where the fair value adjustments are estimated. A U.S. statutory
rate of 39.6% was used, except for adjustments related to PCIC for which a 34%
statutory rate was used since PCIC would not be included in the U.S.
consolidated tax return. For purposes of determining the estimated income tax
expense for the adjustments reflected in the unaudited pro forma condensed
combined statement of operations, taxes were determined by applying the
applicable statutory tax rate for jurisdictions where each pro forma adjustment
is expected to be reported. Although not reflected in these unaudited pro forma
condensed combined statements of operations, the effective tax rate of the
combined company could be significantly different depending on post-acquisition
activities, including repatriation decisions, the geographic mix of income, and
post-Merger restructuring activities.G)
    
    Reflects one year of amortization of $5.7 million of bank fees
associated with the Towers Watson credit facility, which will be amortized over
a three-year period.H)
    
    Reflects the elimination of premium revenue and unearned revenues
from Watson Wyatt and Towers Perrin as recorded by PCIC, as well as related
expense recorded by Watson Wyatt and Towers Perrin.I)
    
    Reflects the 27.14% non-controlling interest in PCIC of the remaining
minority shareholder.J)
    
    Reflects the elimination of Watson Wyatts and Towers Perrins
earnings from PCIC as recorded under the equity method.K)
    
    Reflects the reduction of revenue for the acquisition fair value
adjustment of historical Towers Perrin deferred revenue to reflect the
unrecognized revenue relating to the amount of effort that was performed prior
to the Merger which would not be subsequently earned under acquisition
accounting rules.L)
    
    Earnings per share calculations for the year ended June 30, 2010 and
2009 are based on Towers Watsons fully diluted shares outstanding as of June
30, 2010.
 44




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##### Table of Contents



Pro Forma Financial Information for the Fiscal Year Ended June 30, 2010
Compared to the Fiscal Year Ended June 30, 2009
 Revenue
   
    
    Benefits revenue increased less than 1% and was $1.83 billion for the fiscal
year ended June 30, 2010 compared to $1.82 billion for the fiscal year ended June 30,
2009. Health and Group Benefits and Technology and Administration Solutions practices
had single digit increases year over year, which was partially offset by a less than 1%
decrease in the Retirement practice that makes up the majority of the segments revenue.
    
    Risk and Financial Services revenue decreased 4% and was $720.9 million and
$750.4 million for the fiscal years ended June 30, 2010 and 2009, respectively. This
decrease was a result of a decrease in revenue of the Risk Consulting and Software
practice from fiscal year 2009 to fiscal year 2010, which was partially offset by
increases in revenue of the Investment and Brokerage practices in fiscal year 2010
compared to fiscal year 2009.
    
    Talent and Rewards revenue decreased 7% and was $538.8 million and $582.0
million for the fiscal years ended June 30, 2010 and 2009, respectively. This decrease
was primarily the result of a decrease in revenue from the Rewards, Talent and
Communication practice from fiscal year 2009 to fiscal year 2010. Executive Compensation
practice also decreased slightly and was partially offset by a single digit increase in
Data, Surveys and Technology revenue for fiscal year 2010 compared to fiscal year 2009.
 Salaries and Employee Benefits
  Professional and Subcontracted Services
  Occupancy
  General and Administrative Expenses
  45




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##### Table of Contents



Depreciation and Amortization
  Transaction and Integration Expenses
  (Loss)/Income From Affiliates
  Interest Income
  Interest Expense
  Other Non-Operating Income
  Explanatory Note Regarding Pro Forma Financial Information
  Historical Results of Towers Watson
  Liquidity and Capital Resources
  46




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##### Table of Contents



Cash Flows (Used in)/From Operating Activities.
   Cash
Flows From/(Used in) Investing Activities.
  Cash Flows Used in Financing Activities.
  Capital Commitments
  Dividends
   47




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##### Table of Contents



Off-Balance Sheet Arrangements and Contractual Obligations
 Remaining payments by fiscal year due as of June 30, 2010Contractual Cash
    
    
    
    
    
    Less than
    
    
    
    
    
    
    
    
    
    
    More thanObligations (in thousands)
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsNotes payable
    
    $
    300,555
    
    
    $
    201,967
    
    
    $
    98,588
    
    
    $
    
    
    
    $
    Lease commitments
    
    
    628,039
    
    
    
    113,771
    
    
    
    185,138
    
    
    
    133,370
    
    
    
    195,760$
    928,594
    
    
    $
    315,738
    
    
    $
    283,726
    
    
    $
    133,370
    
    
    $
    195,760
 Operating Leases
  Pension Contribution
  Uncertain Tax Positions
 Income Taxes
 Indebtedness
 Subordinated Notes due January 2011
  Subordinated Notes due March 2012
  Towers Watson Senior Credit Facility
  48




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##### Table of Contents



Letters of Credit under the Senior Credit Facility
  Additional Borrowings, Letters of Credit and Guarantees not part of the Senior Credit Facility
    Risk Management
 Contingencies
    49




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##### Table of Contents



Recent Accounting Pronouncements
 Adopted
 Employers Disclosures about Postretirement Benefit Plan Assets
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement No. 162.
 Business Combinations Determination of the Useful Life of Intangible Assets
 50




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##### Table of Contents



Goodwill and Other
Intangible Assets Accounting for Assets Acquired and Liabilities Assumed in a
Business Combination That Arise from Contingencies
 Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB No. 51 Business
Combinations
 SFAS 161, Disclosures About Derivative Instruments and Hedging Activities  an
Amendment of FASB Statement No. 133
 Fair Value Measurements
 Not yet adopted
 Amendments to FASB Interpretation No. 46 (R) Consolidation of Variable Interest Entities  An Interpretation of ARB No. 51.
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
  Interest Rate Risk
  Foreign Currency Risk
  Translation Exposure
  51




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  Managements Report on Internal Control over Financial Reporting
  (1)
    
    Pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the company;(2)
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and(3)
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the companys assets that could have a material effect on
the financial statements.
  52




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##### Table of Contents



Internal Control  Integrated Framework
   53




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control
 Integrated Framework
    Internal Control 
Integrated Framework
  DELOITTE & TOUCHE LLP
 
 54




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##### Table of Contents



Item 9B. Other Information.
  
 Part III
 
 Item 10. Directors, Executive Officers, and Audit Committee of the Registrant.
  
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  
 Item 13. Certain Relationships and Related Transactions.
  
 Item 14. Principal Auditor Fees and Services.
  
 Part IV
 
 Item 15. Exhibits and Financial Statement Schedules
  (1)
    
    Consolidated Financial Statements of Towers Watson & Co.
   
 (2)
    
    Consolidated Financial Statement Schedule for each of the three years in the period ended June 30, 2010
   (3)
    
    Exhibits
  b)
    
    Exhibits
  c)
    
    Financial Statement Schedules
  55




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##### Table of Contents



SIGNATURES
  TOWERS WATSON & CO.
(Registrant)Date: September 7, 2010
    By:
    /s/ John J. HaleyJohn J. HaleyChief Executive Officer  Signature
    
    Title
    
    Date/s/ John J. Haley
    
    Chief Executive Officer and Director
    
    September 7, 2010John J. Haley/s/ Mark V. Mactas
    
    President, Chief Operating Officer and Director
    
    September 7, 2010Mark V. Mactas/s/ Roger F. Millay
    
    Chief Financial Officer
    
    September 7, 2010Roger F. Millay/s/ Peter L. Childs
    
    Principal Accounting Officer
    
    September 7, 2010Peter L. Childs/s/ Betsy S. Atkins
    
    Director
    
    September 7, 2010Betsy S. Atkins/s/ Victor F. Ganzi
    
    Director
    
    September 7, 2010Victor F. Ganzi/s/ John J. Gabarro
    
    Director
    
    September 7, 2010John J. Gabarro/s/ Mark Maselli
    
    Director
    
    September 7, 2010Mark Maselli/s/ Gail E. McKee
    
    Director
    
    September 7, 2010Gail E. McKee/s/ Brendan R. ONeill
    
    Director
    
    September 7, 2010Brendan R. ONeill/s/ Linda D. Rabbitt
    
    Director
    
    September 7, 2010Linda D. Rabbitt/s/ Gilbert T. Ray
    
    Director
    
    September 7, 2010Gilbert T. Ray/s/ Paul D. Thomas
    
    Director
    
    September 7, 2010Paul D. Thomas/s/ Wilhelm Zeller
    
    Director
    
    September 7, 2010Wilhelm Zeller
 56




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Income
Taxes
 Internal ControlIntegrated Framework
  
 57




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##### Table of Contents



TOWERS WATSON & CO.
 
 Consolidated Statements of Operations
 Year Ended June 30,2010
    
    
    2009
    
    
    2008Revenue
    
    $
    2,387,829
    
    
    $
    1,676,029
    
    
    $
    1,760,055Costs of providing services:Salaries and employee benefits
    
    
    1,540,417
    
    
    
    1,029,299
    
    
    
    1,052,992Professional and subcontracted services
    
    
    163,848
    
    
    
    119,323
    
    
    
    138,983Occupancy
    
    
    109,454
    
    
    
    72,566
    
    
    
    83,255General and administrative expenses
    
    
    220,937
    
    
    
    172,010
    
    
    
    185,624Depreciation and amortization
    
    
    101,084
    
    
    
    73,448
    
    
    
    72,428Transaction and integration expenses
    
    
    87,644
    
    
    
    
    
    
    
    2,223,384
    
    
    
    1,466,646
    
    
    
    1,533,282Income from operations
    
    
    164,445
    
    
    
    209,383
    
    
    
    226,773(Loss)/income from affiliates
    
    
    (1,274
    )
    
    
    8,350
    
    
    
    2,325Interest income
    
    
    2,950
    
    
    
    2,022
    
    
    
    5,584Interest expense
    
    
    (7,508
    )
    
    
    (2,778
    )
    
    
    (5,977
    )Other non-operating income
    
    
    11,304
    
    
    
    4,926
    
    
    
    464Income before income taxes
    
    
    169,917
    
    
    
    221,903
    
    
    
    229,169Provision for income taxes
    
    
    50,907
    
    
    
    75,276
    
    
    
    73,470Net income before non-controlling interests
    
    
    119,010
    
    
    
    146,627
    
    
    
    155,699Net (loss)/income attributable to non-controlling interests
    
    
    (1,587
    )
    
    
    169
    
    
    
    258Net income attributable to controlling interests
    
    $
    120,597
    
    
    $
    146,458
    
    
    $
    155,441Earnings per share:Net income attributable to controlling interests  basic
    
    $
    2.04
    
    
    $
    3.43
    
    
    $
    3.65Net income attributable to controlling interests  diluted
    
    $
    2.03
    
    
    $
    3.42
    
    
    $
    3.50Weighted average shares of common stock,
basic (000)
    
    
    59,257
    
    
    
    42,690
    
    
    
    42,577Weighted average shares of common stock,
diluted (000)
    
    
    59,372
    
    
    
    42,861
    
    
    
    44,381
  58




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##### Table of Contents



TOWERS WATSON & CO.
 
