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, 2009
 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: 001-16159
 WATSON WYATT WORLDWIDE, INC.
  Delaware
    
    52-2211537(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 901 N. Glebe Road, Arlington, VA 22203
 (703) 258-8000
 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
 Securities registered pursuant to Section 12(g) of the Act:
 (Title of class)
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 þ o
 o o
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  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
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WATSON WYATT WORLDWIDE, INC.
INDEX TO FORM 10-K
  PART I.Item 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    16Item 1B. Unresolved SEC Comments
    
    
    23Item 2. Properties
    
    
    23Item 3. Legal Proceedings
    
    
    23Item 4. Submission of Matters to a Vote of Security Holders
    
    
    23PART II.Item 5. Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
    
    
    24Item 6. Selected Financial Data
    
    
    26Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    29Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    49Item 8. Financial Statements and Supplementary Data
    
    
    50Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
    
    
    50Item 9A. Controls and Procedures
    
    
    50PART III.Item 10. Directors, Executive Officers and Corporate Governance
    
    
    54Item 11. Executive Compensation
    
    
    54Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    54Item 13. Certain Relationships and Related Transactions, and
Director Independence
    
    
    54Item 14. Principal Accounting Fees and Services
    
    
    54PART 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, 2009, 2008, and 2007
    
    
    58Consolidated
Balance SheetsJune 30, 2009 and June 30, 2008
    
    
    59Consolidated Statements of Cash FlowsFiscal year ended
June 30, 2009, 2008, and 2007
    
    
    60Consolidated Statement of Changes in Stockholders
EquityFiscal year ended June 30, 2009, 2008, and 2007
    
    
    61Notes to the Consolidated Financial Statements
    
    
    62Certifications




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PART I
 
 Item 1.
    
    Business.
 The Company
  FORTUNE
 Proposed Merger with Towers, Perrin, Forster & Crosby, Inc.
     1




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2




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Business Acquisitions
 Dr. Dr. Heissmann GmbH
  
 WisdomNet
  Marcu & Asociados S.A.
  Watson Wyatt Netherlands
 
 Access to Public Filings, Code of Business Conduct and Ethics and Board Committee Charters
  3




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Certifications
  Business Overview
   Benefits Group
 
    
    Design and management of benefit programs
 
    
    Actuarial services including development of funding and risk management strategies
 
    
    Expatriate and international human resource strategies
 
    
    Mergers and acquisitions
 
    
    Strategic workforce planning
 
    
    Compliance and governance
 Technology and Administration Solutions Group
 
    
    Web-based systems for health and welfare, pension, compensation and talent management
administration
 
    
    Administration services for outsourcing of health and welfare, pension and flexible
benefits plans
 
    
    Consulting on strategic human resources technology and service delivery, including
SharePoint portal implementation and other HR and enterprise portals
 
    
    Targeted online compensation and benefits statements, content management and call center
case management solutions
 
    
    Reward and talent management strategy, design and technology solutions
 4




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Human Capital Group
 
    
    Advice concerning compensation plans, including broad-based and executive compensation,
stock and other long-term incentive programs
 
    
    Strategies to align workforce performance with business objectives
 
    
    Organization effectiveness consulting
 
    
    Talent management consulting, including workforce planning, performance management,
succession planning and other programs
 
    
    Strategies for attracting, retaining and motivating employees
 
    
    Data services
 Investment Consulting Group
 
    
    Investment consulting services to pension plans and other institutional funds
 
    
    Input on governance and regulatory issues
 
    
    Analysis of asset allocation and investment strategies
 
    
    Investment structure analysis, selection and evaluation of managers and performance
monitoring
 
    
    Implementation/fiduciary services for defined benefit and defined contribution
investment programs via our Advanced Investment Solutions (AIS) and Defined Contribution
Solutions (DCS) services
 Insurance & Financial Services Group
 
    
    Independent actuarial and strategic advice
 
    
    Assessment and advice regarding financial condition and risk management
 
    
    Financial modeling software tools for product design and pricing, planning and
projections, reporting, valuations and risk management
  Competitive Advantage
     5




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Human Resources Consulting Industry
  Consulting Services
  2009
    
    2008
    
    2007Benefits Group
    
    
    57
    %
    
    
    56
    %
    
    
    55
    %Human Capital Group
    
    
    10
    
    
    
    11
    
    
    
    11Technology and Administration Solutions Group
    
    
    11
    
    
    
    10
    
    
    
    11Investment Consulting Group
    
    
    10
    
    
    
    10
    
    
    
    9Insurance & Financial Services Group
    
    
    7
    
    
    
    7
    
    
    
    8Other Segments
    
    
    5
    
    
    
    6
    
    
    
    6Total Segment Revenue
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  Benefits Group
  Retirement Consulting
  6




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
    
    Actuarial services
    
    Analysis and recommendations on funding strategy
    
    Development and implementation of risk mitigation and management strategies
    
    Strategic plan design
    
    Administrative services
    
    Workforce diagnostics, analysis and planning
    
    Defined contribution services including nondiscrimination testing and vendor selection
    
    Financial reporting
    
    Stock option and share plan financial accounting
    
    Executive retirement benefits and assistance with enhanced U.S. proxy disclosures
    
    Retiree health care design and valuation
    
    Assistance with changes relating to mergers, acquisitions and divestitures
    
    Development of compliance and governance strategies
   TM
 
    
    BenefitConnect Consultants in our retirement practice and our Technology and Administration
Solutions Group partner to deliver the pension administration component of this full-featured,
Web-based solution for benefits administration
 7




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
    
    OnePlace  A Web portal that helps our clients with the day-to-day management and governance
of their plans and links easily with our global tools, research and data
 
    
    FASTool  An interactive tool that allows the immediate comparison of income statement and
balance sheet information and assumptions related to pension, stock option and retiree medical
plans for large, publicly traded U.S. companies
 
    
    Forecaster  A Web-enabled tool that allows pension plan sponsors to quickly and easily
model a variety of financial and business situations, and project retirement plan
contributions, funded status and expense
 
    
    DesignIT  A modeling tool for our European clients that provides comparisons between a
selection of alternative pension designs
 
    
    Liability Watch  Enables our European clients to keep daily track of their funding position
 Group and Health Care Consulting
     8




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
    
    Strategic plan design of health and welfare, paid time off and flexible benefit plans
 
    
    Retiree health programs
 
    
    Health and productivity management, including onsite clinics
 
    
    Health and welfare technology solutions
 
    
    Total program management
 
    
    Vendor negotiations, audits and performance management
 
    
    Measurement of program effectiveness
 
    
    Assistance with plan changes relating to mergers, acquisitions and divestitures.
 International Consulting
   
    
    Resolution of people issues in mergers and acquisitions
    
    Compliance and competitiveness of human capital practices at all stages of the
off-shoring lifecycle or expansion process
    
    Management of financial exposures and investment risks in benefit plans and
determination of pension funding
    
    Development and support of multinational governance procedures for managing
employee benefit and worldwide reward programs
    
    Development of an international transfer policy that meets the organizations
current and projected mobility needs
  
    
    BenTrack  The online tool used by the worlds largest multinationals 
including four of the Fortune 10  to help govern global benefits and compensation programs.
 
    
    FAStrack  To facilitate global coordination for the various global accounting
standards requirements, including IFRS, FAS87, FAS106 and FAS132R, Watson Wyatt has developed
FAStrack Global, a Web-based program designed for local plan actuaries to enter IFRS/FAS
results by business unit, plan and/or country.
 
    
    Global Survey of Accounting Assumptions for Defined Benefit Plans  an annual
survey of the accounting assumptions applied by major corporations for their defined benefit
plans around the world.
 9




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Technology and Administration Solutions Group
   Retirement Administration
     Health &Welfare/Flexible Benefits Administration
 
    
    Flexible benefit plans exist in different forms in different geographies, and we
provide web-enabled flexible benefits administration solutions to support clients in a number
of different parts of the world.
 10




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
    
    In the United States, flexible benefits tend to be focused primarily around health
and welfare arrangements. We offer comprehensive services ranging from technology to support
clients who administer their own plans to a full set of administration and technology services
for those who wish to fully outsource health and welfare administration activities.
BenefitConnect is our flexible web-based health and welfare technology that allows employees
and retirees to perform benefits transactions and access information at their convenience with
easy-to-use self-service tools. BenefitConnect and our service centers provide contact center
support, vendor interface management, participant issue resolution and material fulfillment.
Health care consumerism support tools give participants direct web-based access to their
benefits information and enrollment tools and provide modeling on a choice of medical spending
and savings accounts, as well as life insurance. They also help participants become smart
consumers through access to information on the World Wide Web via the Internet.
 
    
    In the United Kingdom, we provide flexible benefits administration services on a
stand-alone basis or linked with defined contribution administration and the provision of
total compensation statements.
 Integrated Reward and Talent Management Suite
 
    
    Built by business and HR experts, our world-class technology suite supports and
automates reward and talent management programs. Our I-TMS talent suite integrates strategic
workforce planning, recruiting, performance management, compensation planning, compensation
analytics, global job leveling, career development, learning and succession planning. The
system accommodates a wide range of client processes, terminology and workflow without
programming.
 Online Total Rewards Statements
 
    
    eStatements is our Web-based solution that helps employees understand the true
value of their compensation and benefits package. It aggregates data from a number of
internal and/or external sources, and provides a real-time view of an employees complete
package. It illustrates the value of an organizations human resource programs, fosters
smarter plan participation and benefit consumerism, offers organizations another vehicle to
promote plan features, provides support, and delivers other focused information. There is also
a recruiting module that gives candidates a view of the total compensation and rewards
strategy they would receive at the employer organization.
 Service Delivery Technology Suite
 
    
    AnswerKey is our shared service center solution that combines case management
software with a personalized, searchable knowledge base. Using Web-based technology, it
consolidates data from multiple sources, offering employees and human resource service center
staff a single point of contact for faster response times and more accurate and consistent
inquiry resolution.
 Portal, Service Delivery and Talent Management Consulting Services
 
    
    We also have a consulting group within our technology and administration group.
Our expertise includes HR service delivery assessment, design and implementation; HRO and HRMS
vendor selection; HRO and HRMS implementation services; HR/enterprise portal consulting;
SharePoint development, research and benchmarking; and talent management assessment, strategy
and program design.
 11




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Human Capital Group
   Executive Compensation
  Strategic Rewards ®
  Sales Effectiveness and Compensation
  Organization Effectiveness
  Talent Management
  12




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Watson Wyatt Data Services
   Investment Consulting Group
   
    
    Asset/liability modeling, risk budgeting and asset allocation studies
 
    
    Governance consulting and investment policy development
 
    
    Investment policy implementation
 
    
    Analysis of structured products
 
    
    Investment manager selection and monitoring
 
    
    Performance evaluation and monitoring
  
    
    Pension Risk Management  an integrated methodology for determining the appropriate
amount of investment risk for a pension plan and allocating that risk across investment
decisions
    
    Advanced Investment Solutions  taking a more proactive responsibility for the
investment arrangements of institutional funds. We work with the plan sponsor to develop an
investment policy and to help manage the implementation of that policy.
    
