Watson Wyatt & Company Holdings Reports Second Quarter Earnings; Second Quarter Earnings Increase 20% over Last Year on a Comparable Basis.Business EditorsWASHINGTON--(BUSINESS WIRE)--Feb. 5, 2001 Watson Wyatt & Company Holdings (NYSE NYSE See: New York Stock Exchange :WW), a leading international human capital consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a , today announced financial results for the second fiscal quarter ended December December: see month. 31, 2000. Total revenues increased 11% to $168.8 million from $152.4 million in the second quarter of fiscal 2000. Net income for the second quarter of 2001 increased 20% to $9.0 million, or $0.27 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, excluding the $3.5 million charge ($2.3 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. or $0.07 per diluted share) related to the Company's initial public offering. Net income in the comparable prior year quarter was $7.5 million, or $0.25 per diluted share, excluding the $9.0 million expense ($5.3 million after-tax or $0.18 per diluted share) related to the now-discontinued supplemental stock incentive bonus. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of amounts in the second fiscal quarter of 2001 reflect an 11%, or 3.3 million, increase in the share count as a result of the Company's initial public offering in October October: see month. . "This was a solid quarter for us, with revenue growth meeting our expectations of 10-12%. This growth largely reflects our continued success in the integration and leveraging of our services around eHR consulting, with many large assignments drawing on our human capital consulting, benefits, employee communications and technology expertise. We also increased our market-share in serving the largest U. S. pension funds," stated John Haley John Haley former Little Rock lawyer, former attorney for Jim Guy Tucker and Jim Guy Tucker's co-defendant. On February 20, 1998, John Haley pleaded guilty to one misdemeanor count tax fraud to the Internal Revenue Service. , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "The challenge of attracting and retaining talented employees and coping with rapid change continues to make effective human capital management a top priority for most corporations. We're we're Contraction of we are. we're we are seeing HR functions respond to this need by getting more closely aligned with business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets and using technology to facilitate HR processes. With our integrated service strategy, we are well positioned to help clients meet these challenges," said Mr. Haley Ha·ley , Alex 1921-1992. American writer best known for Roots (1976), a fictionalized chronicle tracing his family history back to its African origins. Noun 1. . In the second quarter, revenues for Watson Wyatt's HR Technologies Group grew a strong 19% and the Human Capital Group and Benefits Consulting Group revenues grew by a combined 9% over the second quarter of last year. Watson Wyatt again reported an improved gross margin for the quarter over the same prior year quarter. Gross Margin, measured as Revenues less "Salaries and employee benefits" and "Professional and subcontracted sub·con·tract n. A contract that assigns some of the obligations of a prior contract to another party. intr. & tr.v. sub·con·tract·ed, sub·con·tract·ing, sub·con·tracts services," was 39% of revenue for the second quarter of fiscal 2001 excluding the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. related charge, compared to 37% for the second quarter of fiscal 2000 excluding the stock incentive bonus expense. "We expect to deliver revenue growth in line with the 10-12% annual range we have discussed previously. We remain comfortable with the current range of analysts' estimates of diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. for the balance of this fiscal year," concluded Mr. Haley. The Company will host a conference call to be broadcast via web cast on Tuesday Tuesday: see week. , February February: see month. 6, 2001, discussing the financial results for the second quarter ended December 31, 2000. The conference call and live web cast will begin at 9:00 a.m. Eastern Time. An archive of the web cast will be available one hour after the live call and until midnight Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , February 9, 2001. To access the live web cast or archive, please visit http://www.vcall.com. Watson Wyatt is an international human capital consulting firm that provides services in the areas of employee benefits, human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. technologies and human capital strategies. The firm is headquartered in Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , D.C., and has 