 Consolidated Balance Sheets
  June 30,2010
    
    
    2009AssetsCash and cash equivalents
    
    $
    600,466
    
    
    $
    209,832Short-term investments
    
    
    51,009
    
    
    
    Receivables from clients:Billed, net
of allowances of $7,975 and $4,452
    
    
    421,602
    
    
    
    190,991Unbilled, at estimated net realizable value
    
    
    215,912
    
    
    
    111,419637,514
    
    
    
    302,410Other current assets
    
    
    156,312
    
    
    
    53,358Total current assets
    
    
    1,445,301
    
    
    
    565,600Fixed assets, net
    
    
    227,802
    
    
    
    174,857Deferred income taxes
    
    
    333,950
    
    
    
    111,912Goodwill
    
    
    1,727,165
    
    
    
    542,754Intangible assets, net
    
    
    683,487
    
    
    
    186,233Other assets
    
    
    155,745
    
    
    
    44,963Total Assets
    
    $
    4,573,450
    
    
    $
    1,626,319LiabilitiesAccounts payable, accrued liabilities and deferred income
    
    $
    409,141
    
    
    $
    281,946Reinsurance payables
    
    
    164,539
    
    
    
    Notes payable
    
    
    201,967
    
    
    
    Other current liabilities
    
    
    189,966
    
    
    
    51,716Total current liabilities
    
    
    965,613
    
    
    
    333,662Revolving credit facility
    
    
    
    
    
    
    Accrued retirement benefits
    
    
    1,061,557
    
    
    
    292,555Professional liability claims reserve
    
    
    335,034
    
    
    
    43,229Other noncurrent liabilities
    
    
    246,574
    
    
    
    102,237Total Liabilities
    
    
    2,608,778
    
    
    
    771,683Commitments and contingenciesStockholders EquityClass A Common Stock  $.01 par value:300,000,000 shares authorized; 47,160,497 and
0 issued and
47,160,497 and 0 outstanding
    
    
    472
    
    
    
    Class A Common Stock  $.01 par value:99,000,000 shares authorized; 0 and
43,813,451 issued and
0 and 42,657,431 outstanding
    
    
    
    
    
    
    438Class B Common Stock  $.01 par value:93,500,000 shares authorized; 27,043,196 and
0 issued and
27,043,196 and 0 outstanding
    
    
    270
    
    
    
    Additional paid-in capital
    
    
    1,679,624
    
    
    
    452,938Treasury stock, at cost - 0 and 1,156,020 shares
    
    
    
    
    
    
    (63,299
    )Retained earnings
    
    
    711,570
    
    
    
    608,634Accumulated other comprehensive loss
    
    
    (436,329
    )
    
    
    (145,073
    )Total Stockholders Equity
    
    
    1,955,607
    
    
    
    853,638Non-controlling interest
    
    
    9,065
    
    
    
    998Total Equity
    
    
    1,964,672
    
    
    
    854,636Total Liabilities and Total Equity
    
    $
    4,573,450
    
    
    $
    1,626,319
  59




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##### Table of Contents



TOWERS WATSON & CO.
 
 Consolidated Statements of Cash Flows
  Year ended June 30,2010
    
    
    2009
    
    
    2008Cash flows (used in)/from operating activities:Net income
    
$
    119,010
    
    
$
    146,627
    
    
    $
    155,699Adjustments to reconcile net income to net cash
from operating activities:Provision for doubtful receivables from clients
    
    
    11,759
    
    
    
    5,355
    
    
    
    11,207Depreciation
    
    
    69,684
    
    
    
    59,556
    
    
    
    56,031Amortization of intangible assets
    
    
    31,400
    
    
    
    13,892
    
    
    
    16,397(Benefit)/Provision for deferred income taxes
    
    
    (5,134
    )
    
    
    14,205
    
    
    
    11,550Equity from affiliates
    
    
    869
    
    
    
    (8,080
    )
    
    
    (2,324
    )Stock-based compensation
    
    
    52,953
    
    
    
    932
    
    
    
    4,054Other, net
    
    
    (9,975
    )
    
    
    (2,474
    )
    
    
    4,586Changes in operating assets and liabilities (net
of business acquisitions)Receivables from clients
    
    
    (41,339
    )
    
    
    57,991
    
    
    
    (22,057
    )Other current assets
    
    
    (2,205
    )
    
    
    3,279
    
    
    
    443Other noncurrent assets
    
    
    50,854
    
    
    
    (3,497
    )
    
    
    37,080Accounts payable, accrued liabilities and
deferred income
    
    
    (295,402
    )
    
    
    (28,717
    )
    
    
    66,431Reinsurance payables
    
    
    49,756
    
    
    
    
    
    
    
    Accrued retirement benefits
    
    
    (71,292
    )
    
    
    (42,069
    )
    
    
    (54,230
    )Professional liability claims reserves
    
    
    16,171
    
    
    
    (5,900
    )
    
    
    (195
    )Other current liabilities
    
    
    20,874
    
    
    
    4,138
    
    
    
    5,112Other noncurrent liabilities
    
    
    (24,050
    )
    
    
    10,631
    
    
    
    (1,083
    )Income tax related accounts
    
    
    (8,801
    )
    
    
    1,678
    
    
    
    (4,969
    )Cash flows (used in)/from operating activities:
    
    
    (34,868
    )
    
    
    227,547
    
    
    
    283,732Cash flows from/(used in) investing activities:Cash paid for business acquisitions
    
    
    (200,025
    )
    
    
    (1,185
    )
    
    
    (138,830
    )Cash acquired from business acquisitions
    
    
    721,708
    
    
    
    
    
    
    
    Purchases of fixed assets
    
    
    (25,752
    )
    
    
    (39,195
    )
    
    
    (38,694
    )Capitalized software costs
    
    
    (19,632
    )
    
    
    (23,374
    )
    
    
    (21,904
    )Purchases of available-for-sale securities
    
    
    (17,789
    )
    
    
    
    
    
    
    Redemption of available-for-sale securities
    
    
    16,191
    
    
    
    
    
    
    
    Investment in affiliates
    
    
    
    
    
    
    (2,302
    )
    
    
    (3,316
    )Increase in restricted cash
    
    
    
    
    
    
    
    
    
    
    (2,331
    )Proceeds from sale of investments
    
    
    10,749
    
    
    
    
    
    
    
    Contingent proceeds from divestitures
    
    
    4,486
    
    
    
    4,926
    
    
    
    464Cash flows from/(used in) investing activities:
    
    
    489,936
    
    
    
    (61,130
    )
    
    
    (204,611
    )Cash flows used in financing activities:Borrowings under credit facility
    
    
    126,333
    
    
    
    267,912
    
    
    
    172,841Repayments under credit facility
    
    
    (125,650
    )
    
    
    (267,912
    )
    
    
    (277,841
    )Financing of credit facility
    
    
    (5,679
    )
    
    
    
    
    
    
    Dividends paid
    
    
    (15,249
    )
    
    
    (12,785
    )
    
    
    (12,768
    )Repurchases of common stock
    
    
    (34,922
    )
    
    
    (77,443
    )
    
    
    (82,031
    )Issuances of common stock and excess tax benefit
    
    
    6,068
    
    
    
    6,509
    
    
    
    11,046Cash flows used in financing activities:
    
    
    (49,099
    )
    
    
    (83,719
    )
    
    
    (188,753
    )Effect of exchange rates on cash
    
    
    (15,335
    )
    
    
    2,502
    
    
    
    (13,922
    )Increase/(decrease) in cash and cash equivalents
    
    
    390,634
    
    
    
    85,200
    
    
    
    (123,554
    )Cash and cash equivalents at beginning of period
    
    
    209,832
    
    
    
    124,632
    
    
    
    248,186Cash and cash equivalents at end of period
    
    $
    600,466
    
    
    $
    209,832
    
    
    $
    124,632Supplemental disclosures:Cash paid for interest
    
    $
    2,595
    
    
    $
    2,780
    
    
    $
    5,951Cash paid for income taxes, net of refunds
    
    $
    58,624
    
    
    $
    66,480
    
    
    $
    76,234Notes payable issued in connection with the Merger
    
    $
    200,000
    
    
    $
    
    
    
    $
    Notes payable issued in connection with the
tender offer
    
    $
    98,469
    
    
    $
    
    
    
    $
    Issuance of
stock in connection with the Merger
    
    $
    1,357,379
    
    
    $
    
    
    
    $
    
  60




---



##### Table of Contents



TOWERS WATSON & CO.
 
 Consolidated Statement of Changes in Stockholders Equity
  Class A
    
    
    
    
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedCommon
    
    
    Class A
    
    
    Common
    
    
    Class B
    
    
    Additional
    
    
    Treasury
    
    
    
    
    
    
    OtherStock
    
    
    Common
    
    
    Stock
    
    
    Common
    
    
    Paid-in
    
    
    Stock,
    
    
    Retained
    
    
    ComprehensiveOutstanding
    
    
    Stock
    
    
    Outstanding
    
    
    Stock
    
    
    Capital
    
    
    at Cost
    
    
    Earnings
    
    
    Loss
    
    
    TotalBalance at June 30, 2007
    
    
    42,299
    
    
    $
    428
    
    
    
    
    
    
    $
    
    
    
    $
    395,521
    
    
    $
    (22,251
    )
    
    $
    336,101
    
    
    $
    77,720
    
    
    $
    787,519Adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,813
    )
    
    
    
    
    
    
    (3,813
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155,441
    
    
    
    
    
    
    
    155,441Additional minimum pension liability, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32,368
    )
    
    
    (32,368
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,185
    
    
    
    20,185Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    143,258Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,768
    )
    
    
    
    
    
    
    (12,768
    )Repurchases of common stock
    
    
    (1,586
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (82,031
    )
    
    
    
    
    
    
    
    
    
    
    (82,031
    )Issuances of common stock  acquisitions and
contingent consideration
    
    
    2,176
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    52,694
    
    
    
    57,999
    
    
    
    
    
    
    
    
    
    
    
    110,703Issuances of common stock and excess tax benefit
    
    
    689
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,466
    
    
    
    33,061
    
    
    
    
    
    
    
    
    
    
    
    41,527Balance at June 30, 2008
    
    
    43,578
    
    
    $
    438
    
    
    
    
    
    
    $
    
    
    
    $
    456,681
    
    
    $
    (13,222
    )
    
    $
    474,961
    
    
    $
    65,537
    
    
    $
    984,395Comprehensive loss:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    146,458
    
    
    
    
    
    
    
    146,458Additional minimum pension liability, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,835
    )
    
    
    (79,835
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (130,775
    )
    
    
    (130,775
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (64,152
    )Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,785
    )
    
    
    
    
    
    
    (12,785
    )Repurchases of common stock
    
    
    (1,418
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77,443
    )
    
    
    
    
    
    
    
    
    
    
    (77,443
    )Issuances of common stock and excess tax benefit
    
    
    497
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,743
    )
    
    
    27,366
    
    
    
    
    
    
    
    
    
    
    
    23,623Balance at June 30, 2009
    
    
    42,657
    
    
    $
    438
    
    
    
    
    
    
    $
    
    
    
    $
    452,938
    
    
    $
    (63,299
    )
    
    $
    608,634
    
    
    $
    (145,073
    )
    
    $
    853,638Comprehensive loss:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,468
    
    
    
    
    
    
    
    62,468Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,218
    )
    
    
    (50,218
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,250Class A Common Stock Watson WyattCash dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,364
    )
    
    
    
    
    
    
    (6,364
    )Repurchases of common stock
    
    
    (792
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,922
    )
    
    
    
    
    
    
    
    
    
    
    (34,922
    )Issuances of common stock and excess tax benefit
    
    
    337
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,090
    )
    
    
    17,640
    
    
    
    
    
    
    
    
    
    
    
    15,550Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69Retirement of treasury stock
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    (80,565
    )
    
    
    80,581
    
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2009
    
    
    42,202
    
    
    $
    422
    
    
    
    
    
    
    $
    
    
    
    $
    370,352
    
    
    $
    
    
    
    $
    664,738
    
    
    $
    (195,291
    )
    
    $
    840,221Merger of Towers Perrin and Watson WyattClass A Common Stock Towers WatsonStock issued for consideration of Merger:Issuance of Class A Restricted shares
    
    
    4,249
    
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    43,686
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,729Issuance of Class B1-B4 shares
    
    
    
    
    
    
    
    
    
    
    29,483
    
    
    
    294
    
    
    
    1,313,356
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,313,650Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,297
    )
    
    
    
    
    
    
    (11,297
    )Issuances of common stock and excess tax benefit
    
    
    536
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    (2,210
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,203
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,884
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,884Repurchases of Class B-1 shares from tender offer
    
    
    
    
    
    
    
    
    
    
    (2,267
    )
    
    
    (24
    )
    
    
    (98,444
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98,468
    )Acceleration of Class B shares to Class A shares
    
    
    173
    
    
    
    
    
    
    
    (173
    )Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,129
    
    
    
    
    
    
    
    58,129Additional minimum pension liability, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (163,105
    )
    
    
    (163,105
    )Hedge effectiveness, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,986
    )
    
    
    (1,986
    )Unrealized
gain on available-for-sale securities,  net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98
    
    
    
    98Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76,045
    )
    
    
    (76,045
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (182,909
    )Balance at June 30, 2010
    
    
    47,160
    
    
    $
    472
    
    
    
    27,043
    
    
    $
    270
    
    
    $
    1,679,624
    
    
    $
    
    
    
    $
    711,570
    
    
    $
    (436,329
    )
    
    $
    1,955,607
  61




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##### Table of Contents



TOWERS WATSON & CO.
 