    Defined Contribution Solutions  partnering with DC plan committees to help ensure they
meet their fiduciary responsibilities. We act as an investment co-fiduciary, providing
single manager recommendations, as well as plan value and fiduciary risk assessments.
 13




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Insurance & Financial Services Group
   
    
    Development and review of business strategy, including market-entry studies and
business plan design
 
    
    Provision of strategic and actuarial advice to buyers or sellers of financial
institutions
 
    
    Advice on a wide range of financial management issues, including risk and value
management, asset liability modeling, statutory reporting, embedded value and
market-consistent valuations
 itech
 Other Services
 Communication Consulting
 Communication ROI
 
    
    Increases total returns to shareholders
    
    Improves service, quality and productivity levels
    
    Helps fuel growth
    
    Enhances organizational ability to manage change successfully
    
    Builds employee community, trust and commitment
    
    Educates, engages and motivates employees
   
    
    Clarifying the value and scope of employee compensation and benefits, and enhancing
employees appreciation of their total rewards opportunities
 
    
    Drawing a clear line of sight between employee performance and company objectives through
open communication and leadership communication training
 
    
    Optimizing the use of technology in communication through audits and best-practice design
 
    
    Facilitating organizational change so that all stakeholders fully understand their role in
business success
 
    
    Maintaining employee trust, confidence and commitment through all cycles of performance
 
    
    Demonstrating the return on investment of employee communication in achieving business
objectives
 
    
    Supporting management through innovative communication programs that help employers target,
attract and hire the right talent to meet business objectives
 14




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Integrated Service Approach
  Sales and Marketing
 TM
  Clients
  Competition
   
    
    Major human resources-focused consulting firms that compete in serving the large employer
market worldwide, including Hewitt Associates, Towers Perrin and Mercer
 
    
    Smaller benefits and compensation consulting firms, including the Hay Group and The Segal
Company, as well as boutique investment firms like Russell Investments and Callan Associates
 
    
    The human resources consulting and/or plan administration divisions of diversified
professional services, financial services and insurance firms, including Aon, Deloitte &
Touche, Ernst & Young, Fidelity, ING Institutional Plan Services, PricewaterhouseCoopers and
KPMG
 15




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
    
    Information technology services firms, including Accenture, ACS, ADP, ExcellerateHRO and IBM,
as well as Internet/intranet development firms and smaller talent management companies like
SuccessFactors
 
    
    Boutique consulting firms consisting primarily of professionals formerly associated with the
firms mentioned above
  Employees
  As of June 30,2009
    
    2008Benefits Group
    
    
    3,405
    
    
    
    3,290Human Capital Group
    
    
    825
    
    
    
    900Technology and Administration Solutions Group
    
    
    900
    
    
    
    850Investment Consulting Group
    
    
    565
    
    
    
    500Insurance & Financial Services Group
    
    
    415
    
    
    
    420Other (incl. Communication)
    
    
    450
    
    
    
    450Business Services (incl. Corporate and field support)
    
    
    1,140
    
    
    
    1,100Total
    
    
    7,700
    
    
    
    7,510
  
 Item 1A
    
     Risk Factors
   16




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Watson Wyatts success will continue to depend on its ability to recruit and retain qualified
consultants; our failure to do so could adversely affect our ability to compete successfully.
  The loss of key consultants and managers could damage or result in the loss of client relationships
and adversely affect our business.
   Improper management of our fixed-fee engagements could hurt our financial results.
  Failure to complete the merger with Towers Perrin in certain circumstances could require us to pay
a termination fee or reimburse Towers Perrins expenses.
  Failure to complete the merger with Towers Perrin could negatively impact Watson Wyatt and its
future operations.
  17




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If we are not able to successfully integrate the operations of Towers Perrin and Watson Wyatt, the
combined company may fail to realize the anticipated growth opportunities, cost savings 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 trend of employers shifting from defined benefit plans to defined contribution plans could
adversely affect our business and our operating results.
  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.
  18




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Our business could be negatively affected by currently proposed or future legislative or regulatory activity concerning compensation consultants.
 Corporate and Financial Institution Compensation Fairness Act of 2009
 We are subject to risks of doing business internationally.
  
    
    currency exchange rate fluctuations;
    
    unexpected increases in taxes;
    
    compliance with a variety of international laws, such as data privacy, employment,
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;
    
    new regulatory requirements and/or changes in policies and local laws that materially
affect the demand for our services or directly affect our foreign operations;
    
    local economic and political conditions, including unusual, severe, or protracted
recessions in foreign economies;
    
    unusual and unexpected monetary exchange controls; or
    
    civil disturbance or other catastrophic events that reduce business activity in
other parts of the world. These factors may lead to decreased sales or profits and therefore
may have a material adverse effect on our business, financial condition and operating
results.
 Competition from firms with greater resources could result in loss of our market share and reduced
profitability.
  19




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Demand for our services may decrease for various reasons, including a general economic slowdown, a
decline in a clients or an industrys financial condition or prospects, or a decline in defined
benefit pension plans that could adversely affect our operating results.
   Our clients generally may terminate our services at any time, which could decrease associate
utilization, adversely impacting our profitability and results of operation.
  We are subject to malpractice claims arising from our work, which could adversely affect our
reputation and business, and we are subject to government inquiries and investigations.
   
    
    A clients assertion that actuarial assumptions used in a pension plan were
unreasonable, leading to plan underfunding;
 
    
    A claim arising out of the use of inaccurate data, which could lead to an
underestimation of plan liabilities;
 
    
    A claim that employee benefit plan documents were misinterpreted or plan
amendments were misstated in plan documents, leading to overpayments to beneficiaries; and
 
    
    A claim that reserves or premium requirements of insurance company clients were
understated.
 20




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Insurance may become more difficult or expensive to obtain.
  We offer investment consulting services that may require us to serve as a fiduciary as defined
under the Employee Retirement Income Security Act of 1974, as amended. As a result, if our clients
are not satisfied with our services, we may face damage to our professional reputation or increased
legal liability.
  We are engaged, through our subsidiaries, in providing services outside of our core human resources
consulting business, which may carry greater risk of liability.
  21




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Our quarterly revenue may fluctuate while our expenses are relatively fixed.
  
    
    The significance of client engagements commenced and completed during a quarter;
 
    
    The seasonality of some specific types of services. In particular, retirement revenues are
more heavily weighted toward the second and third quarters of the fiscal year, when annual
actuarial valuations are required to be completed for calendar year end companies and the
related services are performed. In the Technology and Administration Solutions Group, the
distribution of work is concentrated at the end of the first fiscal quarter and through the
second fiscal quarter, as there is demand from our clients for assistance in updating systems
and programs used in the annual re-enrollment of employees in benefit plans, such as flex
plans. Much of the remaining business is project-oriented and is thus influenced more by
particular client needs and the availability of our workforce;
 
    
    The number of business days in a quarter, associate hiring and utilization rates and clients
ability to terminate engagements without penalty;
 
    
    The size and scope of assignments; and
 
    
    General economic conditions.
  Our business faces rapid technological change and our failure to respond to this change quickly
could adversely affect our business.
   Limited protection of our proprietary expertise, methodologies and software could harm our
business.
  22




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We have various mechanisms in place that may prevent a change in control that a stockholder might
favor.
  
    
    Authorize the issuance of preferred stock without fixed characteristics that could be issued
by our board of directors to increase the number of outstanding shares and deter a takeover
attempt;
 
    
    Provide that only the President or our board of directors may call a special meeting of
shareholders;
 
    
    Prohibit stockholder action by written consent, which requires all actions to be taken at a
meeting of the shareholders;
 
    
    Provide that vacancies on our board of directors, including new directorships, may be filled only
by the directors then in office;
 
    
    Require super-majority voting for the shareholders to amend our bylaws and other provisions
of our certificate of incorporation;
 
    
    Prohibit a stockholder from presenting a proposal or director nomination at an annual meeting
unless the stockholder provides us with sufficient advance notice.
 
 Item 1B.
    
    Unresolved SEC Comments
  
 Item 2.
    
    Properties.
   
 Item 3.
    
    Legal Proceedings.
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders.
  23




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Part II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
    Market Information
  2009
    
    2008High
    
    Low
    
    High
    
    LowFirst quarter (July 1 through September 30)
    
    $
    59.80
    
    
    $
    48.45
    
    
    $
    51.19
    
    
    $
    43.00Second quarter (October 1 through December
31)
    
    
    48.23
    
    
    
    33.47
    
    
    
    49.82
    
    
    
    43.90Third quarter (January 1 through March 31)
    
    
    50.43
    
    
    
    42.81
    
    
    
    58.40
    
    
    
    43.10Fourth quarter (April 1 through June 30)
    
    
    53.36
    
    
    
    36.72
    
    
    
    60.22
    
    
    
    52.89
 Holders
  Dividends
  24




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Securities Authorized for Issuance Under Equity Compensation Plans
   
    
    Selected senior associates receive deferred stock units in lieu of a portion of their
annual fiscal year end bonus. Each deferred stock unit represents one share of common stock
at the market price on the date of grant. Typically deferred stock units are issued
annually in September and vest immediately.
 
    
    Selected senior associates receive deferred stock units in the Performance Share Bonus
Incentive Program. The target compensation is based either on the associates salary or on
the value of the cash portion of the participants fiscal year-end bonus target and a
multiplier, which ranges from 0% to 170%. The target compensation is then converted into a
target number of deferred stock units based upon the companys stock price as of the
quarter end prior to grant. This performance based award is based on the extent to which
financial and strategic performance metrics are achieved over a three year period.
Typically deferred stock units are issued in September following the end of the programs
three year term and vest immediately.
  Number of sharesremaining availablefor future issuanceNumber of shares to
    
    
    
    
    
    under equitybe issued upon
    
    
    
    
    
    compensation plansexercise of
    
    Weighted-average
    
    (excluding sharesoutstanding options,
    
    exercise price of
    
    reflected in the firstPlan Category
    
    warrants and rights
    
    outstanding options
    
    column)Equity
compensation plans
approved by
stockholders
    
    
    
    
    
    $
    
    
    
    
    4,237,700
    (1)
 
 (1)
    
    Includes 2,548,915 shares remaining available for future issuance under the 2000 Long-Term
Incentive Plan, 420,714 shares under the 2001 Employee Stock Purchase Plan, 1,191,026 shares under
the 2001 Deferred Stock Unit Plan for Selected Employees, and 77,045 shares under the Amended
Compensation Plan for Outside Directors. 25




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Performance Graph
  Issuer Purchases of Equity Securities
  Maximum NumberTotal Number of
    
    of Shares thatShares Purchased
    
    May Yet Beas Part of Publicly
    
    Purchased UnderTotal Number of
    
    Average Price
    
    Announced Plans
    
    the Plans orPeriod
    
    Shares Purchased
    
    Paid per Share
    
    or Programs
    
    ProgramsApril 1, 2009,
through April 30,
2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    May 1, 2009,
through May 31,
2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    June 1, 2009,
through June 30,
2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,218,023
   
 Item 6.
    
    Selected Consolidated Financial Data
  26




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Year Ended June 30,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Statement of Operations Data:(amounts are in thousands, except per
share data)Revenue (a)
    
    $
    1,676,029
    
    
    $
    1,760,055
    
    
    $
    1,486,523
    
    
    $
    1,271,811
    
    
    $
    737,421Costs of providing services:Salaries and employee benefits
    
    
    936,825
    
    
    
    970,236
    
    
    
    805,571
    
    
    
    699,049
    
    
    
    397,252Professional and subcontracted services
    
    
    95,690
    
    
    
    105,896
    
    
    
    99,943
    
    
    
    84,165
    
    
    
    57,810Occupancy, communications and other
    
    
    183,433
    
    
    
    208,058
    
    
    
    184,832
    
    
    
    164,140
    
    
    
    106,752General and administrative expenses
    
    
    177,250
    
    
    
    176,664
    
    
    
    159,637
    
    
    
    147,122
    
    
    
    74,612Depreciation and amortization
    
    
    73,448
    
    
    
    72,428
    
    
    
    57,235
    
    
    
    44,918
    
    
    
    20,2101,466,646
    
    
    
    1,533,282
    
    
    
    1,307,218
    
    
    
    1,139,394
    
    
    
    656,636Income from operations
    
    
    209,383
    
    
    
    226,773
    
    
    
    179,305
    
    
    
    132,417
    
    
    
    80,785Income/(loss) from affiliates (a)
    
    
    8,181
    
    
    
    2,067
    
    
    
    (5,500
    )
    
    
    1,135
    
    
    
    7,146Interest income
    
    
    2,022
    
    
    
    5,584
    
    
    
    4,066
    
    
    
    4,325
    
    
    
    2,833Interest expense
    
    
    (2,778
    )
    
    
    (5,977
    )
    
    
    (1,581
    )
    
    
    (4,093
    )
    
    
    (661
    )Other non-operating income/(loss)
    
    
    4,926
    
    
    
    464
    
    
    
