1、We are Watson Wyatt. We connect them, make them stronger and help drive their performance. We understand people. We understand business. W AT S O N W YAT T the second paragraph under Liquidity and Capital Resources on page 21; under the subheadings “Restatement” and “Stock-Based Compensation” in Not
2、e 1 “Summary of Significant Accounting Policies” on pages 28 and 29; in the second paragraph of Note 10 “Employee Stock Plans and Equity” on page 35; and in the first and third paragraphs of Note 14 “Commitments and Contingent Liabilities” on page 42. In some cases, you can identify these statements
3、 and other forward-looking statements in this filing by words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend,” “continue,” or similar words. You should read these state- ments carefully because they contain projections of our future results of operations or fin
4、ancial condition, or state other “forward-looking” information. A number of risks and uncertainties exist which could cause actual results to differ materially from the results reflected in these forward-looking statements. Such factors include, but are not limited to our continued ability to recrui
5、t and retain highly qualified asso- ciates, outcomes of litigation, a significant decrease in the demand for the consulting services we offer as a result of changing economic conditions or other factors, actions by competitors offering human resources consulting services, including public accounting
6、 and consulting firms, technology consulting firms and internet/intranet development firms, regulatory, legislative and technological developments that may affect the demand for or costs of our services and other factors discussed under “risk factors” in our prospectus dated June 21, 2001, which is
7、filed with the SEC and may be accessed via EDGAR on the SECs web site at www.sec.gov. These statements are based on assumptions that may not come true. All forward-looking disclosure is speculative by its nature. The Company undertakes no obligation to update any of the forward-looking information i
8、ncluded in this report, whether as a result of new information, future events, changed expectations or otherwise. Overview Watson Wyatt is a global provider of human capital consult- ing services. We provide services in three principal practice areas: Benefits, eHR and Human Capital consulting. We o
9、perate from 61 offices in 18 countries throughout North America, Asia-Pacific and Latin America. We also operate through our affiliates in Europe. Our principal affiliates are Watson Wyatt LLP which conducts operations in the United Kingdom and Ireland, and in which we hold a 10% interest in a defin
10、ed distribution pool, and are a member of their partnership board, and Watson Wyatt management believes the approximate percentages are 60% and 40%, respectively. Clients are typically invoiced on a monthly basis with revenue recognized as services are performed. For the most recent three fiscal yea
11、rs, revenue from U.S. consulting operations have comprised approximately 80% of consolidated revenue. No single client accounted for more than 4% of our consoli- dated revenue for any of the most recent three fiscal years. In delivering consulting services, our principal direct expenses relate to co
12、mpensation of personnel. Salaries and employee benefits are comprised of wages paid to associates, related taxes, benefit expenses such as pension, medical and insur- ance costs and fiscal year-end incentive bonuses. In addition, professional and subcontracted services include client reimbursed trav
13、el and other costs specifically billable to clients, as well as fees paid to external service providers managements discussion and analysis of financial condition and results of operations Watson Wyatt our responsi- bility is to express an opinion on these financial statements based on our audits. W
14、e conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit incl
15、udes examining, on a test basis, evidence supporting the amounts and disclo- sures in the financial statements, assessing the accounting principles used and significant estimates made by manage- ment, and evaluating the overall financial statement presen- tation. We believe that our audits provide a
16、 reasonable basis for our opinion. PricewaterhouseCoopers LLP Washington, D.C. August 19, 2002, except for Note 10, as to which the date is September 12, 2002 report of independent accountants Watson Wyatt none issued and outstanding Class A Common Stock$.01 par value: 69,000,000 shares authorized;
17、20,212,449 and 9,390,000 issued and 20,029,115 and 9,390,000 outstanding20294 Class B-1 Common Stock$.01 par value: 15,000,000 shares authorized; none and 10,398,640 issued and outstanding104 Class B-2 Common Stock$.01 par value: 15,000,000 shares authorized; 12,868,030 and 13,244,355 issued and out
18、standing129132 Additional paid-in capital147,034146,649 Treasury stock, at cost183,334 shares(3,076) Retained earnings (accumulated deficit)20,351(26,733) Cumulative translation adjustment (accumulated other comprehensive loss)(5,419)(8,361) Total Stockholders Equity159,221111,885 Total Liabilities
19、and Stockholders Equity$436,817$392,016 See accompanying notes consolidated balance sheets (thousands of U.S. dollars, except per share data) Watson Wyatt as such, the amounts due to associates are recorded as a liability in the consolidated balance sheets of the Company. CSAP expense for fiscal yea
20、rs 2002, 2001 and 2000 amounted to $328,000, $357,000 and $372,000, respectively. Health Care Benefits. We sponsor a contributory health care plan that provides hospitalization, medical and dental benefits to substantially all U.S. associates. We accrue a liability for estimated incurred but unrepor
21、ted claims based on projected use of the plan as well as prior plan history. The liability totaled $3,383,000 and $2,483,000 at June 30, 2002 and June 30, 2001, respectively, and is included in accounts payable and accrued liabilities in the Consolidated Balance Sheets. Postretirement Benefits. We p
22、rovide certain health care and life insurance benefits for retired associates. The principal plans cover associates in the U.S. and Canada who have met certain eligibility requirements. Our principal plans are unfunded. Net periodic postretirement benefit cost consists of the following components: Y
23、ear Ended June 30, 200220012000 Service cost$1,771$1,814$1,877 Interest cost2,3622,2942,216 Amortization of transition obligation444546 Amortization of net unrecognized gains(877)(835)(683) Amortization of prior service cost(129)(128)(127) Net periodic postretirement benefit cost$3,171$3,190$3,329 3
24、3Watson Wyatt & Company Holdings The following tables set forth the changes in the accumulated postretirement benefit obligation, Company contributions and benefit payments. June 30, 20022001 Benefit obligation at beginning of year$34,986$34,810 Service cost1,7711,814 Interest cost2,3622,294 Partici
25、pant contributions260272 Actuarial losses (gains)549(2,475) Benefit payments(2,337)(1,648) Healthcare premium change209 Change in assumptions647 Foreign currency adjustment41(81) Benefit obligation at end of year$38,488$34,986 June 30, 20022001 Fair value of plan assets at beginning of year$ Company
26、 contributions2,0781,376 Participant contributions260272 Benefit payments(2,338)(1,648) Fair value of plan assets at end of year$ The accrued other postretirement benefit cost recognized in the Companys Consolidated Balance Sheets is computed as follows: June 30, 20022001 Funded status at end of year$(38,488)$(34,986) Unrecognized prior service cost(948)(1,075) Unrecognized net loss(10,477)(12,791) Unrecognized transition obligation495541 Net accrued postretirement liability$(49,418)$(48,311) Assumptions