 Notes to the Consolidated Financial Statements
(Tabular Amounts in Thousands of U.S. Dollars Except Share and Per Share Data)
 Note 1  Summary of Significant Accounting Policies
   Nature of the Business
 Principles of Consolidation
 Use of Estimates
 Cash and Cash Equivalents
 Marketable Securities
 62




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##### Table of Contents



Receivables from Clients
 Revenue Recognition
       Income Taxes Income Taxes
 63




---



##### Table of Contents



Foreign Currency Translation
 Fair Value of Financial Instruments
 Concentration of Credit Risk
 Correction of Statements of Cash Flows  
 Incurred But Not Reported (IBNR) Claims
 Stock-based Compensation
  Earnings perShare (EPS) Earnings per Share
 Goodwill and Intangible Assets
  64




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##### Table of Contents



Recent Accounting Pronouncements
 Adopted
 Employers Disclosures about Postretirement Benefit Plan Assets
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement No. 162.
 Business Combinations Determination of the Useful Life of Intangible Assets Goodwill and Other Intangible Assets Accounting for Assets Acquired and Liabilities Assumed in a Business Combination
That Arise from Contingencies Business Combinations
 Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB No. 51 Business
Combinations
 SFAS 161, Disclosures About Derivative Instruments and Hedging Activities  an
Amendment of FASB Statement No. 133
 65




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##### Table of Contents



Fair Value Measurements
 Not yet adopted
 Amendments to FASB Interpretation No. 46 (R) Consolidation of Variable Interest Entities  An Interpretation of ARB No. 51.
 Note 2  Merger with Towers Perrin
  Consideration Exchanged
  
    
    Each share of Watson Wyatt Class A common stock, par value $0.01 per share
issued and outstanding immediately prior to the Merger was converted into the right to
receive one (1) share of Towers Watson Class A common stock, par value $0.01 per share (the
Class A Common Stock). In addition, outstanding deferred rights to receive Watson Wyatt
Class A common stock were converted into the right to receive an equal number of shares of
Towers Watson Class A common stock, and outstanding options to purchase Watson Wyatt Class
A common stock were assumed by Towers Watson and converted on a one-for-one basis into
fully vested options to purchase shares of Towers Watson Class A common stock with the same
exercise price as the underlying Watson Wyatt options.
 
    
    Each share of Towers Perrin common stock, par value $0.50 per share, issued and
outstanding immediately prior to the Merger was converted into the right to receive
545.627600377 fully paid and nonassessable shares of Towers Watson common stock, which
ratio was determined at the time of the Merger in accordance with the Merger Agreement.
Shares of Towers Watson common stock issued to Towers Perrin shareholders (other than
209,013 shares issued to Towers Perrin shareholders located in certain countries (as
detailed below) and other than shares issued to Towers Perrin shareholders who elected to
receive a portion of their Merger Consideration as shares of Towers Watsons Class R common
stock, par value $0.01 per share) have been divided among four series of non-transferable
Towers Watson common stock, Classes B-1, B-2, B-3 and B-4, each with a par value of $0.01
per share. Outstanding shares of Towers Watson Class B common stock generally will
automatically convert on a one-for-one basis into shares of freely transferable shares of
Towers Watson Class A common stock on the following timetable:
      
    
    In accordance with the Merger Agreement, to provide immediate liquidity to
certain Towers Perrin shareholders located in countries where the Merger consideration may
be subject to current tax, such Towers Perrin shareholders received a portion of their
merger consideration in the form of unrestricted shares of Towers Watson Class A Common
Stock instead of shares of Towers Watson Class B Common Stock.
 
    
    Certain Towers Perrin shareholders who met defined age and service criteria
elected to terminate their employment no later than January 31, 2010 (except as extended by
Towers Watsons executive committee) and receive a portion of their Merger consideration in
shares of Towers Watson Class R Common Stock, which subsequently were automatically
redeemed for equal amounts of cash and subordinated one-year promissory notes (such
election, a Class R Election). The amount of cash and principal amount of Towers Watson
notes issued in exchange for each share of Towers Watson Class R Common Stock was
determined based on the Exchange Ratio and the average closing price per share of Watson
Wyatt Common Stock for the 10 trading days ending on December 28, 2009, the second trading
day immediately prior to the closing of the Merger, which was $46.79. Class R Elections
were prorated so that the amount of cash and notes payable on the automatic conversion of
the shares of Towers Watson Class R common stock would not exceed $400 million,
shareholders who made valid Class R Elections received shares of Towers Watson Class B-1
common stock in
 66




---



##### Table of Contents



exchange for their shares of Towers Perrin common stock that were not
exchanged for shares of Towers Watson Class R common stock due to proration or because the
Towers Perrin shareholder elected to receive less than 100% of his or her Merger
consideration in the form of Towers Watson Class R common stock. As noted above, shares of
Towers Watson Class B-1 common stock will automatically convert into freely tradable shares
of Towers Watson Class A Common Stock on January 1, 2011.
 
    
    Prior to the Merger, Towers Perrin issued awards of restricted stock units to
certain Towers Perrin employees, which were exchanged in the Merger for shares of Towers
Watson Class A common stock, generally subject to a three-year contractual vesting schedule
and other restrictions (Restricted Towers Watson Class A Common Stock). At the time of
the Merger, the restricted stock units were converted using the Merger Agreement exchange
ratio (545.627600377) into Towers Watson Restricted Class A common stock. The restriction
on the underlying shares lapses over the service period for the employees, which is from
grant date in October 2009 to January 1, 2011 through 2013, annually. The Towers Watson
Restricted Class A common stock is held by an administrator or in a trust and the dividends
accrue and the shares are voted in blocks according to provisions in the Merger Agreement.
  
    
    46,911,275 shares of Towers Watson Class A Common Stock (less a number of
shares that were withheld for tax purposes in respect of Watson Wyatt deferred stock units
and deferred shares), including 4,248,984 shares of Restricted Towers Watson Class A Common
Stock;
 
    
    29,483,008 shares of Towers Watson Class B Common Stock, including:
 
    
    12,798,118 shares of Class B-1 Common Stock;
    
    5,561,630 shares of Class B-2 Common Stock;
    
    5,561,630 shares of Class B-3 Common Stock; and
    
    5,561,630 shares of Class B-4 Common Stock;
 
    
    8,548,835 shares of Towers Watson Class R Common Stock, which subsequently were
redeemed automatically in exchange for the right to receive:
 
    
    $200 million in cash (subject to applicable tax withholding and gross-up
adjustments); and
 
    
    Towers Watson Notes in an aggregate principal amount of $200 million.
   Fair Value of Consideration
 Business Combinations
  67




---



##### Table of Contents



PCIC
   Fair value of net assets acquired and intangibles
  Customer relationships
  Trademarks and trade names
  Developed technology
  68




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##### Table of Contents



Favorable and unfavorable lease contracts
    January 1, 2010(In thousands, except share and per share data)Calculation of Consideration TransferredCash paid
    
    
    
    
    
    
    
    
    
    $
    200,000Notes payable issued to Towers Perrin shareholders
    
    
    
    
    
    
    
    
    
    
    200,000Towers Perrin shares converted to Towers Watson shares
    
    
    42,489,840Less Class R shares
    
    
    (8,548,835
    )Less 10% of consideration in RSUs
    
    
    (4,248,984
    )Shares of Towers Watson stock issued
    
    
    
    
    
    
    29,692,021Closing price of Watson Wyatt stock, December 31, 2009
    
    
    
    
    
    $
    47.52Average discount for restricted stock
    
    
    
    
    
    
    7
    %Aggregate fair value of the Towers Watson common stock issued
    
    
    
    
    
    
    
    
    
    
    1,313,650Fair value of RSUs assumed in the Merger
    
    
    
    
    
    
    
    
    
    
    43,729Total consideration transferred
    
    
    
    
    
    
    
    
    
    $
    1,757,379Estimated Tangible and Intangible Net Assets:Current assets
    
    
    
    
    
    $
    1,002,567Other non-current assets
    
    
    
    
    
    
    221,131Identifiable intangible assets
    
    
    
    
    
    
    552,785Deferred tax asset, net
    
    
    
    
    
    
    138,850Current liabilities
    
    
    
    
    
    
    (671,866
    )Other long-term liabilities
    
    
    
    
    
    
    (760,708
    )Goodwill
    
    
    
    
    
    
    1,274,620Total estimated tangible and intangible net assets
    
    
    
    
    
    
    
    
    
    $
    1,757,379
  69




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##### Table of Contents



Year Ended June 30,2010
    
    
    2009(In thousands)Revenue
    
    $
    3,180,916
    
    
    $
    3,251,323Costs of providing services:Salaries and employee benefits
    
    
    2,146,211
    
    
    
    2,236,462Professional and subcontracted services
    
    
    243,752
    
    
    
    293,292Occupancy
    
    
    146,695
    
    
    
    144,392General and administrative expenses
    
    
    268,808
    
    
    
    352,109Depreciation and amortization
    
    
    131,599
    
    
    
    136,5142,937,065
    
    
    
    3,162,769Income from operations
    
    
    243,851
    
    
    
    88,554(Loss)/income from affiliates
    
    
    (1,085
    )
    
    
    294Interest income
    
    
    4,731
    
    
    
    8,567Interest expense
    
    
    (11,991
    )
    
    
    (12,160
    )Other non-operating income
    
    
    16,585
    
    
    
    19,810Income before income taxes
    
    
    252,091
    
    
    
    105,065Provision for income taxes
    
    
    67,918
    
    
    
    64,157Net income before non-controlling interests
    
    $
    184,173
    
    
    $
    40,908Net (loss)/income attributable to non-controlling interests
    
    $
    (2,146
    )
    
    $
    4,515Net income attributable to controlling interests
    
    $
    186,319
    
    
    $
    36,393
 Note 3  Short-Term Investments
  June 30, 2010Amortized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Fair ValueShort-term investments: due in one year or less
    
    $
    50,585
    
    
    $
    424
    
    
    $
    51,009Non-current assets: due in one through five years
    
    
    60,142
    
    
    