    178
    
    
    
    (2,081
    )
    
    
    (7,404
    )Income from continuing operations before
income taxes
    
    
    221,734
    
    
    
    228,911
    
    
    
    176,468
    
    
    
    131,703
    
    
    
    82,699Provision for income taxes
    
    
    75,276
    
    
    
    73,470
    
    
    
    60,193
    
    
    
    45,585
    
    
    
    31,303Income from continuing operations
    
    
    146,458
    
    
    
    155,441
    
    
    
    116,275
    
    
    
    86,118
    
    
    
    51,396Discontinued operations (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,073
    
    
    
    766Net income
    
    $
    146,458
    
    
    $
    155,441
    
    
    $
    116,275
    
    
    $
    87,191
    
    
    $
    52,162Earnings per share, continuing operations,
basic
    
    $
    3.43
    
    
    $
    3.65
    
    
    $
    2.74
    
    
    $
    2.08
    
    
    $
    1.58Earnings per share, continuing operations,
diluted (c)
    
    $
    3.42
    
    
    $
    3.50
    
    
    $
    2.60
    
    
    $
    1.99
    
    
    $
    1.56Earnings per share, discontinued
operations, basic
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.03
    
    
    $
    0.02Earnings per share, discontinued
operations, diluted
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02
    
    
    $
    0.02Earnings per share, net income, basic
    
    $
    3.43
    
    
    $
    3.65
    
    
    $
    2.74
    
    
    $
    2.11
    
    
    $
    1.60Earnings per share, net income, diluted (c)
    
    $
    3.42
    
    
    $
    3.50
    
    
    $
    2.60
    
    
    $
    2.01
    
    
    $
    1.58Dividends declared per share
    
    $
    0.30
    
    
    $
    0.30
    
    
    $
    0.30
    
    
    $
    0.30
    
    
    $
    0.30Weighted average shares of common stock,
basic
    
    
    42,690
    
    
    
    42,577
    
    
    
    42,413
    
    
    
    41,393
    
    
    
    32,541Weighted average shares of common stock,
diluted
    
    
    42,861
    
    
    
    44,381
    
    
    
    44,684
    
    
    
    43,297
    
    
    
    32,845
 27




---



##### 



As of June 30,2009
    
    2008
    
    2007
    
    2006
    
    2005Balance Sheet and
Other Data:Cash and cash equivalents
    
    $
    209,832
    
    
    $
    124,632
    
    
    $
    248,186
    
    
    $
    165,345
    
    
    $
    168,076Working capital
    
    
    228,460
    
    
    
    172,241
    
    
    
    326,354
    
    
    
    197,312
    
    
    
    236,658Goodwill & Intangible
Assets
    
    
    728,987
    
    
    
    870,943
    
    
    
    594,651
    
    
    
    511,116
    
    
    
    22,664Total assets
    
    
    1,626,319
    
    
    
    1,715,976
    
    
    
    1,529,709
    
    
    
    1,240,359
    
    
    
    618,679Revolving credit facility
    
    
    
    
    
    
    
    
    
    
    105,000
    
    
    
    30,000
    
    
    
    Dividends declared
    
    
    12,785
    
    
    
    12,768
    
    
    
    12,717
    
    
    
    12,667
    
    
    
    9,756Stockholders equity
    
    
    853,638
    
    
    
    984,395
    
    
    
    787,519
    
    
    
    648,761
    
    
    
    234,203Shares outstanding
    
    
    42,657
    
    
    
    43,578
    
    
    
    42,299
    
    
    
    42,386
    
    
    
    32,627
 
 (a)
    
    The company has acquired many entities during the past five fiscal years including, WWLLP,
WWN and Heissmann. The WWLLP business combination was completed July 31, 2005 and as a
result, our financial statements reflect the consolidation of the European operations
beginning August 1, 2005. Prior to July 31, 2005, the company recorded its share of the
results of WWLLP using the equity method of accounting. This income is reflected in the
Income from affiliates line on our income statement. Our share of the results of our
affiliated captive insurance company, Professional Consultants Insurance Company, Inc. (PCIC),
and other investments in affiliates continues to be recorded using the equity method of
accounting, and is also reflected in the Income from affiliates line.(b)
    
    In fiscal year 2005 and 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.(c)
    
    The diluted earnings per share calculation for fiscal years 2008, 2007 and 2006 assume that
1,950,000 contingent shares related to the WWLLP business combination have been issued and
outstanding since July 31, 2005. The diluted earnings per share calculation for 2008 also
assumes that the 218,089 WWN contingent shares were also outstanding at the beginning of the
fiscal year. All of these shares were issued during the fourth quarter of fiscal year 2008. 28




---



##### 



Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 Special Note Regarding Forward-Looking Statements
  
    
    the ability of Watson Wyatt and Towers Perrin to obtain governmental and
regulatory approvals of the merger on the proposed terms and schedule;
 
    
    failure to complete the merger with Towers Perrin in certain circumstances could
require us to pay a termination fee or reimburse Towers Perrins expenses;
 
    
    failure to complete the merger with Towers Perrin could negatively impact Watson
Wyatt and its future operations;
 
    
    our ability to integrate acquired businesses into our own business, processes and
systems, and achieve the anticipated results;
 
    
    foreign currency exchange and interest rate fluctuations;
 
    
    general economic and business conditions that adversely affect us or our clients;
 
    
    our continued ability to recruit and retain qualified associates;
 
    
    the success of our marketing, client development and sales programs after our
acquisitions;
 
    
    our ability to maintain client relationships and to attract new clients after our
acquisitions;
 
    
    declines in demand for our services;
 
    
    outcomes of pending or future professional liability cases and the availability
and capacity of professional liability insurance to fund the outcome of pending cases or
future judgments or settlements;
 
    
    our ability to obtain professional liability insurance;
 
    
    a significant decrease in the demand for the consulting, actuarial and other
services we offer as a result of changing economic conditions or other factors;
 
    
    actions by competitors offering human resources consulting services, including
public accounting and consulting firms, technology consulting firms and Internet/intranet
development firms;
 
    
    our ability to achieve cost reductions after our recent acquisitions;
 
    
    exposure to liabilities that have not been expressly assumed in our acquisition
transactions;
 
    
    the level of capital resources required for future acquisitions and business
opportunities;
 
    
    regulatory developments abroad and domestically that impact our business practice;
 
    
    legislative and technological developments that may affect the demand for or costs
of our services;
  29




---



##### 



Executive Overview
    Benefits Group 
 Technology and Administration Solutions Group 
 Human Capital Group 
 Investment Consulting Group 
 Insurance and Financial Services Group 
 30




---



##### 



Financial Statement Overview
    Fiscal YearGeographic Region
    
    2009
    
    2008
    
    2007United States
    
    
    44
    %
    
    
    41
    %
    
    
    44
    %United Kingdom
    
    
    28
    
    
    
    32
    
    
    
    31Germany
    
    
    4
    
    
    
    5
    
    
    
    1Canada
    
    
    3
    
    
    
    4
    
    
    
    4Netherlands
    
    
    3
    
    
    
    4
    
    
    
    1Greater China
    
    
    3
    
    
    
    2
    
    
    
    2
     31




---



##### 



Critical Accounting Policies and Estimates
  Revenue Recognition
     32




---



##### 



Valuation of Billed and Unbilled Receivables from Clients
  Discretionary Compensation
   33




---



##### 



Income Taxes
 Accounting for Income
Taxes FIN 48.
 Pension Assumptions
   34




---



##### 



Year Ended June 30,2009
    
    2008
    
    2007Discount rate, Projected Benefit Obligation
    
    
    7.21
    %
    
    
    6.91
    %
    
    
    6.25
    %Discount rate, Net Periodic Benefit Cost
    
    
    6.91
    %
    
    
    6.25
    %
    
    
    6.25
    %Expected long-term rate of return on assets
    
    
    8.61
    %
    
    
    8.75
    %
    
    
    8.75
    %Rate of increase in compensation,
Projected Benefit Obligation
    
    
    3.29
    %
    
    
    4.08
    %
    
    
    3.84
    %Rate of increase in compensation, Net
Periodic Benefit Cost
    
    
    4.08
    %
    
    
    3.84
    %
    
    
    3.84
    %
    Effect on FY2009Change 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
    
    +$1.3
    million25 basis point increase in expected return on assets
    
    -$1.3
    million
  United Kingdom
  Year Ended June 30,2009
    
    2008
    
    2007Discount rate
    
    
    6.30
    %
    
    
    6.50
    %
    
    
    5.80
    %Expected long-term rate of return on assets
    
    
    6.81
    %
    
    
    6.46
    %
    
    
    5.69
    %Rate of increase in compensation
    
    
    5.45
    %
    
    
    5.65
    %
    
    
    4.95
    %
 35




---



##### 



Effect on FY2009Change in Assumption
    
    Pre-Tax Pension Expense25 basis point decrease in discount rate
    
    +$2.4
    million25 basis point increase in discount rate
    
    - $2.1
    million25 basis point decrease in expected return on assets
    
    + $0.8
    million25 basis point increase in expected return on assets
    
    - $0.8
    million
  Incurred But Not Reported Claims
  Goodwill and Intangible Assets
  36




---



##### 



Results of Operations
  Year ended June 30,2009
    
    2008
    
    2007Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of providing services:Salaries and employee benefits
    
    
    55.9
    %
    
    
    55.1
    %
    
    
    54.2
    %Professional and subcontracted services
    
    
    5.7
    %
    
    
    6.0
    %
    
    
    6.7
    %Occupancy, communications and other
    
    
    10.9
    %
    
    
    11.8
    %
    
    
    12.4
    %General and administrative expenses
    
    
    10.6
    %
    
    
    10.0
    %
    
    
    10.7
    %Depreciation and amortization
    
    
    4.4
    %
    
    
    4.1
    %
    
    
    3.9
    %87.5
    %
    
    
    87.1
    %
    
    
    87.9
    %Income from operations
    
    
    12.5
    %
    
    
    12.9
    %
    
    
    12.1
    %Income/(loss) from affiliates
    
    
    0.5
    %
    
    
    0.1
    %
    
    
    (0.4
    )%Interest expense
    
    
    (0.2
    )%
    
    
    (0.3
    )%
    
    
    (0.1
    )%Interest income
    
    
    0.1
    %
    
    
    0.3
    %
    
    
    0.3
    %Other non-operating income
    
    
    0.3
    %
    
    
    0.0
    %
    
    
    0.0
    %Income before income taxes
    
    
    13.2
    %
    
    
    13.0
    %
    
    
    11.9
    %Provision for income taxes
    
    
    4.5
    %
    
    
    4.2
    %
    
    
    4.0
    %Net income
    
    
    8.7
    %
    
    
    8.8
    %
    
    
    7.8
    %
 37




---



##### 



Fiscal Year Ended June 30, 2009, Compared to Fiscal Year Ended June 30, 2008
 Revenue
    
    
    Benefits revenue decreased $33.3 million, or 3 percent, compared with fiscal year 2008
due to the strengthening of the U.S. dollar. On a constant currency basis, revenue
increased 4 percent over fiscal year 2008 due to increased demand for our services.
 
    
    Technology and Administration Solutions revenue increased $5.1 million, or 3 percent,
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 percent, 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 percent, 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 percent, 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
  38




---



##### 



Professional and Subcontracted Services
  Occupancy, Communications and Other
  General and Administrative Expenses
  Depreciation and Amortization
  Income From Affiliates
  Interest Expense
  39




---



##### 



Interest Income
  Other Non-Operating Income
  Income Before Income Taxes
  Provision for Income Taxes
  Net Income
  Earnings Per Share
  40




---



##### 



Fiscal Year Ended June 30, 2008, Compared to Fiscal Year Ended June 30, 2007
 Revenue
    
    
    The Benefits Group revenue increased $172.6 million, or 21 percent, over fiscal year
2007. Approximately $97.7 million of the increase is due to the acquisitions of Heissmann
and Watson Wyatt Netherlands. The remainder of the increase is due to increased demand for
our services, primarily in the U.S. and Europe, and changes in foreign exchange rates. The
strengthening of the European and Canadian currencies accounted for 3 percentage points of
the increase. Excluding the impact of acquisitions and changes in foreign exchange rates,
the Benefits Group revenue growth was 6%.
 