4,100 associates in 59 offices in the Americas and Asia-Pacific. Together with Watson Wyatt Partners, a leading European-based consulting partnership, the firm operates globally as Watson Wyatt Worldwide. Watson Wyatt Worldwide has more than 5,800 associates in 84 offices in 30 countries. Statements in this press release regarding projections and expectations of future earnings, revenues, operations, business trends and other such items are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . A number of risks and uncertainties exist which could cause actual results to differ materially from the results reflected in these forward-looking statements. Such factors include, but are not limited to our continued ability to recruit and retain highly qualified associates, outcomes of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , no significant decrease in the demand for the consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" we offer and other factors discussed under "risk factors" in our prospectus dated October 11, 2000, which is on file with the Securities and Exchange Commission. These statements are based on assumptions that may 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 release, whether as a result of new information, future events, changed expectations or otherwise. The inclusion of any statement in this release does not constitute an admission by Watson Wyatt & Company Holdings or any other person that the events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or described in such statement are material. (TABLES TO FOLLOW)
WATSON WYATT & COMPANY HOLDINGS
Consolidated Statements of Operations
(Thousands of U.S. Dollars, Except Per Share Amounts)
Three Months Ended Six Months Ended
December 31, December 31,
---------------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
(Unaudited) (Unaudited)
Revenue $ 168,781 $ 152,411 $ 339,474 $ 298,734
---------- ---------- ---------- ---------
Costs of providing
services:
Salaries and
employee benefits 91,661 80,950 181,424 160,753
Stock incentive
bonus plan - 9,000 - 15,000
Professional and
subcontracted
services 15,576 15,131 26,755 24,927
Occupancy,
communications
and other 26,850 24,707 53,494 46,723
General and
administrative
expenses 17,920 14,724 33,051 27,902
Depreciation and
amortization 6,119 4,610 12,036 9,517
------ ------ ------- -------
158,126 149,122 306,760 284,822
-------- -------- -------- -------
Income from operations 10,655 3,289 32,714 13,912
Other:
Interest income 847 216 1,424 1,252
Interest expense (742) (698) (1,015) (1,088)
Income from affiliates 1,162 1,155 2,178 2,143
------ ------ ------ -----
Income before income
taxes and minority
interest 11,922 3,962 35,301 16,219
Provision for
income taxes 5,113 1,916 15,144 7,835
------ ------ ------- -----
Income before
minority interest 6,809 2,046 20,157 8,384
Minority interest in
net (income) loss of
consolidated
subsidiaries (72) 158 (85) 176
---- ---- ---- ---
Net income $ 6,737 $ 2,204 $ 20,072 $ 8,560
======== ======== ========= =======
Basic earnings per
share, net income $ 0.21 $ 0.07 $ 0.64 $ 0.28
======= ======= ======= ======
Diluted earnings
per share, net income $ 0.20 $ 0.07 $ 0.64 $ 0.28
======= ======= ======= ======
Weighted average
shares of common
stock, basic 32,755 29,834 31,190 30,280
======= ======= ======= ======
Weighted average
shares of common
stock, diluted 33,146 29,834 31,386 30,280
======= ======= ======= ======
Supplemental Segment Data
(Thousands of U.S. Dollars)
Three Months Ended Six Months Ended
December 31, December 31,
-------------------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
(Unaudited) (Unaudited)
Revenue (net of
reimbursable expenses)
Benefits Group $ 86,004 $ 79,275 $ 172,921 $ 158,649
HR Technologies Group 24,589 20,745 49,441 40,492
Human Capital Group 14,519 12,885 28,486 23,601
International 17,537 15,049 35,914 30,126
Other 17,646 15,787 37,183 30,863
------- ------- ------- ------
Total segment revenue 160,295 143,741 323,945 283,731
Reimbursable expenses
and other 8,486 8,670 15,529 15,003
------ ------ ------- ------
Consolidated
revenue $ 168,781 $ 152,411 $ 339,474 $ 298,734
========== ========== ========== =========
Net operating income
Benefits Group $ 16,865 $ 14,167 $ 38,748 $ 31,999
HR Technologies
Group 7,158 5,615 15,834 10,572
Human Capital Group 2,444 1,990 5,179 2,514
International 1,502 1,146 5,052 2,446
Other 1,904 583 5,964 3,303
------ ---- ------ -----
Total segment net
operating income 29,873 23,501 70,777 50,834
Discretionary
compensation
and other (17,951) (19,539) (35,476) (34,615)
-------- -------- -------- --------
Consolidated pretax
income from
continuing
operations $ 11,922 $ 3,962 $ 35,301 $ 16,219
========= ======== ========= ========
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