    1,956
    
    
    
    62,098
  70




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##### Table of Contents



Note 4  Fixed Assets
   June 30,2010
    
    
    2009Furniture, fixtures and equipment
    
    $
    172,899
    
    
    $
    147,460Computer software
    
    
    239,647
    
    
    
    212,172Leasehold improvements
    
    
    157,554
    
    
    
    105,618570,100
    
    
    
    465,250Less: accumulated depreciation and amortization
    
    
    (342,298
    )
    
    
    (290,393
    )Fixed assets, net
    
    $
    227,802
    
    
    $
    174,857
  Note 5  Goodwill and Intangible Assets
  Risk and
    
    
    Talent andBenefits
    
    
    Financial Services
    
    
    Rewards
    
    
    All Other
    
    
    TotalBalance as of June 30, 2008
    
    $
    459,430
    
    
    $
    138,476
    
    
    $
    35,056
    
    
    $
    1,214
    
    
    $
    634,176Goodwill acquired
    
    
    472
    
    
    
    49
    
    
    
    664
    
    
    
    
    
    
    
    1,185Translation adjustment
    
    
    (64,948
    )
    
    
    (22,583
    )
    
    
    (5,076
    )
    
    
    
    
    
    
    (92,607
    )Balance as of June 30, 2009
    
    
    394,954
    
    
    
    115,942
    
    
    
    30,644
    
    
    
    1,214
    
    
    
    542,754Goodwill acquired and
contingent payments
    
    
    825,975
    
    
    
    368,365
    
    
    
    80,301
    
    
    
    
    
    
    
    1,274,641Translation adjustment
    
    
    (63,424
    )
    
    
    (22,336
    )
    
    
    (4,470
    )
    
    
    
    
    
    
    (90,230
    )Balance as of June 30, 2010
    
    $
    1,157,505
    
    
    $
    461,971
    
    
    $
    106,475
    
    
    $
    1,214
    
    
    $
    1,727,165
  Trademark
    
    
    Customer
    
    
    
    
    
    
    
    
    
    
    Favorable& trade
    
    
    related
    
    
    Core/developed
    
    
    Non-compete
    
    
    leasename
    
    
    intangible
    
    
    technology
    
    
    agreements
    
    
    agreements
    
    
    TotalBalance as of June 30, 2008
    
    $
    121,885
    
    
    $
    101,592
    
    
    $
    12,604
    
    
    $
    686
    
    
    
    
    
    
    $
    236,767Intangible assets acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization
    
    
    (198
    )
    
    
    (8,763
    )
    
    
    (4,408
    )
    
    
    (523
    )
    
    
    
    
    
    
    (13,892
    )Translation adjustment
    
    
    (21,176
    )
    
    
    (13,986
    )
    
    
    (1,439
    )
    
    
    (41
    )
    
    
    
    
    
    
    (36,642
    )Balance as of June 30, 2009
    
    
    100,511
    
    
    
    78,843
    
    
    
    6,757
    
    
    
    122
    
    
    
    
    
    
    
    186,233Intangible assets acquired
    
    
    275,500
    
    
    
    140,800
    
    
    
    125,400
    
    
    
    
    
    
    
    11,085
    
    
    
    552,785Amortization
    
    
    
    
    
    
    (18,087
    )
    
    
    (13,170
    )
    
    
    (120
    )
    
    
    (1,495
    )
    
    
    (32,872
    )Translation adjustment
    
    
    (9,218
    )
    
    
    (12,750
    )
    
    
    (261
    )
    
    
    (2
    )
    
    
    (428
    )
    
    
    (22,659
    )Balance as of June 30, 2010
    
    $
    366,793
    
    
    $
    188,806
    
    
    $
    118,726
    
    
    $
    
    
    
    $
    9,162
    
    
    $
    683,487
  71




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Fiscal year ending June 30,
    
    Amount2011
    
    $
    (1,616
    )2012
    
    
    (2,833
    )2013
    
    
    (2,486
    )2014
    
    
    (2,125
    )2015
    
    
    (1,893
    )Thereafter
    
    
    (5,878
    )Total
    
    $
    (16,831
    )
  Fiscal year 2010
    
    
    Fiscal year 2009Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationIntangible assets:Trademark and trade name
    
    $
    367,195
    
    
    $
    402
    
    
    $
    100,913
    
    
    $
    402Customer related intangibles
    
    
    237,072
    
    
    
    48,266
    
    
    
    108,821
    
    
    
    29,978Core/developed technology
    
    
    148,664
    
    
    
    29,938
    
    
    
    23,525
    
    
    
    16,768Non-compete agreements
    
    
    1,275
    
    
    
    1,275
    
    
    
    1,273
    
    
    
    1,151Favorable lease agreements
    
    
    10,657
    
    
    
    1,495
    
    
    
    
    
    
    
    Total intangible assets
    
    $
    764,863
    
    
    $
    81,376
    
    
    $
    234,532
    
    
    $
    48,299
    Fiscal year ending June 30,
    
    Amount2011
    
    $
    47,6462012
    
    
    47,7402013
    
    
    43,4572014
    
    
    37,1202015
    
    
    30,181Thereafter
    
    
    101,388Total estimated amortization expense
    
    $
    307,532
 Note 6  Fair Value Measurements
   Level 1 
 Level 2 
 72




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##### Table of Contents



a)
    
    Quoted prices for similar assets or liabilities in active markets;
 b)
    
    Quoted prices for identical or similar assets or liabilities in non-active markets;
 c)
    
    Pricing models whose inputs are observable for substantially the full term of the asset
or liability; and
 d)
    
    Pricing models whose inputs are derived principally from or corroborated by observable
market data through correlation or other means for substantially the full asset or
liability.
 Level 3 
  Fair Value Measurements on a Recurring Basis atJune 30, 2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets:Short-term investments
    
    $
    6,196
    (a)
    
    $
    44,813
    (a)
    
    $
    
    
    
    $
    51,009Other current assets
    
    
    
    
    
    
    768
    (b)
    
    
    
    
    
    
    768Other non-current assets
    
    
    6,278
    (a)
    
    
    62,098
    (a)
    
    
    
    
    
    
    68,376Liabilities:Accounts payable,
accrued liabilities and
deferred income
    
    
    
    
    
    
    4,277
    (b)
    
    
    
    
    
    
    4,277
 
 (a)
    
    Available-for-sale securities consist of US treasury securities, commercial paper, and corporate fixed income securities.(b)
    
    Primarily foreign exchange forward contracts and foreign exchange options.    Note 7  Derivative Financial Instruments
    73




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Accounting Policy for Derivatives
         74




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##### Table of Contents



Asset derivatives
    

    Liability derivativesBalance sheet location
    
    Fair value
    
    Balance sheet location
    

    Fair valueDerivatives designated
as hedging instruments:Foreign exchange forwards
    
    Other current assets
    
    $
    731
    
    
    Accounts payable,
accrued liabilities
and deferred income
    
    $

    (4,100
    )Foreign exchange options
    
    Other current assets
    
    
    37
    
    

    Accounts payable,
accrued liabilities
and deferred income
    
    

    (94
    )Total derivatives designated
as hedging instruments
    
    
    
    
    768
    
    
    
    
    

    (4,194
    )Derivatives not designated
as hedging instruments:Foreign exchange options
    
    Other current assets
    
    
    
    
    
    Accounts payable,
accrued liabilities
and deferred income
        

    (83
   )Total derivatives not
designated as hedging
instruments
    
    
    
    
    
    
    
    
    
    

    (83
    )Total derivatives
    
    
    
    $
    768
    
    
    
    
    $

    (4,277
    )
  Loss recognized inLocation of loss

    
    incomerecognized in

    
    (ineffectiveLoss
    
    Location of loss
    
    Loss
    
    income (ineffective

    
    portion andrecognized
    
    reclassified
    
    reclassified
    
    portion and amount

    
    amountin OCI
    
    from OCI into
    
    from OCI into
    
    excluded from

    
    excluded fromDerivatives designated as
    
    (effective
    
    income (effective
    
    income (effective
    
    effectiveness

    
    effectivenesshedging instruments:
    
    portion)
    
    portion)
    
    portion)
    
    testing)

    
    testing)Foreign exchange forwards
    
    $
    (3,335
    )
    
    General and
administrative
expenses
    
    $
    (266
    )
    
    General and
administrative
expenses

    $
    (65
    )Foreign exchange options
    
    
    (207
    )
    
    General and
administrative
expenses
    
    
    
    
    
    General and
administrative
expenses

    
    (32
    )Total
    
    $
    (3,542
    )
    
    
    
    $
    (266
    )
    
    

    $
    (97
    )
  Location of gain (loss)
    
    Gain (loss)Derivatives not designated
    
    recognized
    
    recognizedas hedging instruments:
    
    in income
    
    in incomeForeign exchange forwards
    
    General and
administrative
expenses
    
    $
    1,869Foreign exchange options
    
    General and
administrative
expenses
    
    
    (350
    )Total
    
    
    
    $
    1,519
 75




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Note 8  Accounts Payable and Accrued Liabilities, Including Discretionary Compensation
  June 30,2010
    
    
    2009Accounts payable and accrued liabilities
    
    $
    138,654
    
    
    $
    77,410Accrued salaries and bonuses
    
    
    150,761
    
    
    
    162,351Deferred revenue
    
    
    119,726
    
    
    
    42,185Total accounts payable, accrued liabilities and deferred income
    
    $
    409,141
    
    
    $
    281,946
 Note 9  Leases
   LeaseFiscal Year
    
    Commitments2011
    
    $
    113,7712012
    
    
    100,1802013
    
    
    84,9582014
    
    
    72,0112015
    
    
    61,359Thereafter
    
    
    195,760Total
    
    $
    628,039
  Note 10  Retirement Benefits
   76




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##### Table of Contents



2011
    
    
    2010
    
    
    2009(Projected)
    
    
    (Actual)
    
    
    (Actual)U.S.
    