    
    The Technology and Administration Solutions Group revenue increased $25.4 million, or 16
percent, over fiscal year 2007, largely due to an increase in administration services in
both the U.S. and Europe as well as the result of system modifications made to pension
administration systems as companies implemented provisions of the Pension Protection Act in
the U.S. The number of projects in service delivery in the U.S. was 142 at June 30, 2008,
an increase from 84 at June 30, 2007. The number of projects in implementation in the U.S.
was 50 at June 30, 2008, a decrease from 67 at June 30, 2007. In accordance with EITF
00-3, Application of AICPA Statement of Position 97-2 to Arrangements that Include the
Right to Use Software Stored on Another Entitys Hardware (EITF 00-3), the Company begins
recognizing revenue after projects go into service. No revenue are recognized during
project implementation. The strengthening of the European and Canadian currencies
accounted for 2 percentage points of the increase.
 
    
    The Human Capital Group revenue increased $26.1 million, or 15 percent, over fiscal year
2007, primarily due to increased demand for our compensation consulting and our data
services. The strengthening of the European and Canadian currencies accounted for 3
percentage points of the increase.
 
    
    The Investment Consulting Group revenue increased $40.5 million, or 31 percent, over
fiscal year 2007 due to an increase in demand for our services, especially investment
strategy advice. The strengthening of the European and Canadian currencies accounted for 4
percentage points of the increase.
 41




---



##### 




    
    The Insurance and Financial Services Group revenue increased $4.9 million, or 4 percent,
over fiscal year 2007 due to the strengthening of the European currencies. Revenue was
flat on a constant currency basis. The increase in revenue in Asia Pacific was offset by a
decline in revenue in Europe.
 Salaries and Employee Benefits
  Professional and Subcontracted Services
  Occupancy, Communications and Other
  General and Administrative Expenses
  Depreciation and Amortization
  42




---



##### 



Income/(Loss) From Affiliates
  Interest Income
  Interest Expense
  Other Non-Operating Income
  Income Before Income Taxes
  Provision for Income Taxes
  Net Income
  43




---



##### 



Earnings Per Share
  Liquidity and Capital Resources
     Cash From Operating Activities
   44




---



##### 



Cash Used in Investing Activities
   Cash (Used in) From Financing Activities
   Capital Commitments
  Dividends
   45




---



##### 



Off-Balance Sheet Arrangements and Contractual Obligations
 Remaining payments by fiscal year due as of June 30, 2009Less thanContractual Cash
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    More thanObligations (in thousands)
    
    Total
    
    Year
    
    1-3 Years
    
    3-5 Years
    
    5 Years (1)Lease commitments
    
    $
    320,781
    
    
    
    3,813
    
    
    
    163,704
    
    
    
    73,360
    
    
    
    79,904
 Operating Leases
 Pension Contributions.
 Uncertain Tax Positions
 Credit Agreement
    Risk Management
  46




---



##### 



47




---



##### 



Recent Accounting Pronouncements
       48




---



##### 



Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk.
  Interest Rate Risk
  Foreign Currency Risk
  49




---



##### 



Translation Exposure
   
 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
  50




---



##### 



(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.
    51




---



##### 



Internal Control
 Integrated Framework
    Internal Control 
Integrated Framework
 52




---



##### 



DELOITTE & TOUCHE LLP
 
 53




---



##### 



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.
  54




---



##### 



Part IV
 
 Item 15.
    
    Exhibits and Financial Statement Schedules
 a) Financial Information(1) Consolidated Financial Statements of Watson Wyatt Worldwide, Inc.Report of Independent Registered Public Accounting FirmFinancial Statements:Consolidated Statements of Operations for each of the three years
in the period ended June 30, 2009Consolidated Balance Sheets at June 30, 2009 and 2008Consolidated Statements of Cash Flows for each of the three years
in the period ended June 30, 2009Consolidated Statements of Changes in Stockholders Equity for each
of the three years in the period ended June 30, 2009Notes to the Consolidated Financial Statements(2) Consolidated Financial Statement Schedule for each of the three
years in the period ended June 30, 2009Valuation and Qualifying Accounts and Reserves (Schedule II)All other schedules are omitted because they are not applicable or
the required information is shown in the financial statements or
notes thereto.(3) ExhibitsSee (b) below.b) ExhibitsSee Exhibit Index on page 98.c) Financial Statement SchedulesNot applicable.
 55




---



##### 



SIGNATURES
  WATSON WYATT WORLDWIDE, INC.
(Registrant)Date: August 14, 2009
    By:
    /s/ John J. HaleyJohn J. HaleyPresident and Chief Executive
Officer  Signature
    
    Title
    
    Date/s/ John J. Haley
    
    President, Chief Executive Officer
    
    August 14, 2009John J. Haley
    
    and
Director/s/ Roger F. Millay
    
    Vice President and
    
    August 14, 2009Roger F. Millay
    
    Chief
Financial Officer/s/ Peter L. Childs
    
    Controller
    
    August 14, 2009Peter L. Childs/s/ John J. Gabarro
    
    Director
    
    August 14, 2009John J. Gabarro/s/ R. Michael McCullough
    
    Director
    
    August 14, 2009R. Michael McCullough/s/ Brendan ONeill
    
    Director
    
    August 14, 2009Brendan ONeill/s/ Linda D. Rabbitt
    
    Director
    
    August 14, 2009Linda D. Rabbitt/s/ Gilbert T. Ray
    
    Director
    
    August 14, 2009Gilbert T. Ray/s/ John C. Wright
    
    Director
    
    August 14, 2009John C. Wright
 56




---



##### 



Internal ControlIntegrated Framework
 DELOITTE & TOUCHE LLP
 
 57




---



##### 



WATSON
WYATT WORLDWIDE, INC.
 
 Consolidated Statements of Operations
 Year Ended June 302009
    
    
    2008
    
    
    2007Revenue
    
    $
    1,676,029
    
    
    $
    1,760,055
    
    
    $
    1,486,523Costs of providing services:Salaries and employee benefits
    
    
    936,825
    
    
    
    970,236
    
    
    
    805,571Professional and subcontracted
services
    
    
    95,690
    
    
    
    105,896
    
    
    
    99,943Occupancy, communications and other
    
    
    183,433
    
    
    
    208,058
    
    
    
    184,832General and administrative expenses
    
    
    177,250
    
    
    
    176,664
    
    
    
    159,637Depreciation and amortization
    
    
    73,448
    
    
    
    72,428
    
    
    
    57,2351,466,646
    
    
    
    1,533,282
    
    
    
    1,307,218Income from operations
    
    
    209,383
    
    
    
    226,773
    
    
    
    179,305Income/(Loss) from affiliates
    
    
    8,181
    
    
    
    2,067
    
    
    
    (5,500
    )Interest expense
    
    
    (2,778
    )
    
    
    (5,977
    )
    
    
    (1,581
    )Interest income
    
    
    2,022
    
    
    
    5,584
    
    
    
    4,066Other non-operating income
    
    
    4,926
    
    
    
    464
    
    
    
    178Income before income taxes
    
    
    221,734
    
    
    
    228,911
    
    
    
    176,468Provision for income taxes
    
    
    75,276
    
    
    
    73,470
    
    
    
    60,193Net income
    
    $
    146,458
    
    
    $
    155,441
    
    
    $
    116,275Earnings per share:Net income  Basic
    
    $
    3.43
    
    
    $
    3.65
    
    
    $
    2.74Net income  Diluted
    
    $
    3.42
    
    
    $
    3.50
    
    
    $
    2.60Weighted average shares of common stock,
basic (000)
    
    
    42,690
    
    
    
    42,577
    
    
    
    42,413Weighted average shares of common stock,
diluted (000)
    
    
    42,861
    
    
    
    44,381
    
    
    
    44,684
 
 58




---



##### 



WATSON
WYATT WORLDWIDE, INC.
 
 Consolidated Balance Sheets
 June 30,
    
    
    June 30,2009
    
    
    2008AssetsCash and cash equivalents
    
    $
    209,832
    
    
    $
    124,632Receivables from clients:Billed, net of allowances of $4,452 and $8,544
    
    
    190,991
    
    
    
    239,593Unbilled, at estimated net realizable value
    
    
    111,419
    
    
    
    126,163302,410
    
    
    
    365,756Deferred income taxes
    
    
    13,739
    
    
    
    18,576Other current assets
    
    
    39,619
    
    
    
    48,523Total current assets
    
    
    565,600
    
    
    
    557,487Investment in affiliate
    
    
    23,361
    
    
    
    8,526Fixed assets, net
    
    
    174,857
    
    
    
    184,684Deferred income taxes
    
    
    111,912
    
    
    
    72,572Goodwill
    
    
    542,754
    
    
    
    634,176Intangible assets, net
    
    
    186,233
    
    
    
    236,767Other assets
    
    
    21,602
    
    
    
    21,764Total Assets
    
    $
    1,626,319
    
    
    $
    1,715,976LiabilitiesAccounts payable and accrued liabilities, including
discretionary compensation
    
    $
    336,952
    
    
    $
    381,784Income taxes payable and deferred
    
    
    188
    
    
    
    3,462Total current liabilities
    
    
    337,140
    
    
    
    385,246Revolving credit facility
    
    
    
    
    
    
    Accrued retirement benefits
    
    
    292,555
    
    
    
    209,168Deferred rent and accrued lease losses
    
    
    28,434
    
    
    
    29,239Deferred income taxes and other long term tax liabilities
    
    
    14,667
    
    
    
    13,430Other noncurrent liabilities
    
    
    99,885
    
    
    
    94,498Total Liabilities
    
    
    772,681
    
    
    
    731,581Commitments and contingencies (Note 13)Stockholders EquityClass A Common Stock  $.01 par value:99,000,000 shares authorized;
43,813,451 and 43,813,451 issued and
42,657,431 and 43,578,268 outstanding
    
    
    438
    
    
    
    438Additional paid-in capital
    
    
    452,938
    
    
    
    456,681Treasury stock, at cost  1,156,020 and 235,183 shares
    
    
    (63,299
    )
    
    
    (13,222
    )Retained earnings
    
    
    608,634
    
    
    
    474,961Accumulated other comprehensive (loss)/income
    
    
    (145,073
    )
    
    
    65,537Total Stockholders Equity
    
    
    853,638
    
    
    
    984,395Total Liabilities and Stockholders Equity
    
    $
    1,626,319
    
    
    $
    1,715,976
 
 59




---



##### 



WATSON
WYATT WORLDWIDE, INC.
 
