Watson Wyatt Worldwide Reports First Quarter EPS of $0.82

Watson Wyatt Worldwide, Inc. (NYSE, NASDAQ:WW), a leading international human capital and financial management consulting firm, today announced financial results for the first quarter of fiscal year 2009, which ended September 30, 2008.

Revenues were $426.1 million for the quarter, an increase of 6% (7% constant currency) from first quarter of fiscal 2008 revenues of $401.7 million. Net income for the first quarter of fiscal 2009 was $35.2 million, or $0.82 per diluted share, an increase from $34.4 million or $0.77 per diluted share in the prior-year first quarter. When compared to prior-year first quarter, exchange rates had a negative impact of $0.02 per diluted share of net income.

"We’re pleased to have achieved year-over-year earnings growth this quarter, in light of the economic and foreign currency headwinds,” said John Haley, president and chief executive officer. "All of our segments grew on a constant currency basis, with very strong growth in our technology and administration solutions and human capital groups.

"We have redoubled our efforts to stay close to our clients and help them through these tough times. As we’ve seen in past cycles, our services can make a real difference in our clients’ businesses. In spite of these challenging times, we expect to achieve constant currency revenue growth in each of our segments in fiscal year 2009.”

Operating Highlights

• Benefits Group revenues (representing 56% of first-quarter revenues) were $238 million for the first quarter of fiscal 2009, an increase of 5% (6% constant currency) from $227 million in the prior-year first quarter. The increase in revenues was largely due to increased demand for retirement services in all geographic regions.
• Technology and Administration Solutions Group revenues (representing 11% of first-quarter revenues) were $48 million for the first quarter of fiscal 2009, an increase of 18% (21% constant currency) from $40 million in the prior-year first quarter. The increase in reported revenues resulted from additional project work in Europe and North America as well as an increase in the number of projects in service in North America. At September 30, 2008, 164 projects were in service, compared to 95 at September 30, 2007. We have an additional 59 projects in the implementation phase in North America.
• Human Capital Group revenues (representing 12% of first-quarter revenues) were $50 million for the first quarter of fiscal 2009, an increase of 16% (15% constant currency) from $43 million in the prior-year first quarter. Demand for our services was strong in all geographic regions.
• Insurance & Financial Services Group revenues (representing 7% of first-quarter revenues) were $28 million for the first quarter of fiscal 2009 and for the prior-year first quarter. On a constant currency basis, revenues increased 2% from prior-year first quarter.
• Investment Consulting Group revenues (representing 10% of first-quarter revenues) were $42 million for the first quarter of fiscal 2009, an increase of 5% (9% constant currency) from $40 million in the prior-year first quarter. The revenue increase was largely due to increased demand for advice on investment strategy.

Outlook for Fiscal Year 2009

In fiscal year 2009 and after consideration of the volatile foreign exchange markets, the company expects to report revenues in the range of $1.75 billion to $1.81 billion and earnings per diluted share in the range of $3.50 to $3.57. On a constant currency basis, the company expects revenues to be in the range of $1.85 billion to $1.90 billion and earnings per diluted share to be in the range of $3.72 to $3.79 in fiscal year 2009.

In the second quarter of fiscal 2009 and after consideration of the volatile foreign exchange markets, the company expects to report revenues in the range of $422 million to $432 million and earnings per diluted share in the range of $0.75 to $0.79. On a constant currency basis, the company expects revenues to be in the range of $456 million to $466 million and earnings per diluted share to be in the range of $0.82 to $0.86 in the second quarter of fiscal 2009.

Conference Call

The company will host a live webcast and conference call to discuss the financial results for the first quarter of fiscal 2009. It will be held on Wednesday, November 5, 2008, beginning at 9:00 a.m. Eastern Time, and can be accessed via the Internet by going to the Investor Relations section of www.watsonwyatt.com. The replay of the webcast will be available two hours after the live call for a period of three months. The replay also will be available for one week after the call by dialing 617-801-6888 and using confirmation number 84454402.

Forward-Looking Statements

Statements in this press release regarding projections and expectations of future earnings, revenues, operations, business trends and other such items are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to management. Because such statements are based on expectations and are not statements of fact, actual events and results may differ materially from those projected. 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 foreign currency exchange and interest rate fluctuations; general economic and business conditions that adversely affect us or our clients; 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; the company’s ability to integrate the operations of acquired businesses into our own business, processes and systems, and achieve the anticipated results; our continued ability to recruit and retain qualified associates; the success of our marketing, client development and sales programs; our ability to maintain client relationships and to attract new clients; declines in demand for our services; outcomes of pending or future litigation and the availability and capacity of professional liability insurance to fund pending or future judgments or settlements; the ability of the company to obtain professional liability insurance; actions by competitors offering human resources consulting services, including public accounting and consulting firms, technology consulting firms and internet/intranet development firms; our continued ability to achieve cost reductions; exposure to liabilities of acquired businesses that have not been expressly assumed; the level of capital resources required for future acquisitions and business opportunities; regulatory developments abroad and domestically that impact our business practices; legislative and technological developments that may affect the demand for or costs of our services; and other factors discussed under "Risk Factors" in the company’s Annual Report on Form 10-K for the year ended June 30, 2008 and filed on August 15, 2008, with the Securities and Exchange Commission. 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 included in this report, whether as a result of new information, future events, changed expectations or otherwise.

About Watson Wyatt Worldwide

Watson Wyatt (NYSE, NASDAQ: WW) is the trusted business partner to the world's leading organizations on people and financial issues. The firm’s global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,600 associates in 32 countries and is located on the Web at www.watsonwyatt.com.