    $
    30,000
    
    
    $
    30,000
    
    
    $
    30,000Canada
    
    
    8,428
    
    
    
    4,388
    
    
    
    1,359Europe
    
    
    20,285
    
    
    
    21,020
    
    
    
    23,872
  Assumptions Used in the Valuations of the Defined Benefit Pension Plans
   Year Ended June 30, 2010
    
    
    Year Ended June 30, 2009
    
    
    Year Ended June 30, 2008North
    
    
    
    
    
    
    North
    
    
    
    
    
    
    NorthAmerica
    
    
    Europe
    
    
    America
    
    
    Europe
    
    
    America
    
    
    EuropeDiscount rate
    
    
    6.43
    %
    
    
    6.03
    %
    
    
    6.91
    %
    
    
    6.47
    %
    
    
    6.25
    %
    
    
    5.72
    %Expected long-term rate of return on
assets
    
    
    8.11
    %
    
    
    6.48
    %
    
    
    8.61
    %
    
    
    6.53
    %
    
    
    8.61
    %
    
    
    6.74
    %Rate of increase in compensation levels
    
    
    3.93
    %
    
    
    5.09
    %
    
    
    4.08
    %
    
    
    5.36
    %
    
    
    3.84
    %
    
    
    4.73
    %
 77




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##### Table of Contents



June 30,2010
    
    
    June 30, 2009North
    
    
    
    
    
    
    NorthAmerica
    
    
    Europe
    
    
    America
    
    
    EuropeDiscount rate
    
    
    5.86
    %
    
    
    5.25
    %
    
    
    7.21
    %
    
    
    6.29
    %Rate of increase in compensation levels
    
    
    3.88
    %
    
    
    3.88
    %
    
    
    3.29
    %
    
    
    5.15
    %
 Components of Net Periodic Benefit Cost for Defined Benefit Pension Plans
  Year Ended June 30, 2010
    
    
    Year Ended June 30, 2009
    
    
    Year Ended June 30, 2008North
    
    
    
    
    
    
    North
    
    
    
    
    
    
    NorthAmerica
    
    
    Europe
    
    
    America
    
    
    Europe
    
    
    America
    
    
    EuropeService cost
    
    $
    38,068
    
    
    $
    9,844
    
    
    $
    24,771
    
    
    $
    7,538
    
    
    $
    30,592
    
    
    $
    10,813Interest cost
    
    
    95,845
    
    
    
    30,631
    
    
    
    48,504
    
    
    
    22,759
    
    
    
    44,918
    
    
    
    22,966Expected return on plan assets
    
    
    (93,257
    )
    
    
    (27,078
    )
    
    
    (50,725
    )
    
    
    (20,945
    )
    
    
    (55,622
    )
    
    
    (24,427
    )Amortization of transition
obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65
    )
    
    
    Amortization of net
unrecognized losses/(gains)
    
    
    15,275
    
    
    
    2,615
    
    
    
    8,649
    
    
    
    (328
    )
    
    
    6,222
    
    
    
    (2,806
    )Amortization of prior service
cost/(credit)
    
    
    (1,623
    )
    
    
    41
    
    
    
    (2,279
    )
    
    
    42
    
    
    
    (2,594
    )
    
    
    22Other adjustments and
settlements
    
    
    2,293
    
    
    
    924
    
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    115Net periodic pension cost
    
    $
    56,601
    
    
    $
    16,977
    
    
    $
    28,920
    
    
    $
    9,186
    
    
    $
    23,451
    
    
    $
    6,683
  2010
    
    
    2009North
    
    
    
    
    
    
    NorthAmerica
    
    

    Europe
    
    
    America
    
    
    EuropeCurrent year actuarial loss
    
    $
    220,113
    
    
    $
    37,501
    
    
    $
    84,449
    
    
    $
    44,288Amortization of actuarial loss
    
    
    (15,275
    )
    
    
    (2,615
    )
    
    
    (8,649
    )
    
    
    328Amortization of prior service credit (cost)
    
    
    1,623
    
    
    
    (41
    )
    
    
    2,279
    
    
    
    (42
    )Settlement
    
    
    (2,293
    )
    
    
    (64
    )
    
    
    
    
    
    
    Other
    
    
    1,320
    
    
    
    (4,638
    )
    
    
    (998
    )
    
    
    1,289Total recognized in other comprehensive income
    
    $
    205,488
    
    
    $
    30,143
    
    
    $
    77,081
    
    
    $
    45,863
  2011NorthAmerica
    
    
    EuropeActuarial loss
    
    $
    25,229
    
    
    $
    5,340Prior service (credit) cost
    
    
    (1,624
    )
    
    
    39Total
    
    $
    23,605
    
    
    $
    5,379
 78




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##### Table of Contents



June 30, 2010
    
    
    June 30, 2009North
    
    
    
    
    
    
    NorthAmerica
    
    
    Europe
    
    
    America
    
    
    EuropeChange in Benefit ObligationBenefit obligation at beginning of year
    
    $
    593,725
    
    
    $
    355,701
    
    
    $
    612,618
    
    
    $
    403,114Service cost
    
    
    30,420
    
    
    
    7,656
    
    
    
    19,011
    
    
    
    6,960Interest cost
    
    
    77,536
    
    
    
    27,501
    
    
    
    41,480
    
    
    
    21,328Actuarial (gains)/losses
    
    
    195,603
    
    
    
    61,309
    
    
    
    (48,552
    )
    
    
    (2,302
    )Benefit payments
    
    
    (65,263
    )
    
    
    (19,760
    )
    
    
    (22,667
    )
    
    
    (5,411
    )Acquisition/business combination/divestiture
    
    
    1,139,366
    
    
    
    239,603
    
    
    
    
    
    
    
    Plan amendments & other
    
    
    
    
    
    
    2,513
    
    
    
    
    
    
    
    779Foreign currency adjustment
    
    
    3,495
    
    
    
    (57,158
    )
    
    
    (8,165
    )
    
    
    (68,767
    )Benefit obligation at end of year
    
    $
    1,974,882
    
    
    $
    617,365
    
    
    $
    593,725
    
    
    $
    355,701Change in Plan AssetsFair value of plan assets, beginning of year
    
    $
    517,322
    
    
    $
    315,769
    
    
    $
    598,463
    
    
    $
    384,617Actual return on plan assets
    
    
    103,850
    
    
    
    55,514
    
    
    
    (81,791
    )
    
    
    (26,080
    )Company contributions
    
    
    34,388
    
    
    
    21,020
    
    
    
    31,359
    
    
    
    25,696Benefit payments
    
    
    (65,263
    )
    
    
    (19,760
    )
    
    
    (22,667
    )
    
    
    (5,411
    )Participant contributions
    
    
    
    
    
    
    1,820
    
    
    
    
    
    
    
    1,924Acquisition/business combination/divestiture
    
    
    1,239,101
    
    
    
    241,953
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    (166
    )
    
    
    
    
    
    
    630Foreign currency adjustment
    
    
    2,606
    
    
    
    (53,608
    )
    
    
    (8,042
    )
    
    
    (65,607
    )Fair value of plan assets, end of year
    
    $
    1,832,004
    
    
    $
    562,541
    
    
    $
    517,322
    
    
    $
    315,769Funded status at end of year
    
    $
    (142,878
    )
    
    $
    (54,824
    )
    
    $
    (76,403
    )
    
    $
    (39,932
    )Accumulated Benefit Obligation
    
    $
    1,897,011
    
    
    $
    601,461
    
    
    $
    554,695
    
    
    $
    317,751
 June 30, 2010
    
    
    June 30, 2009North
    
    
    
    
    
    
    NorthAmerica
    
    
    Europe
    
    
    America
    
    
    EuropeAmounts recognized in
Consolidated Balance Sheets consist
of :Noncurrent assets
    
    $
    45,949
    
    
    $
    2,568
    
    
    $
    
    
    
    $
    6,490Noncurrent liabilities
    
    
    (188,827
    )
    
    
    (57,392
    )
    
    
    (76,403
    )
    
    
    (46,422
    )Net Amount Recognized
    
    $
    (142,878
    )
    
    $
    (54,824
    )
    
    $
    (76,403
    )
    
    $
    (39,932
    )Amounts recognized in Accumulated
Other Comprehensive Income consist of
:Net actuarial loss/(gain)
    
    $
    329,076
    
    
    $
    65,553
    
    
    $
    157,022
    
    
    $
    39,669Net prior service cost/(credit)
    
    
    (9,628
    )
    
    
    572
    
    
    
    (11,043
    )
    
    
    673Accumulated Other Comprehensive Income
    
    $
    319,448
    
    
    $
    66,125
    
    
    $
    145,979
    
    
    $
    40,342
 79




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##### Table of Contents



June 30,2010
    
    
    2009Change in Benefit ObligationBenefit obligation, beginning of year
    
    $
    126,922
    
    
    $
    127,297Service cost
    
    
    9,836
    
    
    
    6,338Interest cost
    
    
    21,439
    
    
    
    8,455Actuarial (gains)/losses
    
    
    39,032
    
    
    
    1,243Benefit payments
    
    
    (37,003
    )
    
    
    (11,654
    )Acquisition/business combination/divestiture
    
    
    480,337
    
    
    
    Other
    
    
    698
    
    
    
    Foreign currency adjustment
    
    
    (13,787
    )
    
    
    (4,757
    )Benefit obligation, end of year
    
    $
    627,474
    
    
    $
    126,922Change in Plan AssetsFair value of plan assets, beginning of year
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    
    
    
    
    Company contributions
    
    
    37,003
    
    
    
    11,654Benefit payments
    
    
    (37,003
    )
    
    
    (11,654
    )Participant contributions
    
    
    
    
    
    
    Foreign currency adjustment
    
    
    
    
    
    
    Fair value of plan assets, end of year
    
    $
    
    
    
    $
    Funded status at end of year
    
    $
    (627,474
    )
    
    $
    (126,922
    )Amounts recognized in Consolidated Balance
Sheets consist of:Noncurrent assets
    
    $
    
    
    
    $
    Current liabilities
    
    
    (81,743
    )
    
    
    (10,743
    )Noncurrent liabilities
    
    
    (545,731
    )
    
    
    (116,179
    )Net Amount Recognized
    
    $
    (627,474
    )
    
    $
    (126,922
    )Amounts recognized in Accumulated Other
Comprehensive Income consist of:Net actuarial loss/(gain)
    
    $
    39,517
    
    
    $
    3,438Net prior service cost/(credit)
    
    
    (903
    )
    
    
    (1,136
    )Net transition obligation/(asset)
    
    
    
    
    
    
    Accumulated Other Comprehensive Income
    
    $
    38,614
    
    
    $
    2,302Projected Benefit Obligation
    
    $
    627,474
    
    
    $
    126,922Accumulated Benefit Obligation
    
    
    606,529
    
    
    
    108,087Fair value of plan assets
    
    
    
    
    
    
    
     80




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##### Table of Contents



Fair Value Measurements on a Recurring Basis at June 30, 2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalNorth
    
    
    
    
    
    
    North
    
    
    
    
    
    
    NorthAmerica
    
    
    Europe
    
    
    America
    
    
    Europe
    
    
    America
    
    
    EuropeAsset category:Cash
    
    $
    1,921
    
    
    $
    15,375
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    17,296Cash equivalents
    
    
    
    
    
    
    
    
    
    
    32,915
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,915Equity securities:U.S. large cap companies
    
    
    21,507
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,507U.S. mid cap companies
    
    
    63,353
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,353U.S. small cap companies
    
    
    83,393
    
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,417International equities
    
    
    152,369
    
    
    
    17,008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169,377Fixed income:U.S. treasuries
    
    
    71,090
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,090Corporate bonds
    
    
    
    
    
    
    
    
    
    
    503,942
    
    
    
    99,405
    
    
    
    
    
    
    
    
    
    
    
    603,347Other fixed income
    
    
    64,485
    
    
    
    97,935
    
    
    
    85,581
    (a)
    
    
    18,011
    (a)
    
    
    
    
    
    
    
    
    
    
    266,012Pooled funds
    
    
    
    
    
    
    
    
    
    
    432,490
    (b)
    
    
    291,206
    (b)
    
    
    
    
    
    
    
    
    
    
    723,696Multi-strategy funds
    
    
    
    
    
    
    
    
    
    
    146,054
    (c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    146,054Mutual funds
    
    
    
    
    
    
    
    
    
    
    129,174
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,174Limited partnerships
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,643
    
    
    
    9,200
    
    
    
    46,843Derivatives
    
    
    
    
    
    
    
    
    
    
    4,059
    (d)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,059Insurance contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,406
    
    
    
    14,406Total assets
    
    $
    458,118
    
    
    $
    130,318
    
    
    $
    1,334,239
    
    
    $
    408,622
    
    
    $
    37,643
    
    
    $
    23,606
    
    
    $
    2,392,546
 
 (a)
    
    This category includes municipal and foreign bonds.(b)
    
    This category includes pooled funds of both equity and fixed income securities. Fair
value is based on the calculated net asset value of shares held by the plan as reported by
the sponsor of the funds.(c)
    