 Consolidated Statements of Cash Flows
 Year ended June 302009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    146,458
    
    
    $
    155,441
    
    
    $
    116,275Adjustments to reconcile net income to net cash
from operating activities:Provision for doubtful receivables from clients
    
    
    5,355
    
    
    
    11,207
    
    
    
    8,551Depreciation
    
    
    59,556
    
    
    
    56,031
    
    
    
    47,090Amortization of intangible assets
    
    
    13,892
    
    
    
    16,397
    
    
    
    10,145Provision for deferred income taxes
    
    
    14,205
    
    
    
    8,468
    
    
    
    8,418(Income)/Loss from affiliates
    
    
    (8,181
    )
    
    
    (2,067
    )
    
    
    5,500Distributions from affiliates
    
    
    270
    
    
    
    
    
    
    
    Other, net
    
    
    (1,542
    )
    
    
    8,640
    
    
    
    977Changes in operating assets and liabilities (net of business
acquisitions and
discontinued operations):Receivables from clients
    
    
    57,991
    
    
    
    (22,057
    )
    
    
    (43,464
    )Other current assets
    
    
    8,904
    
    
    
    (1,885
    )
    
    
    (24,699
    )Other assets
    
    
    (3,497
    )
    
    
    37,080
    
    
    
    1,324Accounts payable and accrued liabilities
    
    
    (27,408
    )
    
    
    79,898
    
    
    
    19,246Income taxes payable
    
    
    (2,262
    )
    
    
    (2,080
    )
    
    
    4,407Accrued retirement benefits
    
    
    (38,922
    )
    
    
    (61,682
    )
    
    
    (2,831
    )Deferred rent and accrued lease losses
    
    
    (805
    )
    
    
    (3,447
    )
    
    
    54Other noncurrent liabilities
    
    
    3,533
    
    
    
    3,788
    
    
    
    16,119Cash flows from operating activities:
    
    
    227,547
    
    
    
    283,732
    
    
    
    167,112Cash flows used in investing activities:Business acquisitions and contingent
consideration payments
    
    
    (1,185
    )
    
    
    (138,830
    )
    
    
    (48,099
    )Purchases of fixed assets
    
    
    (39,195
    )
    
    
    (38,694
    )
    
    
    (43,989
    )Capitalized software costs
    
    
    (23,374
    )
    
    
    (21,904
    )
    
    
    (22,295
    )Increase in restricted cash
    
    
    
    
    
    
    (2,331
    )
    
    
    Investment in affiliates
    
    
    (2,302
    )
    
    
    (3,316
    )
    
    
    Contingent proceeds from divestitures
    
    
    4,926
    
    
    
    464
    
    
    
    178Cash flows used in investing activities:
    
    
    (61,130
    )
    
    
    (204,611
    )
    
    
    (114,205
    )Cash flows (used in)/from financing activities
(Repayments)/borrowings under Credit Facility
    
    
    
    
    
    
    (105,000
    )
    
    
    75,000Dividends paid
    
    
    (12,785
    )
    
    
    (12,768
    )
    
    
    (12,717
    )Repurchases of common stock
    
    
    (77,443
    )
    
    
    (82,031
    )
    
    
    (48,303
    )Issuance of common stock and excess tax benefit
    
    
    6,509
    
    
    
    11,046
    
    
    
    13,245Cash flows (used in)/from financing activities
    
    
    (83,719
    )
    
    
    (188,753
    )
    
    
    27,225Effect of exchange rates on cash
    
    
    2,502
    
    
    
    (13,922
    )
    
    
    2,709Increase/(decrease) in cash and cash equivalents
    
    
    85,200
    
    
    
    (123,554
    )
    
    
    82,841Cash and cash equivalents at beginning of period
    
    
    124,632
    
    
    
    248,186
    
    
    
    165,345Cash and cash equivalents at end of period
    
    $
    209,832
    
    
    $
    124,632
    
    
    $
    248,186Supplemental disclosures:Cash paid for interest
    
    $
    2,780
    
    
    $
    5,951
    
    
    $
    1,822Cash paid for income taxes, net of refunds
    
    $
    66,480
    
    
    $
    76,324
    
    
    $
    68,893
 
 60




---



##### 



WATSON
WYATT WORLDWIDE, INC.
 
 Consolidated Statement of Changes in Stockholders Equity
  Class ACommonStock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedOutstanding
    
    
    Class A
    
    
    Additional
    
    
    Treasury
    
    
    
    
    
    
    Other(number of shares,
    
    
    Common
    
    
    Paid-in
    
    
    Stock,
    
    
    Retained
    
    
    Comprehensivein thousands)
    
    
    Stock
    
    
    Capital
    
    
    at Cost
    
    
    Earnings
    
    
    (Loss)/IncomeBalance at June 30, 2006
    
    
    42,386
    
    
    $
    425
    
    
    $
    386,392
    
    
    $
    (2,134
    )
    
    $
    242,599
    
    
    $
    21,479
    
    
    $
    648,761Cumulative adjustment to retained earnings for
adoption of SAB 108, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,056
    )
    
    
    
    
    
    
    (10,056
    )Adoption of FAS 158, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,412
    )
    
    
    (1,412
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116,275
    
    
    
    
    
    
    
    116,275Additional minimum pension liability, net
of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,716
    
    
    
    6,716Foreign currency translation adjustment,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,937
    
    
    
    50,937Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    173,928Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,717
    )
    
    
    
    
    
    
    (12,717
    )Repurchases of common stock
    
    
    (1,083
    )
    
    
    
    
    
    
    
    
    
    
    (48,303
    )
    
    
    
    
    
    
    
    
    
    
    (48,303
    )Issuances of common stock  acquisitions
    
    
    252
    
    
    
    3
    
    
    
    11,274
    
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    11,376Issuances of common stock and excess tax
benefit
    
    
    744
    
    
    
    
    
    
    
    (2,145
    )
    
    
    28,087
    
    
    
    
    
    
    
    
    
    
    
    25,942Balance 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,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (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
    )
    
    $
    853,638




---



##### 



WATSON WYATT WORLDWIDE, INC.
 
 Notes to the Consolidated Financial Statements
(Tabular Amounts in Thousands of U.S. Dollars Except Share and Percentage Data)
 Note 1  Summary of Significant Accounting Policies
 Nature of the Business th
 Principles of Consolidation
 Use of Estimates
 Cash and Cash Equivalents
 Receivables from Clients
 Revenue Recognition
 62




---



##### 



Foreign Currency Translation
 63




---



##### 



Fair Value of Financial Instruments
 Concentration of Credit Risk
 Incurred But Not Reported (IBNR) Claims
 Stock-based Compensation
    Earnings per Share
 64




---



##### 



Goodwill and Intangible Assets
 Recent Accounting Pronouncements
     65




---



##### 



66




---



##### 



Note 2
 Proposed Merger and Completed Acquisitions
 Proposed Merger with Towers, Perrin, Forster & Crosby, Inc.
         67




---



##### 



Fiscal Year 2008 Acquisitions
 Heissmann  
 WisdomNet
 Marcu
 68




---



##### 



Fiscal Year 2007 Acquisitions
 Watson Wyatt Netherlands 
 Note 3  Investments in Affiliates
 PCIC
      2009
    
    2008
    
    2007Revenue
    
    $
    45,194
    
    
    $
    45,687
    
    
    $
    38,010Operating Expenses
    
    
    17,162
    
    
    
    36,514
    
    
    
    63,246Income before taxes
    
    
    28,032
    
    
    
    9,173
    
    
    
    (25,236
    )Net income/(loss)
    
    $
    18,279
    
    
    $
    6,051
    
    
    $
    (16,124
    )
 69




---



##### 



December 31,2008
    
    
    2007Current assets
    
    $
    194,620
    
    
    $
    172,639Noncurrent assets
    
    
    66,655
    
    
    
    64,552Total assets
    
    $
    261,275
    
    
    $
    237,191Current liabilities
    
    $
    27,984
    
    
    $
    28,751Noncurrent liabilities
    
    
    201,458
    
    
    
    198,584Stockholders equity
    
    
    31,833
    
    
    
    9,856Total liabilities and
stockholders equity
    
    $
    261,275
    
    
    $
    237,191
 Fifth Quadrant
  Dubai
  IFA
   70




---



##### 



Note 4  Fixed Assets
   June 30,2009
    
    
    2008Furniture, fixtures and equipment
    
    $
    147,460
    
    
    $
    193,554Computer software
    
    
    212,172
    
    
    
    184,517Leasehold improvements
    
    
    105,618
    
    
    
    79,250465,250
    
    
    
    457,321Less: accumulated depreciation and amortization
    
    
    (290,393
    )
    
    
    (272,637
    )Fixed assets, net
    
    $
    174,857
    
    
    $
    184,684
  Note 5  Retirement Benefits
 Defined Benefit Plans
   71




---



##### 



2010 (Projected)
    
    2009 (Actual)
    
    2008 (Actual)U.S.
    
    $
    30,000
    
    
    $
    30,000
    
    
    $
    15,130Canada
    
    
    2,101
    
    
    
    1,359
    
    
    
    1,535U.K.
    
    
    16,566
    
    
    
    23,872
    
    
    
    19,577
   Year Ended June 30,2009
    
    2008
    
    2007Discount rate, Projected Benefit Obligation
    
    
    7.21
    %
    
    
    6.91
    %
    
    
    6.25
    %Discount rate, Net Periodic Benefit Cost
    
    
    6.91
    %
    
    
    6.25
    %
    
    
    6.25
    %Expected long-term rate of return on assets
    
    
    8.61
    %
    
    
    8.75
    %
    
    
    8.75
    %Rate of increase in compensation,
Projected Benefit Obligation
    
    
    3.29
    %
    
    
    4.08
    %
    
    
    3.84
    %Rate of increase in compensation, Net
Periodic Benefit Cost
    
    
    4.08
    %
    
    
    3.84
    %
    
    
    3.84
    %
   72




---



##### 



Year Ended June 30,2009
    
    2008
    
    2007Discount rate, Projected Benefit Obligation
    
    
    6.30
    %
    
    
    6.50
    %
    
    
    5.80
    %Discount rate, Net Periodic Benefit Cost
    
    
    6.50
    %
    
    
    5.80
    %
    
    
    5.10
    %Expected long-term rate of return on assets
    
    
    6.81
    %
    
    
    6.46
    %
    
    
    5.69
    %Rate of increase in compensation,
Projected Benefit Obligation
    
    
    5.45
    %
    
    
    5.65
    %
    
    
    4.95
    %Rate of increase in compensation, Net
Periodic Benefit Cost
    
    
    5.65
    %
    
    
    4.95
    %
    
    
    4.75
    %
    Year Ended June 30, 2009
    
    
    Year Ended June 30, 2008
    
    
    Year Ended June 30, 2007North
    
    
    
    
    
    
    North
    
    
    
    
    
    
    NorthAmerica
    
    
    U.K.
    
    
    America
    
    
    U.K.
    
    
    America
    
    
    U.K.Service cost
    
    $
    24,771
    
    
    $
    5,755
    
    
    $
    30,592
    
    
    $
    9,023
    
    
    $
    26,275
    
    
    $
    13,461Interest cost
    
    
    48,504
    
    
    
    20,337
    
    
    
    44,918
    
    
    
    20,929
    
    
    
    40,159
    
    
    
    18,061Expected return on
plan assets
    
    
    (50,725
    )
    
    
    (19,920
    )
    
    
    (55,622
    )
    
    
    (23,328
    )
    
    
    (46,845
    )
    
    
    (18,123
    )Amortization of
transition
obligation
    
    
    
    
    
    
    
    
    
    
    (65
    )
    
    
    
    
    
    
    (39
    )
    
    
    Amortization of net
unrecognized
losses/(gains)
    
    
    8,649
    
    
    
    (328
    )
    
    
    6,222
    
    
    
    (2,806
    )
    
    
    8,594
    
    
    
    (555
    )Amortization of
prior service
cost/(credit)
    
    
    (2,279
    )
    
    
    42
    
    
    
    (2,594
    )
    
    
    22
    
    
    
    (2,934
    )
    
    
    754Net periodic
pension cost
    
    $
    28,920
    
    
    $
    5,886
    
    
    $
    23,451
    
    
    $
    3,840
    
    
    $
    25,210
    
    
    $
    13,598
 73




---



##### 



June 30, 2009
    
    
    June 30, 2008North
    
    
    
    
    
    
    NorthAmerica
    
    
    U.K.
    
