1470215--9/7/2010--Towers_Watson_&

related topics

{financial, litigation, operation}

{system, service, information}

{acquisition, growth, future}

{stock, price, share}

{condition, economic, financial}

{control, financial, internal}

{regulation, government, change}

{cost, contract, operation}

{competitive, industry, competition}

{product, market, service}

{stock, price, operating}

{customer, product, revenue}

{debt, indebtedness, cash}

{property, intellectual, protect}

{loan, real, estate}

{product, candidate, development}

{operation, natural, condition}

{interest, director, officer}

{operation, international, foreign}

{product, liability, claim}

The loss of key associates could damage or result in the loss of client relationships and could result in such associates competing against Towers Watson. Our clients could terminate or reduce our services at any time, which could decrease associate utilization, adversely impacting our profitability and results of operations. Our quarterly revenues could fluctuate while our expenses are relatively fixed. Improper management of our engagements could hurt our financial results. The trend of employers shifting from defined benefit plans to defined contribution plans could materially adversely affect our business and results of operations. Our business will be negatively affected if we are not able to anticipate and keep pace with rapid changes in government regulations or if government regulations decrease the need for our services or increase our costs. Our business could be negatively affected by currently proposed or future legislative or regulatory activity concerning compensation consultants. Competition could result in loss of our market share and reduced profitability. Consolidation in the industries that we serve could materially adversely affect our business. We are subject to risks of doing business internationally. Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability. Demand for our services could decrease for various reasons, including a continued general economic downturn, a decline in a client s or an industry s financial condition or prospects, or a decline in defined benefit pension plans that could materially adversely affect our results of operations. The unaudited pro forma financial data included in this Annual Report are illustrative and the actual financial condition and results of operations of Towers Watson may differ materially from the historical financial statements of Watson Wyatt and the unaudited pro forma financial data included in this Annual Report. Our growth strategy depends, in part, on our ability to make acquisitions, and if we have difficulty in acquiring, overpay for, or are unable to acquire other businesses, our business may be materially adversely affected. We face risks when we acquire businesses, and may have difficulty integrating or managing acquired businesses, which may harm our business, financial condition, results of operations or reputation. Damage to our reputation could damage our businesses. We could be subject to claims arising from our work, as well as government inquiries and investigations, which could materially adversely affect our reputation, business and financial condition. We advise or act on behalf of clients regarding investments whose results are not guaranteed, and clients that experience investment return shortfalls may assert claims against us. Our investment activities may require specialized operational competencies, and if we fail to properly execute our role in cash and investment management, our clients or third parties may assert claims against us. Towers Watson may be engaged in providing services outside the core human capital and risk management business currently conducted by Towers Perrin and Watson Wyatt, which may carry greater risk of liability. Our business faces rapid technological change, and our failure to respond to this change quickly could materially adversely affect our business. Limited protection of our intellectual property could harm our business, and we face the risk that our services or products may infringe upon the intellectual property rights of others. We could have liability or our reputation could be damaged if we do not protect client data or information systems or if our information systems are breached. Insurance may become more difficult or expensive to obtain. Towers Watson and its subsidiaries could encounter significant obstacles in securing adequate insurance coverage for errors and omissions liability risks on favorable or acceptable terms. We have material pension liabilities that can fluctuate significantly. Towers Perrin and Towers Watson are defendants in several lawsuits commenced by former Towers Perrin shareholders. Our reinsurance brokerage business could be subject to claims arising from its work, which could materially adversely affect our reputation and business. Reinsurance brokerage revenue is influenced by factors that are beyond our control, and volatility or declines in premiums or other trends in the insurance and reinsurance markets could significantly undermine the profitability of our reinsurance brokerage business. We may not be able to obtain financing on favorable terms or at all. Our revolving credit facility contains a number of restrictive covenants that restrict our operations. We rely on third parties to provide services and their failure to perform the services could harm our business. If we are not able to implement any recommended improvements in our internal control over financial reporting or favorably assess the effectiveness of our internal control over financial reporting, or if our independent registered public accounting firm is not able to provide an unqualified attestation report on the effectiveness of our internal control over financial reporting, our business, financial condition or results of operations could be materially adversely affected. The stock price of Class A common stock may be volatile. Shares of Towers Watson common stock eligible for public sale could adversely affect the stock price. We will only pay dividends if and when declared by our board of directors.

Full 10-K form ▸

1470215--9/7/2010--Towers_Watson_&_Co.