    The fund seeks to exceed the total return of the S&P 500 Index by investing under
normal circumstances in S&P 500 Index derivatives, backed by a portfolio of fixed income
instruments. Fair value is based on the calculated net asset value of shares held by the
plan as reported by the sponsor of the funds.(d)
    
    We use various derivatives such as interest rate swaps, futures and options to match
the duration of the corporate bond portfolio with the duration of the plan liability. 81




---



##### Table of Contents



Net assets held in investments
    
    $
    2,392,546Dividend and interest receivable
    
    
    11,195Other liabilities
    
    
    (9,196
    )Fair value of plan assets
    
    $
    2,394,545
  Limited Partnerships
    
    
    Insurance Contracts
    
    
    TotalBeginning balance at June 30, 2009
    
    $
    64,902
    
    
    $
    934
    
    
    $
    65,836Increase due to acquisition
    
    
    
    
    
    
    15,857
    
    
    
    15,857Net actual
return on plan assets
relating to assets still held at the
reporting date
    
    
    7,223
    
    
    
    178
    
    
    
    7,401Net purchases, sales, and settlements
    
    
    (25,099
    )
    
    
    (227
    )
    
    
    (25,326
    )Change in foreign currency exchange rates
    
    
    (183
    )
    
    
    (2,336
    )
    
    
    (2,519
    )Ending balance at June 30, 2010
    
    $
    46,843
    
    
    $
    14,406
    
    
    $
    61,249
  Benefit PaymentsFiscal Year
    
    North America
    
    
    Europe
    
    
    Total2011
    
    $
    189,567
    
    
    $
    26,792
    
    
    $
    216,3592012
    
    
    167,442
    
    
    
    13,349
    
    
    
    180,7912013
    
    
    172,165
    
    
    
    15,329
    
    
    
    187,4942014
    
    
    166,211
    
    
    
    24,723
    
    
    
    190,9342015
    
    
    142,508
    
    
    
    18,849
    
    
    
    161,357Years 2016-2020
    
    
    554,730
    
    
    
    129,463
    
    
    
    684,193$
    1,392,623
    
    
    $
    228,505
    
    
    $
    1,621,128
 Defined Contribution Plan
    Health Care Benefits
  82




---



##### Table of Contents



Postretirement Benefits
   June 30,2010
    
    
    2009Health care cost trend, accumulated benefit obligation
(decreasing to 5.00% for 2016 and thereafter)
    
    
    8.03
    %
    
    
    9.50
    %Discount rate, accumulated benefit obligation postretirement benefit
    
    
    5.91
    %
    
    
    7.25
    %
   1%
    
    
    1%Increase
    
    
    DecreaseEffect on net periodic postretirement benefit cost in fiscal year 2010
    
    $
    1,058
    
    
    $
    (861
    )Effect on accumulated postretirement benefit obligation as of June 30, 2010
    
    
    22,759
    
    
    
    (18,927
    )
  Year Ended June 30,2010
    
    
    2009
    
    
    2008Service cost
    
    $
    3,313
    
    
    $
    1,157
    
    
    $
    1,543Interest cost
    
    
    8,387
    
    
    
    2,495
    
    
    
    2,724Expected return on assets
    
    
    (66
    )
    
    
    
    
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    Amortization of net unrecognized (gains)/losses
    
    
    (1,151
    )
    
    
    (1,135
    )
    
    
    (478
    )Amortization of prior service cost
    
    
    (571
    )
    
    
    (661
    )
    
    
    (664
    )Net periodic postretirement benefit cost
    
    $
    9,912
    
    
    $
    1,856
    
    
    $
    3,125
  2010
    
    
    2009Current year actuarial (gain)/loss
    
    $
    16,782
    
    
    $
    (5,237
    )Amortization of actuarial gain
    
    
    1,151
    
    
    
    1,135Amortization of prior service credit
    
    
    571
    
    
    
    661Other
    
    
    (156
    )
    
    
    (16
    )Total recognized in other comprehensive income
    
    $
    18,348
    
    
    $
    (3,457
    )
  2011Actuarial loss
    
    $
    369Prior service credit
    
    
    (515
    )Total
    
    $
    (146
    )
 83




---



##### Table of Contents



June 30,2010
    
    
    2009Change in Benefit ObligationBenefit obligation, beginning of year
    
    $
    38,944
    
    
    $
    44,156Service cost
    
    
    3,313
    
    
    
    1,157Interest cost
    
    
    8,387
    
    
    
    2,495Participant contributions
    
    
    2,161
    
    
    
    2,145Actuarial (gains)/losses
    
    
    16,714
    
    
    
    (5,237
    )Benefit payments
    
    
    (8,556
    )
    
    
    (4,191
    )Acquisition/business combination/divestiture
    
    
    183,112
    
    
    
    Medicare Part D
    
    
    708
    
    
    
    Foreign currency adjustment
    
    
    757
    
    
    
    (1,581
    )Benefit obligation, end of year
    
    $
    245,540
    
    
    $
    38,944Change in Plan AssetsFair value of plan assets, beginning of year
    
    $
    
    
    
    $
    Company contributions
    
    
    6,395
    
    
    
    2,046Participant contributions
    
    
    2,161
    
    
    
    2,145Benefit payments
    
    
    (8,556
    )
    
    
    (4,191
    )Actual return on assets
    
    
    (2
    )
    
    
    Acquisition/business combination/divestiture
    
    
    6,577
    
    
    
    Fair value of plan assets, end of year
    
    $
    6,575
    
    
    $
    Funded status at end of year
    
    $
    (238,965
    )
    
    $
    (38,944
    )Amounts recognized in Consolidated Balance
Sheets consist ofNoncurrent assets
    
    $
    
    
    
    $
    Current liabilities
    
    
    (4,438
    )
    
    
    (2,507
    )Noncurrent liabilities
    
    
    (234,527
    )
    
    
    (36,437
    )Net Amount Recognized
    
    $
    (238,965
    )
    
    $
    (38,944
    )Amounts recognized in Accumulated Other
Comprehensive Income consist ofNet actuarial loss/(gain)
    
    $
    1,116
    
    
    $

    (16,673
    )Net prior service cost/(credit)
    
    
    (2,969
    )
    
    
    (3,527
    )Net transition obligation/(asset)
    
    
    
    
    
    
    Accumulated Other Comprehensive Income
    
    $
    (1,853
    )
    
    $
    (20,200
    )
  Benefit
    
    
    Retiree drugFiscal Year
    
    Payments
    
    
    subsidy2011
    
    $
    15,501
    
    
    $
    5592012
    
    
    17,060
    
    
    
    6472013
    
    
    18,299
    
    
    
    7462014
    
    
    19,558
    
    
    
    8602015
    
    
    20,855
    
    
    
    979Years 2016-2020
    
    
    124,693
    
    
    
    6,692$
    215,966
    
    
    $
    10,483
 84




---



##### Table of Contents



Note
11  Debt, Commitments and Contingent Liabilities
  Subordinated Notes due January 2011
  Subordinated Notes due March 2012
  Towers Watson Senior Credit Facility
    Letters of Credit under the Senior Credit Facility
  Additional Borrowings, Letters of Credit and Guarantees not part of the Senior Credit Facility
   85




---



##### Table of Contents



Indemnification Agreements
  Legal Proceedings
  Contingencies
  ExxonMobil Superannuation Plan (Australia)
    86




---



##### Table of Contents



Former Towers Perrin shareholder litigation
 Dugan Action). Dugan Action
 Dugan Action
 Dugan
 Dugan
Action, the Allen Action Dugan Action.
 Pao Action Dugan Action Dugan Action Pao Action.
 Dugan Action Allen Pao
Actions
   87




---



##### Table of Contents



Note 12  Accumulated Other Comprehensive Loss
  June 30,2010
    
    
    2009Foreign currency translation
    
    $
    (157,721
    )
    
    $
    (31,458
    )Unrealized
loss on derivative instruments, net of tax of $1,291 and $0
    
    
    (1,986
    )
    
    
    Unrealized
gain on available for sale securities, net of tax  of $(29) and  $0
    
    
    98
    
    
    
    Pension and
postretirement, net of tax of $149,853 and $61,200
    
    
    (276,720
    )
    
    
    (113,615
    )Accumulated other comprehensive loss
    
    $
    (436,329
    )
    
    $
    (145,073
    )
 Note 13  Restricted Stock
  Stock Class
    
    Number of Shares
    
    Conversion DateB-1
    
    
    10,530,853
    
    
    January 1, 2011B-2
    
    
    5,561,630
    
    
    January 1, 2012B-3
    
    
    5,561,630
    
    
    January 1, 2013B-4
    
    
    5,389,083
    
    
    January 1, 2014
   Stock Class
    
    Number of Shares
    
    Conversion DateA
    
    
    1,355,230
    
    
    January 1, 2011A
    
    
    1,355,230
    
    
    January 1, 2012A
    
    
    1,355,230
    
    
    January 1, 2013
 88




---



##### Table of Contents



Note 14  Share-based Compensation
  Towers Watson & Co. Employee Stock Purchase Plan
   Towers Watson & Co. 2009 Long-Term Incentive Plan
  Stock Options
    89




---



##### Table of Contents



Year EndedJune 30,2010Stock option grants:Risk-free interest rate
    
    
    1.40
    %Expected lives in years
    
    
    3Expected volatility
    
    
    37.20
    %Dividend yield
    
    
    0.6
    %Weighted-average grant date fair value of options granted
    
    $
    11.02Number of shares granted
    
    
    234,581
  Weighted
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    RemainingNumber of
    
    
    Exercise
    
    
    Aggregate
    
    
    Contractualshares
    
    
    Price
    
    
    Intrinsic Value
    
    
    Life (years)(in 000s)
    
    
    
    
    
    
    (in 1000s)Outstanding at June 30, 2009
    
    
    
    
    
    $
    
    
    
    $
    Granted
    
    
    235
    
    
    
    11.02
    
    
    
    2,585Exercised
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2010
    
    
    235
    
    
    $
    11.02
    
    
    
    
    
    
    
    5.5Exercisable options at June 30, 2010
    
    
    235
    
    
    $
    11.02
    
    
    
    
    
    
    
    5.5
 Restricted Stock Units
    Number of
    
    
    Weighted AverageShares
    
    
    Fair Value(In thousands,except per share amounts)Nonvested at June 30, 2009
    
    
    
    
    
    $
    Granted
    
    
    42
    
    
    
    48.90Vested
    
    
    (18
    )
    
    
    48.80Forfeited (1)
    
    
    
    
    
    
    Nonvested and expected to vest as of June 30, 2010
    
    
    24
    
    
    $
    48.98
 
 (1)
    
    Forfeited shares represent performance shares that are not estimated to vest for the year
ended June 30, 2010. Former Watson Wyatt Plans and Change of Control Provisions
  90




---



##### Table of Contents



Restricted Stock Units
  Deferred Stock Units
    Amended Compensation Plan for Outside Directors
  91




---



##### Table of Contents



Note 15  Income Taxes
  2010
    
    
    2009
    
    
    2008Domestic
    
    $
    27,375
    
    
    $
    127,811
    
    
    $
    111,587Foreign
    
    
    142,542
    
    
    
    93,923
    
    
    
    117,324$
    169,917
    
    
    $
    221,734
    
    
    $
    228,911
  Year Ended June 30,2010
    
    
    2009
    
    
    2008Current tax expense:U.S.
    