    
    America
    
    
    U.K.Change in Benefit ObligationBenefit obligation at beginning of year
    
    $
    612,618
    
    
    $
    384,901
    
    
    $
    632,038
    
    
    $
    363,203Service cost
    
    
    19,011
    
    
    
    5,755
    
    
    
    23,781
    
    
    
    9,023Interest cost
    
    
    41,480
    
    
    
    20,337
    
    
    
    39,065
    
    
    
    20,929Actuarial (gains)/losses
    
    
    (48,552
    )
    
    
    (614
    )
    
    
    (64,630
    )
    
    
    (1,414
    )Benefit payments
    
    
    (22,667
    )
    
    
    (5,096
    )
    
    
    (20,802
    )
    
    
    (6,314
    )Change in assumptions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Settlements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan amendments & other
    
    
    
    
    
    
    779
    
    
    
    
    
    
    
    2,645Foreign currency adjustment
    
    
    (8,165
    )
    
    
    (66,785
    )
    
    
    3,166
    
    
    
    (3,171
    )Benefit obligation at end of year
    
    
    593,725
    
    
    $
    339,277
    
    
    $
    612,618
    
    
    $
    384,901Change in Plan AssetsFair value of plan assets, beginning of year
    
    $
    598,463
    
    
    $
    364,868
    
    
    $
    639,378
    
    
    $
    354,410Actual return on plan assets
    
    
    (81,791
    )
    
    
    (29,176
    )
    
    
    (39,718
    )
    
    
    (1,575
    )Company contributions
    
    
    31,359
    
    
    
    23,872
    
    
    
    16,665
    
    
    
    19,577Benefit payments
    
    
    (22,667
    )
    
    
    (5,096
    )
    
    
    (20,802
    )
    
    
    (6,314
    )Participant contributions
    
    
    
    
    
    
    1,924
    
    
    
    
    
    
    
    1,760Foreign currency adjustment
    
    
    (8,042
    )
    
    
    (63,537
    )
    
    
    2,940
    
    
    
    (2,990
    )Fair value of plan assets, end of year
    
    $
    517,322
    
    
    $
    292,855
    
    
    $
    598,463
    
    
    $
    364,868Funded status at end of year
    
    $
    (76,403
    )
    
    $
    (46,422
    )
    
    $
    (14,155
    )
    
    $
    (20,033
    )
 June 30, 2009
    
    
    June 30, 2008North
    
    
    
    
    
    
    NorthAmerica
    
    
    U.K.
    
    
    America
    
    
    U.K.Amounts recognized in
Consolidated Balance Sheets
consist of :Noncurrent assets
    
    $
    
    
    
    $
    
    
    
    $
    326
    
    
    $
    Current liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Noncurrent liabilities
    
    
    (76,404
    )
    
    
    (46,422
    )
    
    
    (14,482
    )
    
    
    (20,033
    )Net Amount Recognized
    
    $
    (76,404
    )
    
    $
    (46,422
    )
    
    $
    (14,156
    )
    
    $
    (20,033
    )Amounts recognized in
Accumulated Other Comprehensive
Income consist of :Net actuarial loss/(gain)
    
    
    157,022
    
    
    
    43,022
    
    
    
    81,833
    
    
    
    (6,083
    )Net prior service cost/(credit)
    
    
    (11,043
    )
    
    
    673
    
    
    
    (13,105
    )
    
    
    866Net transition obligation/(asset)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated Other Comprehensive
Income
    
    $
    145,979
    
    
    $
    43,695
    
    
    $
    68,728
    
    
    $
    (5,217
    )
 74




---



##### 



June 30,2009
    
    
    2008Change in Benefit ObligationBenefit obligation, beginning of year
    
    $
    100,682
    
    
    $
    99,959Service cost
    
    
    5,760
    
    
    
    6,811Interest cost
    
    
    7,024
    
    
    
    5,853Actuarial (gains)/losses
    
    
    486
    
    
    
    (4,254
    )Benefit payments
    
    
    (10,783
    )
    
    
    (8,349
    )Foreign currency adjustment
    
    
    (1,886
    )
    
    
    662Benefit obligation, end of year
    
    $
    101,283
    
    
    $
    100,682Change in Plan AssetsFair value of plan assets, beginning of year
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    
    
    
    
    Company contributions
    
    
    10,783
    
    
    
    8,349Benefit payments
    
    
    (10,783
    )
    
    
    (8,349
    )Participant contributions
    
    
    
    
    
    
    Foreign currency adjustment
    
    
    
    
    
    
    Fair value of plan assets, end of year
    
    $
    
    
    
    $
    Funded status at end of year
    
    $
    (101,283
    )
    
    $
    (100,682
    )Amounts recognized in Consolidated Balance
Sheets consist of:Noncurrent assets
    
    $
    
    
    
    $
    Current liabilities
    
    
    (9,818
    )
    
    
    (8,470
    )Noncurrent liabilities
    
    
    (91,465
    )
    
    
    (92,212
    )Net Amount Recognized
    
    $
    (101,283
    )
    
    $
    (100,682
    )Amounts recognized in Accumulated
Comprehensive Income consist of:Net actuarial loss/(gain)
    
    
    4,444
    
    
    
    4,782Net prior service cost/(credit)
    
    
    (1,136
    )
    
    
    (1,304
    )Net transition obligation/(asset)
    
    
    
    
    
    
    Accumulated Other Comprehensive Income
    
    $
    3,308
    
    
    $
    3,478Projected Benefit Obligation
    
    $
    101,283
    
    
    $
    100,682Accumulated Benefit Obligation
    
    
    87,226
    
    
    
    81,427Fair value of plan assets
    
    
    
    
    
    
    
 75




---



##### 



U.S. Plan Assets at
    
    U.K. Plan Assets atJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Asset CategoryEquity securities
    
    
    61.0
    %
    
    
    61.0
    %
    
    
    34.0
    %
    
    
    32.4
    %Debt securities
    
    
    35.0
    
    
    
    35.8
    
    
    
    55.8
    
    
    
    58.0Real estate
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    5.9Other
    
    
    4.0
    
    
    
    3.2
    
    
    
    6.9
    
    
    
    3.7Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
      76




---



##### 



Fiscal Year
    
    Benefit PaymentsNorth America
    
    
    U.K.
    
    
    Total2010
    
    $
    33,724
    
    
    
    5,923
    
    
    $
    39,6472011
    
    
    35,825
    
    
    
    6,417
    
    
    
    42,2422012
    
    
    37,525
    
    
    
    6,746
    
    
    
    44,2712013
    
    
    40,319
    
    
    
    7,569
    
    
    
    47,8882014
    
    
    42,534
    
    
    
    8,227
    
    
    
    50,761Years 2015-2019
    
    
    254,760
    
    
    
    50,514
    
    
    
    305,274$
    444,687
    
    
    
    85,396
    
    
    $
    530,083
 Defined Contribution Plans
   Health Care Benefits
  Postretirement Benefits
  77




---



##### 



Year Ended June 30,2009
    
    2008
    
    2007Health care cost trend, accumulated benefit
obligation:Pre-65 benefits
(decreasing to 5.00% for 2010 and thereafter)
    
    
    9.50
    %
    
    
    10.00
    %
    
    
    8.00
    %Post-65 benefits
(decreasing to 5.00% for 2010 and thereafter)
    
    
    9.50
    %
    
    
    10.00
    %
    
    
    9.00
    %Discount rate, accumulated benefit obligation
postretirement benefit
    
    
    7.25
    %
    
    
    7.00
    %
    
    
    6.25
    %
   1%
    
    1%Increase
    
    DecreaseEffect on net periodic postretirement
benefit cost in fiscal year 2009
    
    $
    200
    
    
    $
    (157
    )Effect on accumulated postretirement
benefit obligation as of June 30, 2009
    
    
    1,925
    
    
    
    (1,574
    )
  Year Ended June 30,2009
    
    
    2008
    
    
    2007Service cost
    
    $
    1,157
    
    
    $
    1,543
    
    
    $
    1,423Interest cost
    
    
    2,495
    
    
    
    2,724
    
    
    
    2,646Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    Amortization of net unrecognized (gains)/losses
    
    
    (1,135
    )
    
    
    (478
    )
    
    
    (395
    )Amortization of prior service cost
    
    
    (661
    )
    
    
    (664
    )
    
    
    (661
    )Net periodic postretirement benefit cost
    
    $
    1,856
    
    
    $
    3,125
    
    
    $
    3,013
 78




---



##### 



June 30,2009
    
    
    2008Change in Benefit ObligationBenefit obligation, beginning of year
    
    $
    44,156
    
    
    $
    48,212Service cost
    
    
    1,157
    
    
    
    1,543Interest cost
    
    
    2,495
    
    
    
    2,724Participant contributions
    
    
    2,145
    
    
    
    2,020Actuarial (gains)/losses
    
    
    (5,237
    )
    
    
    (7,406
    )Benefit payments
    
    
    (4,191
    )
    
    
    (3,559
    )Other
    
    
    
    
    
    
    Foreign currency adjustment
    
    
    (1,581
    )
    
    
    622Benefit obligation, end of year
    
    $
    38,944
    
    
    $
    44,156Change in Plan AssetsFair value of plan assets, beginning of year
    
    $
    
    
    
    $
    Company contributions
    
    
    2,046
    
    
    
    1,539Participant contributions
    
    
    2,145
    
    
    
    2,020Benefit payments
    
    
    (4,191
    )
    
    
    (3,559
    )Fair value of plan assets, end of year
    
    $
    
    
    
    $
    Funded status at end of year
    
    $
    (38,944
    )
    
    $
    (44,156
    )Amounts recognized in Consolidated Balance Sheets
consist ofNoncurrent assets
    
    $
    
    
    
    $
    Current liabilities
    
    
    (2,507
    )
    
    
    (4,933
    )Noncurrent liabilities
    
    
    (36,437
    )
    
    
    (39,223
    )Net Amount Recognized
    
    $
    (38,944
    )
    
    $
    (44,156
    )Amounts recognized in Accumulated Comprehensive
Income consist ofNet actuarial loss/(gain)
    
    
    (16,673
    )
    
    
    (12,535
    )Net prior service cost/(credit)
    
    
    (3,527
    )
    
    
    (4,208
    )Net transition obligation/(asset)
    
    
    
    
    
    
    Accumulated Other Comprehensive Income
    
    $
    (20,200
    )
    
    $
    (16,743
    )
 79




---



##### 



Fiscal
    
    BenefitYear
    
    Payments2010
    
    $
    4,9692011
    
    
    5,4512012
    
    
    5,9742013
    
    
    6,4382014
    
    
    6,932Years 2015-2019
    
    
    41,591$
    71,355
 Note 6  Accounts Payable and Accrued Liabilities, Including Discretionary Compensation
  June 30,2009
    
    
    2008Accounts payable and accrued liabilities
    
    $
    78,959
    
    
    $
    81,874Accrued salaries and bonuses
    
    
    162,352
    
    
    
    188,763Current portion of defined benefit retirement plans
and postretirement benefits other than pensions
    
    
    17,202
    
    
    
    16,492Accrued vacation
    
    
    33,057
    
    
    
    34,043Advance billings deferred revenue
    
    
    42,185
    
    
    
    57,413Dividends payable
    
    
    3,197
    
    
    
    3,199Total accounts payable and accrued liabilities
    
    $
    336,952
    
    
    $
    381,784
 Note 7  Leases
  80




---



##### 



Fiscal
    
    LeaseYear
    
    Commitments(in 000s)2010
    
    $
    64,1422011
    
    
    55,8912012
    
    
    47,4842013
    
    
    41,0922014
    
    
    32,268Thereafter
    
    
    79,904Total
    
    $
    320,781
  Note 8  Line of Credit
    81




---



##### 



Note 9  Share-based Compensation
 Share-based Compensation Plans
  2001 Employee Stock Purchase Plan
  2001 Deferred Stock Unit Plan for Selected Employees
 Deferred Stock Units
   SBI Program
 82




---



##### 



Number of
    
    
    
    
    
    Weighted AverageShares
    
    
    
    
    
    Fair Value(in 000s)Nonvested at June 30, 2008
    
    
    352
    
    
    
    
    
    
    $
    49.48Granted
    
    
    58
    
    
    
    
    
    
    
    52.89Vested
    
    
    (93
    )
    
    
    
    
    
    
    35.14Forfeited (1)
    
    
    (263
    )
    
    
    
    
    
    
    55.10Nonvested and expected to vest as of June 30, 2009
    
    
    54
    
    
    
    
    
    
    $
    50.48
 
 (1)
    
    Forfeited shares represent performance shares that are not estimated to vest for the
year ended June 30, 2009.  Amended Compensation Plan for Outside Directors
   83




---



##### 



2000 Long-Term Incentive Plan
     Weighted
    
    
    
    
    
    AverageAverage
    
    Aggregate
    
    RemainingNumber of
    
    
    
    
    
    Exercise
    
    Intrinsic
    
    ContractualShares
    
    
    
    
    
    Price
    
    Value
    
    Life (years)(in 000s)
    
    
    
    
    
    
    
    
    
    (in 000s)Outstanding at June 30, 2008
    
    
    8
    
    
    
    
    
    
    $
    21.73
    
    
    $
    166,768Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (1
    )
    
    
    
    
    
    
    20.54
    
    
    
    18,757Forfeited
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    (7
    )
    
    
    
    
    
    
    21.81
    
    
    
    156,087Outstanding at June 30, 2009
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    Exercisable Options at June 30, 2009
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
  84




---



##### 



Note 10  Goodwill and Intangible Assets
  Technologyand
    
    
    
    
    
    
    
    
    
    
    InsuranceAdministration
    
    
    Human
    
    
    Investment
    
    
    & FinancialBenefits
    
    
    Solutions
    
    
    Capital
    
    
    Consulting
    
    
    ServicesGroup
    
    
    Group
    
    
    Group
    
    
    Group
    
    
    Group
    
    
    All Other
    
    
    TotalBalance as of
June 30, 2008
    
    $
    397,721
    
    
    $
    61,709
    
    
    $
    35,056
    
    
    $
    61,977
    
    
    $
    76,499
    
    
    $
    1,214
    
    
    $
    634,176Goodwill acquired
during the year and
contingent payments
    
    
    472
    
    
    
    
    
    
    
    664
    
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    1,185Translation adjustment
    
    
    (55,035
    )
    
    
    (9,913
    )
    
    
    (5,076
    )
    
    
    (9,669
    )
    
    
    (12,914
    )
    
    
    
    
    
    
    (92,607
    )Balance as of
June 30, 2009
    
    $
    343,158
    
    
    $
    51,796
    
    
    $
    30,644
    
    
    $
    52,308
    
    
    $
    63,634
    
    
    $
    1,214
    
    
    $
    542,754
  Trademark
    
    
    Customer& trade
    
    
    related
    
    
    Core/developed
    
    
    Non-competename
    
    
    intangible
    
    
    technology
    
    
    agreements
    
    
    TotalBalance as
of June 30,
2008
    
    $
    121,885
    
    
    $
    101,592
    
    
    $
    12,604
    
    
    $
    686
    
    
    $
    236,767Intangible assets acquired
during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization expense
    
    
    (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
    
    
    $
    186,233
  Fiscal year 2009
    
    
    Fiscal year 2008Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationIntangible assets:Trademark and trade name
    
    $
    100,913
    
    
    $
    402
    
    
    $
    122,089
    
    
    $
    204Customer related intangibles
    
    
    108,821
    
    
    
    29,978
    
    
    
    122,807
    
    
    
    21,215Core/developed technology
    
    
    23,525
    
    
    
    16,768
    
    
    
    24,965
    
    
    
    12,361Non-compete agreements
    
    
    1,273
    
    
    
    1,151
    
    
    
    1,316
    
    
    
    630Total intangible assets
    
    $
    234,532
    
    
    $
    48,299
    
    
    $
    271,177
    
    
    $
    34,410
  85




---



##### 



Fiscal year ending June 30,
    
    Amount2010
    
    $
    13,3472011
    
    
    10,2362012
    
    
    9,9652013
    
    
    8,8882014
    
    
    8,888Thereafter
    
    
    34,398Total estimated amortization expense
    
    $
    85,722
 Note 11  Income Taxes
  Year Ended June 30,2009
    
    
    2008
    
    
    2007Current tax (benefit) expense:U.S.
    
    $
    31,899
    
    
    $
    29,278
    
    
    $
    40,485State and local
    
    
    7,067
    
    
    
    6,781
    
    
    
    5,439Foreign
    
    
    22,105
    
    
    
    25,861
    
    
    
    17,35261,071
    
    
    
    61,920
    
    
    
    63,276Deferred tax (benefit) expense:U.S.
    
    
    7,405
    
    
    
    6,031
    
    
    
    (10,585
    )State and local
    
    
    2,359
    
    
    
    1,397
    
    
    
    (835
    )Foreign
    
    
    4,441
    
    
    
    4,122
    
    
    
    8,33714,205
    
    
    
    11,550
    
    
    
    (3,083
    )Total provision for income taxes
    
    $
    75,276
    
    
    $
    73,470
    
    
    $
    60,193
  86




---



##### 



June 30,2009
    
    
    2008Prepaids
    
    $
    (1,977
    )
    
    $
    (1,589
    )Depreciation and amortization
    
    
    (48,372
    )
    
    
    (37,706
    )Goodwill
    
    
    (12,456
    )
    
    
    (10,830
    )Other
    
    
    (3,166
    )
    
    
    (10,792
    )Gross deferred tax liabilities
    
    
    (65,971
    )
    
    
    (60,917
    )Accrued retirement benefits
    
    
    94,888
    
    
    
    72,558Deferred rent
    
    
    4,142
    
    
    
    5,697Other
    
    
    3,847
    
    
    
    8,724Net operating loss carryforwards
    
    
    14,523
    
    
    
    12,212Share based compensation
    
    
    3,229
    
    
    
    3,010Accrued liabilities
    
    
    17,207
    
    
    
    15,910Capitalized expenditures
    
    
    732
    
    
    
    803Accrued compensation
    
    
    15,535
    
    
    
    12,162Deferred revenue
    
    
    39,424
    
    
    
    30,972Foreign tax credit
    
    
    5,727
    
    
    
    1,199Gross deferred tax assets
    
    
    199,254
    
    
    
    163,247Deferred tax assets valuation allowance
    
    
    (10,884
    )
    
    
    (12,524
    )Net deferred tax asset
    
    $
    122,399
    
    
    $
    89,806
     2009
    
    
    2008
    
    
    2007Domestic
    
    $
    127,811
    
    
    $
    111,587
    
    
    $
    97,239Foreign
    
    
    93,923
    
    
    
    117,324
    
    
    
    79,229$
    221,734
    
    
    $
    228,911
    
    
    $
    176,468
 87




---



##### 



Year Ended June 302009
    
    
    2008
    
    
    2007Tax provision at U.S. federal statutory tax
rate of 35 percent
    
    $
    77,607
    
    
    $
    80,119
    
    
    $
    61,764Increase (reduction) resulting from:Foreign income tax rate differential, net
    
    
    (7,613
    )
    
    
    (10,955
    )
    
    
    (5,678
    )State income taxes, net of federal tax effect
    
    
    6,579
    
    
    
    4,030
    
    
    
    4,604Non-deductible expenses and foreign dividend
    
    
    4,764
    
    
    
    8,670
    
    
    
    5,999Tax credits
    
    
    (4,702
    )
    
    
    (11,484
    )
    
    
    (8,338
    )Other
    
    
    (1,359
    )
    
    
    3,090
    
    
    
    1,842Income tax provision
    
    $
    75,276
    
    
    $
    73,470
    
    
    $
    60,193
   2009
    
    
    2008Balance at July 1
    
    $
    11,034
    
    
    $
    16,352Increases related to tax positions in prior years
    
    
    248
    
    
    
    434Decreases related to tax positions in prior years
    
    
    (213
    )
    
    
    (6,386
    )Decreases related to settlements
    
    
    (786
    )
    
    
    (758
    )Decreases related to lapse in statute of limitations
    
    
    (1,562
    )
    
    
    (615
    )Increases related to current year tax positions
    
    
    1,116
    
    
    
    2,007Cumulative translation adjustment
    
    
    (423
    )
    
    
    Balances at June 30
    
    $
    9,414
    
    
    $
    11,034
  88




---



##### 



Open Tax Years(fiscal year ending in)United States  federal
    
    2006 and forwardUnited States  various states
    
    2004 and forwardCanada  federal
    
    2005 and forwardGermany
    
    2003 and forwardUnited Kingdom
    
    2006 and forward
 Note 12  Segment Information
  (1)
    
    Benefits Group(2)
    
    Human Capital Group(3)
    
    Technology and Administration Solutions Group(4)
    
    Investment Consulting Group(5)
    
    Insurance & Financial Services Group
   89




---



##### 



Technology and
    
    Investment
    
    Insurance &Benefits
    
    Human Capital
    
    Administration
    
    Consulting
    
    Financial ServicesGroup
    
    Group
    
    Solutions
    
    Group
    
    Group
    
    Other
    
    TotalRevenue (net
of reimbursable
expenses)
    
    $
    960,031
    
    
    $
    172,737
    
    
    $
    188,021
    
    
    $
    160,819
    
    
    $
    117,159
    
    
    $
    38,735
    
    
    $
    1,637,502Net operating income
    
    
    286,228
    
    
    
    11,231
    
    
    
    44,768
    
    
    
    45,244
    
    
    
    17,578
    
    
    
    711
    
    
    
    405,760Interest expense
    
    
    1,819
    
    
    
    410
    
    
    
    209
    
    
    
    199
    
    
    
    68
    
    
    
    70
    
    
    
    2,775Depreciation and
amortization
    
    
    17,235
    
    
    
    2,904
    
    
    
    19,634
    
    
    
    731
    
    
    
    3,640
    
    
    
    7,306
    
    
    
    51,450Receivables
    
    
    211,746
    
    
    
    29,824
    
    
    
    14,699
    
    
    
    28,439
    
    
    
    21,168
    
    
    
    4,687
    
    
    
    310,563
  Technology and
    
    Investment
    
    Insurance &Benefits
    
    Human Capital
    
    Administration
    
    Consulting
    
    Financial ServicesGroup
    
    Group
    
    Solutions
    
    Group
    
    Group
    
    Other
    
    TotalRevenue (net
of reimbursable
expenses)
    
    $
    993,371
    
    
    $
    195,925
    
    
    $
    182,953
    
    
    $
    169,173
    
    
    $
    118,603
    
    
    $
    43,922
    
    
    $
    1,703,947Net operating income
    
    
    285,610
    
    
    
    35,067
    
    
    
    47,246
    
    
    
    59,918
    
    
    
    2,381
    
    
    
    4,670
    
    
    
    434,892Interest expense
    
    
    2,979
    
    
    
    859
    
    
    
    369
    
    
    
    305
    
    
    
    307
    
    
    
    142
    
    
    
    4,961Depreciation and
amortization
    
    
    16,811
    
    
    
    2,189
    
    
    
    18,500
    
    
    
    736
    
    
    
    4,253
    
    
    
    5,616
    
    
    
    48,105Receivables
    
    
    248,375
    
    
    
    46,526
    
    
    
    16,075
    
    
    
    34,545
    
    
    
    33,140
    
    
    
    4,773
    
    
    
    383,434
  Technology and
    
    Investment
    
    Insurance &Benefits
    
    Human Capital
    
    Administration
    
    Consulting
    
    Financial ServicesGroup
    
    Group
    
    Solutions
    
    Group
    
    Group
    
    Other
    
    TotalRevenue (net
of reimbursable
expenses)
    
    $
    820,806
    
    
    $
    169,845
    
    
    $
    157,516
    
    
    $
    128,720
    
    
    $
    113,676
    
    
    $
    41,104
    
    
    $
    1,431,667Net operating income
    
    
    222,021
    
    
    
    24,052
    
    
    
    36,663
    
    
    
    39,269
    
    
    
    18,985
    
    
    
    (6,108
    )
    
    
    334,882Interest expense
    
    
    3,352
    
    
    
    506
    
    
    
    425
    
    
    
    369
    
    
    
    555
    
    
    
    138
    
    
    
    5,345Depreciation and
amortization
    
    
    11,118
    
    
    
    2,695
    
    
    
    14,108
    
    
    
    830
    
    
    
    796
    
    
    
    8,757
    
    
    
    38,304Receivables
    
    
    228,284
    
    
    
    40,516
    
    
    
    15,616
    
    
    
    27,427
    
    
    
    31,959
    
    
    
    6,689
    
    
    
    350,491
 90




---



##### 



Year Ended June 30,2009
    
    
    2008
    
    
    2007Revenue:Total segment revenue
    
    $
    1,637,502
    
    
    $
    1,703,947
    
    
    $
    1,431,667Reimbursable expenses not included in
segment revenue
    
    
    55,259
    
    
    