    $
    6,288
    
    
    $
    31,899
    
    
    $
    29,278State and local
    
    
    3,109
    
    
    
    7,067
    
    
    
    6,781Foreign
    
    
    46,644
    
    
    
    22,105
    
    
    
    25,86156,041
    
    
    
    61,071
    
    
    
    61,920Deferred (benefit)/tax expense:U.S.
    
    
    (2,656
    )
    
    
    7,405
    
    
    
    6,031State and local
    
    
    (4,888
    )
    
    
    2,359
    
    
    
    1,397Foreign
    
    
    2,410
    
    
    
    4,441
    
    
    
    4,122(5,134
    )
    
    
    14,205
    
    
    
    11,550Total provision for income taxes
    
    $
    50,907
    
    
    $
    75,276
    
    
    $
    73,470
  Year Ended June 302010
    
    
    2009
    
    
    2008Tax provision at U.S. federal statutory tax rate of 35 percent
    
    $
    59,471
    
    
    $
    77,607
    
    
    $
    80,119Increase (reduction) resulting from:Foreign income tax rate differential, net
    
    
    (4,013
    )
    
    
    (7,613
    )
    
    
    (10,955
    )State income taxes, net of federal tax effect
    
    
    88
    
    
    
    6,579
    
    
    
    4,030Non-deductible expenses and foreign dividend
    
    
    5,350
    
    
    
    4,764
    
    
    
    8,670Tax Credits
    
    
    (6,247
    )
    
    
    (4,702
    )
    
    
    (11,484
    )Valuation Allowance
    
    
    (19,925
    )
    
    
    
    
    
    
    Medicare Part D Subsidy
    
    
    9,367
    
    
    
    
    
    
    
    Legal Entity Restructuring
    
    
    5,636
    
    
    
    
    
    
    
    Other
    
    
    1,180
    
    
    
    (1,359
    )
    
    
    3,090Income tax provision
    
    $
    50,907
    
    
    $
    75,276
    
    
    $
    73,470
   92




---



##### Table of Contents



June 30,2010
    
    
    2009Depreciation and amortization
    
    $
    (84,047
    )
    
    $
    (48,372
    )Trademarks and tradename
    
    
    (116,127
    )
    
    
    (4,409
    )Goodwill
    
    
    (9,459
    )
    
    
    (8,047
    )Unbilled receivables
    
    
    (33,292
    )
    
    
    Deferred tax liability on unremitted earnings
    
    
    (7,591
    )
    
    
    Other
    
    
    (20,858
    )
    
    
    (5,143
    )Gross deferred tax liabilities
    
    $
    (271,374
    )
    
    $
    (65,971
    )Accrued retirement benefits
    
    $
    378,100
    
    
    $
    94,888Deferred rent
    
    
    5,157
    
    
    
    4,142Other
    
    
    35,997
    
    
    
    4,579Net operating loss carryforwards
    
    
    50,712
    
    
    
    14,523Share-based compensation
    
    
    26,084
    
    
    
    3,229Accrued liabilities
    
    
    63,803
    
    
    
    17,207Accrued compensation
    
    
    21,881
    
    
    
    15,535Deferred revenue
    
    
    43,976
    
    
    
    39,424Foreign tax credit
    
    
    47,189
    
    
    
    5,727Gross deferred tax assets
    
    $
    672,899
    
    
    $
    199,254Deferred tax assets valuation allowance
    
    $
    (37,206
    )
    
    $
    (10,884
    )Net deferred tax asset
    
    $
    364,319
    
    
    $
    122,399
      93




---



##### Table of Contents



2010
    
    
    2009
    
    
    2008Balance at July 1
    
    $
    9,414
    
    
    $
    11,034
    
    
    $
    16,352Increases related to current year acquisitions
    
    
    24,515
    
    
    
    
    
    
    
    Increases related to tax positions in prior years
    
    
    1,257
    
    
    
    248
    
    
    
    434Decreases related to tax positions in prior years
    
    
    (4,245
    )
    
    
    (213
    )
    
    
    (6,386
    )Decreases related to settlements
    
    
    (283
    )
    
    
    (786
    )
    
    
    (758
    )Decreases related to lapse in statute of limitations
    
    
    (1,781
    )
    
    
    (1,562
    )
    
    
    (615
    )Increases related to current year tax positions
    
    
    4,830
    
    
    
    1,116
    
    
    
    2,007Cumulative translation adjustment
    
    
    (441
    )
    
    
    (423
    )
    
    
    Balances at June 30
    
    $
    33,266
    
    
    $
    9,414
    
    
    $
    11,034
      Open Tax Years(fiscal year ending in)United States  federal
    
    2002 and forwardUnited States  various states
    
    1998 and forwardCanada  federal
    
    2003 and forwardGermany
    
    2004 and forwardThe Netherlands
    
    2008 and forwardUnited Kingdom
    
    2007 and forward
 94




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##### Table of Contents



Note 16  Segment Information
         Risk and
    
    Talent andBenefits
    
    Financial Services
    
    Rewards
    
    TotalRevenue (net of reimbursable expenses)
    
    $
    1,470,817
    
    
    $
    494,961
    
    
    $
    351,709
    
    
    $
    2,317,487Net operating income
    
    
    441,159
    
    
    
    112,373
    
    
    
    17,417
    
    
    
    570,949Interest expense
    
    
    1,434
    
    
    
    136
    
    
    
    294
    
    
    
    1,864Depreciation and amortization
    
    
    26,509
    
    
    
    6,520
    
    
    
    8,736
    
    
    
    41,765Receivables
    
    
    400,169
    
    
    
    132,487
    
    
    
    107,465
    
    
    
    640,121
  Risk and
    
    Talent andBenefits
    
    Financial Services
    
    Rewards
    
    TotalRevenue (net of reimbursable expenses)
    
    $
    1,119,753
    
    
    $
    278,986
    
    
    $
    223,001
    
    
    $
    1,621,740Net operating income
    
    
    327,832
    
    
    
    62,579
    
    
    
    16,709
    
    
    
    407,120Interest expense
    
    
    2,010
    
    
    
    271
    
    
    
    471
    
    
    
    2,752Depreciation and amortization
    
    
    24,471
    
    
    
    4,397
    
    
    
    7,426
    
    
    
    36,294Receivables
    
    
    226,445
    
    
    
    49,607
    
    
    
    32,919
    
    
    
    308,971
  Risk and
    
    Talent andBenefits
    
    Financial Services
    
    Rewards
    
    TotalRevenue (net of reimbursable expenses)
    
    $
    1,153,911
    
    
    $
    287,774
    
    
    $
    243,657
    
    
    $
    1,685,342Net operating income
    
    
    333,235
    
    
    
    62,301
    
    
    
    41,733
    
    
    
    437,269Interest expense
    
    
    3,308
    
    
    
    612
    
    
    
    991
    
    
    
    4,911Depreciation and amortization
    
    
    21,270
    
    
    
    4,988
    
    
    
    5,389
    
    
    
    31,647Receivables
    
    
    264,446
    
    
    
    67,685
    
    
    
    50,260
    
    
    
    382,391
 95




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##### Table of Contents



Year Ended June 30,2010
    
    
    2009
    
    
    2008Revenue:Total segment revenue
    
    $
    2,317,487
    
    
    $
    1,621,740
    
    
    $
    1,685,342Reimbursable expenses not included in segment revenue
    
    
    63,602
    
    
    
    55,259
    
    
    
    62,014Other, net
    
    
    6,740
    
    
    
    (970
    )
    
    
    12,699Revenue
    
    $
    2,387,829
    
    
    $
    1,676,029
    
    
    $
    1,760,055Net Operating Income:Total segment net operating income
    
    $
    570,949
    
    
    $
    407,120
    
    
    $
    437,269(Loss)/income from affiliates
    
    
    (1,274
    )
    
    
    8,350
    
    
    
    2,325Differences in allocation methods (1)
    
    
    7,012
    
    
    
    (1,183
    )
    
    
    (1,507
    )Amortization of intangibles
    
    
    (31,280
    )
    
    
    (13,892
    )
    
    
    (16,397
    )Transaction and integration expenses
    
    
    (87,644
    )
    
    
    
    
    
    
    Stock-based compensation and restricted A shares
    
    
    (48,006
    )
    
    
    
    
    
    
    Interest expense
    
    
    (7,508
    )
    
    
    (2,778
    )
    
    
    (5,977
    )Other non-operating income
    
    
    11,304
    
    
    
    4,926
    
    
    
    464Discretionary compensation
    
    
    (236,154
    )
    
    
    (167,590
    )
    
    
    (184,980
    )Other, net
    
    
    (7,482
    )
    
    
    (13,050
    )
    
    
    (2,028
    )Income before income taxes
    
    $
    169,917
    
    
    $
    221,903
    
    
    $
    229,169Interest expense:Total segment expense
    
    $
    1,864
    
    
    $
    2,752
    
    
    $
    4,911Transaction-related interest expense
    
    
    4,523
    
    
    
    
    
    
    
    Differences in allocation method
    
    
    1,121
    
    
    
    26
    
    
    
    1,066Total interest expense
    
    $
    7,508
    
    
    $
    2,778
    
    
    $
    5,977Depreciation and amortization:Total segment expense
    
    $
    41,765
    
    
    $
    36,294
    
    
    $
    31,647Intangible asset amortization, not allocated to segments
    
    
    31,280
    
    
    
    13,892
    
    
    
    16,397Information technology and other
    
    
    28,039
    
    
    
    23,262
    
    
    
    24,384Total depreciation and amortization
    
    $
    101,084
    
    
    $
    73,448
    
    
    $
    72,428Receivables:Total segment receivables  billed and unbilled
    
    $
    640,121
    
    
    $
    308,971
    
    
    $
    382,391Valuation differences and other
    
    
    (2,607
    )
    
    
    (6,561
    )
    
    
    (16,635
    )Total billed and unbilled receivables
    
    
    637,514
    
    
    
    302,410
    
    
    
    365,756Assets not reported by segment
    
    
    3,935,936
    
    
    
    1,323,909
    
    
    
    1,350,220Total assets
    
    $
    4,573,450
    
    
    $
    1,626,319
    
    
    $
    1,715,976
 
 (1)
    
    Depreciation, general and administrative, pension, and medical costs are allocated to our
segments based on budgeted expenses determined at the beginning of the fiscal year as
management believes that these costs are largely uncontrollable to the segment. To the extent
that the actual expense base upon which allocations are made differs from the forecast/budget
amount, a reconciling item will be created between internally allocated expenses and the
actual expense that we report for GAAP purposes.(2)
    
    Total segment receivables, which reflect the receivable balances used by management to make
business decisions, are included for management reporting purposes net of deferred revenue.  Revenue
    
    
    Long-lived Assets2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008North America
    
    $
    1,325,876
    
    
    $
    835,941
    
    
    $
    832,614
    
    
    $
    1,331,241
    
    
    $
    201,450
    
    
    $
    202,898Europe
    
    
    888,076
    
    
    
    701,035
    
    
    
    780,270
    
    
    
    1,352,990
    
    
    
    733,887
    
    
    
    862,555Rest of World
    
    
    173,877
    
    
    
    139,053
    
    
    
    147,171
    
    
    
    49,232
    
    
    
    13,470
    
    
    
    20,464$
    2,387,829
    
    
    $
    1,676,029
    
    
    $
    1,760,055
    
    
    $
    2,733,463
    
    
    $
    948,807
    
    
    $
    1,085,917
  96




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##### Table of Contents



Note 17  Earnings Per Share
 Earnings per Share
 Fiscal Year Ended June 30,2010
    
    
    2009
    
    
    2008Per Share
    
    
    
    
    
    
    
    
    
    
    Per Share
    
    
    
    
    
    
    