    62,014
    
    
    
    58,164Other, net
    
    
    (16,732
    )
    
    
    (5,906
    )
    
    
    (3,308
    )Consolidated revenue
    
    $
    1,676,029
    
    
    $
    1,760,055
    
    
    $
    1,486,523Net Operating Income:Total segment income
    
    $
    405,760
    
    
    $
    434,892
    
    
    $
    334,882Income/(loss) from affiliates
    
    
    8,181
    
    
    
    2,067
    
    
    
    (5,500
    )Differences in allocation methods for
depreciation, G&A, pension and medical
costs (1)
    
    
    (14,911
    )
    
    
    (17,675
    )
    
    
    (9,422
    )Interest Expense
    
    
    (2,778
    )
    
    
    (5,977
    )
    
    
    (1,581
    )Other non-operating income
    
    
    4,926
    
    
    
    464
    
    
    
    178Discretionary bonuses
    
    
    (167,590
    )
    
    
    (184,980
    )
    
    
    (139,433
    )Other, net
    
    
    (11,854
    )
    
    
    120
    
    
    
    (2,656
    )Income before income taxes
    
    $
    221,734
    
    
    $
    228,911
    
    
    $
    176,468Interest expense:Total segment expense
    
    $
    2,775
    
    
    $
    4,961
    
    
    $
    5,345Differences in allocation method
    
    
    3
    
    
    
    1,016
    
    
    
    (3,764
    )Consolidated interest expense
    
    $
    2,778
    
    
    $
    5,977
    
    
    $
    1,581Depreciation and amortization:Total segment expense
    
    $
    51,450
    
    
    $
    48,105
    
    
    $
    38,304Intangible asset amortization, not
allocated to segments
    
    
    13,892
    
    
    
    16,397
    
    
    
    10,145Differences in allocation method and other
    
    
    8,106
    
    
    
    7,926
    
    
    
    8,786Consolidated depreciation and amortization
    
    $
    73,448
    
    
    $
    72,428
    
    
    $
    57,235Receivables:Total segment receivables
    
    $
    310,563
    
    
    $
    383,434
    
    
    $
    350,491Net valuation differences (2)
    
    
    (8,153
    )
    
    
    (17,678
    )
    
    
    (13,664
    )Total billed and unbilled receivables
    
    
    302,410
    
    
    
    365,756
    
    
    
    336,827Assets not reported by segment
    
    
    1,323,909
    
    
    
    1,350,220
    
    
    
    1,192,882Consolidated total assets
    
    $
    1,626,319
    
    
    $
    1,715,976
    
    
    $
    1,529,709
 
 (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. 91




---



##### 



Revenue
    
    
    Long-lived Assets2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007United States
    
    $
    732,768
    
    
    $
    761,584
    
    
    $
    707,784
    
    
    $
    188,646
    
    
    $
    137,120
    
    
    $
    174,369United Kingdom
    
    
    467,618
    
    
    
    531,444
    
    
    
    468,142
    
    
    
    482,582
    
    
    
    862,555
    
    
    
    617,816Rest of World
    
    
    475,643
    
    
    
    467,027
    
    
    
    310,597
    
    
    
    277,579
    
    
    
    86,242
    
    
    
    34,011$
    1,676,029
    
    
    $
    1,760,055
    
    
    $
    1,486,523
    
    
    $
    948,807
    
    
    $
    1,085,917
    
    
    $
    826,196
  Note 13  Commitments and Contingent Liabilities
  Letters of Credit:
  Indemnification Agreements:
 Legal Proceedings
 92




---



##### 



Watson Wyatt v. SBC Holdings, Inc. (Stroh Brewery Company):
 Department of Labor Investigation:
 ExxonMobil Superannuation Plan (Australia)
 93




---



##### 



Note 14  Earnings Per Share
  Year Ended June 30,2009
    
    
    2008
    
    
    2007Net income
    
    $
    146,458
    
    
    $
    155,441
    
    
    $
    116,275Weighted average outstanding shares of common stock
    
    
    42,690
    
    
    
    42,577
    
    
    
    42,413Contingency Stock
    
    
    
    
    
    
    
    
    
    
    1,950Dilutive effect of SBI plan shares
    
    
    171
    
    
    
    1,804
    
    
    
    321Common stock and stock equivalents
    
    
    42,861
    
    
    
    44,381
    
    
    
    44,684Basic earnings per share
    
    $
    3.43
    
    
    $
    3.65
    
    
    $
    2.74Diluted earnings per share
    
    $
    3.42
    
    
    $
    3.50
    
    
    $
    2.60
  Note
15  Restricted Shares
  94




---



##### 



Note
16  Exit From Multi-employer Retirement Consulting Business
  Note
17  Unaudited Quarterly Financial Data
  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
    
    
    53,322
    
    
    
    57,817
    
    
    
    56,518
    
    
    
    54,077Net income
    
    
    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
 2008 Quarter EndedSeptember 30
    
    December 31
    
    March 31
    
    June 30Revenue
    
    $
    401,687
    
    
    $
    447,032
    
    
    $
    457,525
    
    
    $
    453,811Income from operations
    
    
    51,233
    
    
    
    59,942
    
    
    
    64,434
    
    
    
    51,164Income before income taxes
    
    
    51,833
    
    
    
    57,587
    
    
    
    64,816
    
    
    
    54,675Net income
    
    
    34,444
    
    
    
    36,781
    
    
    
    42,546
    
    
    
    41,670Earnings per share: (a)Net income, basic
    
    
    0.81
    
    
    
    0.87
    
    
    
    1.01
    
    
    
    0.96Net income, diluted
    
    
    0.77
    
    
    
    0.82
    
    
    
    0.96
    
    
    
    0.95
 
 (a)
    
    The diluted earnings per share calculation for fiscal years 2008 assume that 1,950,000
contingent shares related to the WWLLP business combination have been issued and outstanding at the
beginning of the year. The diluted earnings per share calculation for 2008 also assumes that the
218,089 WWN contingent shares were also outstanding at the beginning of the fiscal year. All of
these shares were issued during the fourth quarter of fiscal year 2008. 95




---



##### 



Note
18  Subsequent Events
  96




---



##### 



WATSON WYATT WORLDWIDE, INC.
 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, 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
    
    
    
    
    
    
    
    (1,639
    )
    
    
    
    
    
    
    
    
    
    
    10,885Year 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
    
    
    
    
    
    
    
    
    
    
    
    12,524Year Ended June 30, 2007Allowance for
uncollectible
accounts
    
    $
    3,678
    
    
    $
    11,109
    
    
    $
    
    
    
    $
    
    
    
    $
    (8,571
    )
    
    $
    6,216Allowance for
unbillable accounts
    
    
    5,348
    
    
    
    2,335
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,683Valuation allowance
for deferred tax
assets
    
    
    23,841
    
    
    
    
    
    
    
    (9,777)
    (1)
    
    
    
    
    
    
    (4,238
    )
    
    
    9,826
 
 (1)
    
    The decrease is due to reclassification of the deferred tax assets for foreign branches. 97




---



##### 



EXHIBITS.
  http://www.sec.gov
 3.1
    
    Amended and Restated Certificate of Incorporation of Watson Wyatt Worldwide, Inc.(1)3.2
    
    Amended and Restated Bylaws of Watson Wyatt Worldwide, Inc.(2)4
    
    Form of Certificate Representing Common Stock(3)10.1
    
    Amended and Restated Revolving Credit Agreement (Credit Agreement) Among Suntrust Bank
and Others dated July 11, 2005(4)10.2
    
    Amendment to the Credit Agreement Among Suntrust Bank and Others dated September 30, 2005(5)10.3
    
    Amendment to the Credit Agreement Among Suntrust Bank and Others dated June 21, 2007 (6)10.4
    
    Third Amendment to Amended and Restated Revolving Credit Agreement dated September 14, 2007
(7)10.5
    
    FY06 Performance Share Bonus Incentive Program (8)10.6
    
    FY07 Performance Share Bonus Incentive Program (1)10.7
    
    FY08 Performance Share Bonus Incentive Program (9)10.8
    
    Trust Deed and Rules of the Watson Wyatt Share Incentive Plan 2005 (U.K.) (10)10.9
    
    Watson Wyatt Share Incentive Plan 2005 Deed of Amendment (U.K.) (10)10.10
    
    Amended and Restated Senior Officer Deferred Compensation Plan (2)10.11
    
    Amended 2001 Deferred Stock Unit Plan for Selected Employees(18)10.12
    
    Amended Voluntary Deferred Compensation Plan for Non-Employee Directors (2)10.13
    
    Amended Compensation Plan for Outside Directors(7)10.14
    
    Form of Employment Agreement between Watson Wyatt Limited and each of Chandrasekhar
Ramamurthy, Paul N. Thornton and Roger C. Urwin(11)10.15
    
    Deed of Lease between Watson Wyatt & Company and Arlington Office, LLC, dated
April 27, 2004(12)10.16
    
    First Amendment to Deed of Lease between Watson Wyatt & Company and Arlington Office
L.L.C., dated April 22, 2005(13)10.17
    
    First Amendment to Lease Between Watson Wyatt & Company and Arlington Office LLC dated
November 14, 2005 (14)10.18
    
    Form of Indemnification Agreement among Watson Wyatt & Company Holdings and each of
its directors and Section 16 officers(15)10.19
    
    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 June 26, 2009 (17)10.20
    
    2008 Long-Term Incentive Program for Selected Associates (18)10.21
    
    FY09 Performance Share Bonus Incentive Program (18)10.22
    
    Form of Voting Agreement between Watson Wyatt and Directors and Executive Officers of
Towers Perrin (19)16
    
    Letter re change in certifying accountant (16)21
    
    Subsidiaries of Watson Wyatt Worldwide, Inc.(2)23
    
    Consent of the Companys Independent Registered Public Accounting Firm  Deloitte &
Touche LLP(2)31.1
    
    Certification of Chief Executive Officer Pursuant to Securities Exchange Act
Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002(2)
 98




---



##### 



31.2
    
    Certification of Chief Financial Officer Pursuant to Securities Exchange Act
Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002(2)32
    
    Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Title
18, U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002(2)
 
 (1)
    
    Incorporated by reference from Registrants Form 10-Q, filed on February 9, 2007(2)
    
    Incorporated by reference from Registrants Form 10-K, filed on August 15, 2008(3)
    
    Incorporated by reference from Registrants Form 8-K, filed on January 3,
2006(4)
    
    Incorporated by reference from Registrants Form 8-K, filed on July 14,
2005(5)
    
    Incorporated by reference from Registrants Form 10-Q, filed on November 9, 2005(6)
    
    Incorporated by reference from Registrants Form 10-K, filed on August 24, 2007(7)
    
    Incorporated by reference from Registrants Form 10-Q, filed on November 9, 2007(8)
    
    Incorporated by reference from Registrants Form 8-K, filed on May 16, 2006.(9)
    
    Incorporated by reference from Registrants Form 10-Q, filed on May 8, 2008(10)
    
    Incorporated by reference from Registrants Form 10-K, filed on September 1, 2006(11)
    
    Incorporated by reference from Registrants Form S-4 (File No. 33-3124629), filed
on May 4, 2005(12)
    
    Incorporated by reference from Registrants Form 10-Q, filed on May 7, 2004(13)
    
    Incorporated by reference from Registrants Form 10-Q, filed on May 10, 2005(14)
    
    Incorporated by reference from Registrants Form 10-Q, filed on February 9, 2006(15)
    
    Incorporated by reference from Registrants Form 8-K, filed on October 4, 2005(16)
    
    Incorporated by reference from Registrants Form 8-K, filed on December 13, 2006(17)
    
    Incorporated by reference from Registrants Form 8-K, filed on June 29, 2009(18)
    
    Incorporated by reference from Registrants Form 10-Q, filed on February 6,2009(19)
    
    Incorporated by reference from Exhibit A-1 of Exhibit 2.1 of Registrants Form 8-K, filed on
June 29, 2009 99