    
    
    
    Per ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    AmountBasic EPSNet income attributable to controlling interests
    
    $
    120,597
    
    
    
    
    
    
    
    
    
    
    $
    146,458
    
    
    
    
    
    
    
    
    
    
    $
    155,441Less: Income allocated to participating securities
    
    
    (4,323
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income available to common shareholders
    
    $
    116,274
    
    
    
    57,135
    
    
    $
    2.04
    
    
    $
    146,458
    
    
    
    42,690
    
    
    $
    3.43
    
    
    $
    155,441
    
    
    
    42,577
    
    
    $
    3.65Diluted EPSShare based compensation awards
    
    
    
    
    
    
    115
    
    
    
    
    
    
    
    
    
    
    
    171
    
    
    
    
    
    
    
    
    
    
    
    1,804Income available to common shareholders
    
    $
    116,274
    
    
    
    57,250
    
    
    $
    2.03
    
    
    $
    146,458
    
    
    
    42,861
    
    
    $
    3.42
    
    
    $
    155,441
    
    
    
    44,381
    
    
    $
    3.50
   Note 18  Unaudited Quarterly Financial Data
  2010 Quarter EndedSeptember 30
    
    December 31
    
    March 31
    
    June 30Revenue
    
    $
    401,345
    
    
    $
    432,614
    
    
    $
    803,963
    
    
    $
    749,907Income from operations
    
    
    43,141
    
    
    
    45,809
    
    
    
    51,145
    
    
    
    24,350Income before income taxes
    
    
    45,079
    
    
    
    46,093
    
    
    
    49,696
    
    
    
    29,049Net income attributable
to controlling interests
    
    
    29,781
    
    
    
    23,872
    
    
    
    8,815
    
    
    
    58,129Earnings per share:Net income, basic
    
    $
    0.70
    
    
    $
    0.57
    
    
    $
    0.12
    
    
    $
    0.77Net income, diluted
    
    $
    0.69
    
    
    $
    0.56
    
    
    $
    0.12
    
    
    $
    0.77
 2009 Quarter EndedSeptember 30
    
    December 31
    
    March 31
    
    June 30Revenue
    
    $
    426,126
    
    
    $
    436,389
    
    
    $
    416,994
    
    
    $
    396,520Income from operations
    
    
    51,184
    
    
    
    55,785
    
    
    
    51,790
    
    
    
    50,624Income before income taxes
    
    
    53,369
    
    
    
    58,066
    
    
    
    56,653
    
    
    
    53,815Net income attributable
to controlling interests
    
    
    35,160
    
    
    
    39,551
    
    
    
    40,591
    
    
    
    31,156Earnings per share:Net income, basic
    
    $
    0.82
    
    
    $
    0.93
    
    
    $
    0.95
    
    
    $
    0.73Net income, diluted
    
    $
    0.82
    
    
    $
    0.93
    
    
    $
    0.95
    
    
    $
    0.73
 97




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##### Table of Contents



Note 19  Subsequent Events
 Proposed secondary public offering of our Class A common stock to our outstanding Class B-1
stockholders
   Changes to employee defined benefit pension and postretirement plans and defined contribution plans
     98




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##### Table of Contents



TOWERS WATSON & CO.
 Schedule II
Valuation and Qualifying Accounts and Reserves
 AdditionsBalance
    
    Charged
    
    Additionsat
    
    Against
    
    Charged
    
    Additions
    
    
    
    
    
    BalanceBeginning
    
    (Credited
    
    to
    
    Resulting
    
    
    
    
    
    atof
    
    to)
    
    Other
    
    From
    
    
    
    
    
    End ofDescription
    
    Year
    
    Revenue
    
    Accounts
    
    Acquisitions
    
    Deductions
    
    YearYear Ended June 30, 2010Allowance for uncollectible accounts
    
    $
    4,452
    
    
    $
    11,759
    
    
    $
    
    
    
    $
    
    
    
    $
    (8,236
    )
    
    $
    7,975Allowance for unbillable accounts
    
    
    9,115
    
    
    
    2,581
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,696Valuation allowance for deferred tax assets
    
    
    10,884
    
    
    
    
    
    
    
    (20,868
    )
    
    
    47,190
    
    
    
    
    
    
    
    37,206Year Ended June 30, 2009Allowance for uncollectible accounts
    
    $
    8,544
    
    
    $
    5,355
    
    
    $
    
    
    
    $
    
    
    
    $
    (9,447
    )
    
    $
    4,452Allowance for unbillable accounts
    
    
    11,700
    
    
    
    
    
    
    
    
    

    
    

    
    
    

    
    (2,585
    )
    
    

    9,115Valuation allowance for deferred tax assets
    
    
    12,524
    
    
    
    
    
    
    
    (1,640
    )
    
    
    
    
    
    
    
    
    
    
    10,884Year Ended June 30, 2008Allowance for uncollectible accounts
    
    $
    6,216
    
    
    $
    14,309
    
    
    $
    
    
    
    $
    
    
    
    $
    (11,981
    )
    
    $
    8,544Allowance for unbillable accounts
    
    
    7,683
    
    
    
    4,017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,700Valuation allowance for deferred tax assets
    
    
    9,826
    
    
    
    
    
    
    
    2,698
    
    
    
    
    
    
    
    
    
    
    
    12,524
 99




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##### Table of Contents



EXHIBITS.
  http://www.sec.gov
 EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibit2.1
    
    Agreement and Plan of Merger among Watson Wyatt Worldwide, Inc., Towers, Perrin, Forster & Crosby, Inc., Jupiter
Saturn Holding Company, Jupiter Saturn Delaware Inc. and Jupiter Saturn Pennsylvania Inc., dated as of June 26,
2009. (1)2.2
    
    Amendment No. 1 to Agreement and Plan of Merger among Watson Wyatt Worldwide, Inc., Towers, Perrin, Forster &
Crosby, Inc., Jupiter Saturn Holding Company, Jupiter Saturn Delaware Inc. and Jupiter Saturn Pennsylvania Inc.,
dated as of October 19, 2009. (1)3.1
    
    Amended and Restated Certificate of Incorporation of Towers Watson & Co. (2)3.2
    
    Amended and Restated Bylaws of Towers Watson & Co. (3)4.1
    
    Indenture, dated as of December 30, 2009, by and between Towers Watson & Co. and Wilmington Trust FSB, as Trustee,
and form of Towers Watson Notes. (4)4.2
    
    Indenture, dated as of June 15, 2010, between Towers Watson & Co. and Wilmington Trust FSB, as Trustee, and form
of Towers Watson Notes. (5)10.1
    
    Credit Agreement dated as of January 1, 2010, among Towers Watson & Co. and certain subsidiaries, as borrowers,
each lender from time to time party thereto and Bank of America, N.A., as administrative agent, swing line lender
and L/C issuer. (6)10.2
    
    Towers Watson & Co. 2009 Long Term Incentive Plan.** (7)10.3
    
    Form of Transaction Based Compensation Agreement between Towers, Perrin, Forster & Crosby, Inc. (now known as
Towers Watson Pennsylvania Inc.) and certain executives.** (8)10.4
    
    Towers, Perrin, Forster & Crosby, Inc. Restricted Stock Unit Plan.** (9)10.5
    
    Form of Award pursuant to the Towers, Perrin, Forster & Crosby, Inc. Restricted Stock Unit Plan.** (10)10.6
    
    Form of Transaction Award pursuant to the Towers, Perrin, Forster & Crosby, Inc. Restricted Stock Unit Plan.** (11)10.7
    
    Form of Indemnification Agreement with directors and executive officers.** (12)10.8
    
    Trust Deed and Rules of the Watson Wyatt Share Incentive Plan 2005 (U.K.).** (13)10.9
    
    Watson Wyatt Share Incentive Plan 2005 Deed of Amendment (U.K.).** (13)
 100




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibit10.10
    
    Share Purchase Plan 2005 (Spain).** (13)10.11
    
    Trust Deed and Rules of the Watson Wyatt Ireland Share Participation Scheme.** (13)10.12
    
    Watson Wyatt Amended and Restated Senior Officer Deferred Compensation Plan.** (14)10.13
    
    Watson Wyatt Amended Voluntary Deferred Compensation Plan for Non-Employee Directors.** (15)10.14
    
    Form of Non-Qualified Stock Option Award Agreement for use under the Towers Watson & Co. 2009 Long-Term Incentive
Plan.** (16)10.15
    
    Towers Watson & Co. Compensation Plan for Non-Employee Directors.** (17)10.16
    
    Voluntary Deferred Compensation Plan for Non-Employee Directors.** (17)10.17
    
    Watson Wyatt & Company Holdings 2000 Long-Term Incentive Plan.** (18)21.1
    
    Subsidiaries of Towers Watson & Co.*23.1
    
    Consent of Deloitte & Touche LLP, an independent registered public accounting firm.*31.1
    
    Certification of the Registrants Chief Executive Officer, John J. Haley, pursuant to Rule 13a-14 of the
Securities Exchange Act of 1934.*31.2
    
    Certification of the Registrants Chief Financial Officer, Roger F. Millay, pursuant to Rule 13a-14 of the
Securities Exchange Act of 1934.*32.1
    
    Certification of the Registrants Chief Executive Officer, John J. Haley, and Chief Financial Officer, Roger F.
Millay, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 
 *
    
    Filed herewith.**
    
    Designates management contracts and compensation plans.(1)
    
    Incorporated by reference to Exhibit 2.1 to the Companys joint proxy statement/prospectus
included in the Registration Statement on Form S-4/A (File No. 333-161705) filed by the
Company with the Securities and Exchange Commission and declared effective on November 9,
2009, as supplemented by the prospectus supplement filed pursuant to Rule 424(b)(3) on
December 14, 2009 (collectively, the Joint Proxy Statement/Prospectus).(2)
    
    Incorporated by reference to Exhibit 4.1 to the Form 8-A filed by the Company on January 4,
2010.(3)
    
    Incorporated by reference to Exhibit 3.4 to the Joint Proxy Statement/Prospectus.(4)
    
    Incorporated by reference to Exhibit 4.1 to the Form 8-K filed by the Company on January 4,
2010.(5)
    
    Incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-1 (File No.
333-168201) filed by the Company on July 19, 2010.(6)
    
    Incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on January 4,
2010.(7)
    
    Incorporated by reference to Annex G to the Joint Proxy Statement/Prospectus.(8)
    
    Incorporated by reference to Exhibit 10.4 to the Joint Proxy Statement/Prospectus.(9)
    
    Incorporated by reference to Exhibit 10.5 to the Joint Proxy Statement/Prospectus.(10)
    
    Incorporated by reference to Exhibit 10.6 to the Joint Proxy Statement/Prospectus.(11)
    
    Incorporated by reference to Exhibit 10.7 to the Joint Proxy Statement/Prospectus.(12)
    
    Incorporated by reference to Exhibit 10.8 to the Joint Proxy Statement/Prospectus.(13)
    
    Incorporated by reference to Exhibit 10.23 of Watson Wyatt Worldwide Inc.s Form 10-K filed
on September 1, 2006.(14)
    
    Incorporated by reference to Exhibit 10.11 to the Joint Proxy Statement/Prospectus.(15)
    
    Incorporated by reference to Exhibit 10.12 to the Joint Proxy Statement/Prospectus.(16)
    
    Incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on March 8,
2010.(17)
    
    Incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on May 18,
2010.(18)
    
    Incorporated by reference to Exhibit 10.23 of Watson Wyatt Worldwide Inc.s Form 10-Q filed
on November 9, 2009. 101