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The Corporate Executive Board Reports Third-Quarter Diluted Earnings Per Share of $0.59 and 15% Revenue Growth

WASHINGTON--(BUSINESS WIRE)--Oct. 24, 2007--The Corporate Executive Board Company ("CEB" or the "Company") (NASDAQ: EXBD) today announces financial results for the third quarter ended September 30, 2007. Revenues for the third quarter increased 15.1% to $136.3 million from $118.4 million for the third quarter of 2006. Net income increased 1.3% to $21.4 million from $21.1 million. Diluted earnings per share for the third quarter of 2007 increased 13.5% to $0.59 from $0.52 for the third quarter of 2006.

For the first nine months of 2007, revenues were $390.5 million, a 16.5% increase from $335.1 million for the first nine months of 2006. Net income for the first nine months of 2007 increased 3.7% to $58.1 million from $56.0 million for the first nine months of 2006. Diluted earnings per share for the first nine months of 2007 were $1.54, a 12.4% increase from $1.37 for the first nine months of 2006.

Contract Value growth in the third quarter of 2007 was 16.2%, as a result of continued cross-sales to existing clients, new client acquisitions, and new program launches. The average cross-sell ratio was 3.53, reflecting cross-sell ratios of 4.05 in the Company's large corporate market and 1.31 in the middle market. Growth from new clients continued to be strong as experienced over the past two years, and is tracking towards the high end of its annual guidance range. This strong growth came from both the traditional larger company markets as well as from the middle market. Growth from cross sales and new programs were tracking towards their annual guidance ranges. Companies joining their first CEB program in the quarter included: Red Bull GmbH; Red Wing Shoe Company, Inc.; Swiss International Air Lines; University of California; VeriFone, Inc.; and Wipro Ltd.

Tom Monahan, Chief Executive Officer commented, "I'm pleased with the progress we made in the quarter on several fronts, including our ongoing efforts to rebuild the sales force and the quality of those new hires. We ended the quarter with 293 sales teams putting us on track towards our year end goal. There are, however, areas where there is still plenty of work to do, particularly in reducing the time to productivity for those new sales hires and continuing to rebuild our sales pipelines as we enter the fourth quarter. This will have the effect of moving some sales related activities and expenses from the third quarter to the fourth quarter, and resulted in lower than budgeted marketing and member services expense for the third quarter. I remain confident that we will continue to realize measurable returns on the investments we put in place across 2007 and that these investments will set us up for a strong start to 2008.

"Today, I am pleased to announce the fifth of the six to seven membership programs we will launch in 2007, the Logistics Leadership Board (LLB). LLB serves senior executives responsible for managing the distribution networks and activities of our member companies. As with all our new programs, LLB program has benefited enormously from the advice and guidance of our charter members, including senior executives from: Cisco Systems, Inc.; Jabil Circuit, Inc.; Merck & Co., Inc.; Rohm and Haas Company; and Target Corporation. This brings our total number of membership-based programs to 47."

Share Repurchase

During the nine months ended September 30, 2007, the Company repurchased approximately 3,793,000 shares of its common stock at a total cost of $270.8 million. Repurchases will continue to be made in open market and privately negotiated transactions subject to market conditions. No minimum number of shares has been fixed. The Company is funding its share repurchases with cash on hand and cash generated from operations.

Outlook for 2007

The following statements summarize the Company's guidance for 2007. For the fourth quarter of 2007, the Company expects revenues of approximately $143.5-$149.5 million. This will equate to annual revenue growth for 2007 of approximately 16.0-17.5%.

The Company is raising its guidance on annual diluted earnings per share for 2007 to a range of $2.11 to $2.16. Included in this amount is approximately $0.40 of share-based compensation expense. For the fourth quarter of 2007, the Company expects diluted earnings per share of $0.57-$0.62. This includes approximately $0.02 of additional expenses for certain sales activities in the fourth quarter which were originally planned for the third quarter.

For the full year 2007, the Company expects other income of approximately $16.5 to $17.0 million, an effective income tax rate of approximately 38.5% and diluted weighted shares outstanding of approximately 37.0-37.5 million.

The diluted earnings per share, interest income and weighted shares outstanding guidance includes only share repurchases made as of September 30, 2007.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth below and in CEB's filings with the U.S. Securities and Exchange Commission, and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. Factors that could cause actual results to differ materially from those indicated by forward-looking statements include, among others, our dependence on renewals of our membership-based services, difficulties we may experience in anticipating market trends, our need to attract and retain a significant number of highly skilled employees, fluctuations in operating results, our potential inability to protect our intellectual property rights, our potential exposure to loss of revenue resulting from our unconditional service guarantee, various factors that could affect our estimated income tax rate or our ability to use our existing deferred tax assets, changes in estimates or assumptions under FAS No. 123(R), whether the Washington, D.C. Office of Tax and Revenue withdraws our QHTC status and possible volatility of our stock price. These and other factors are discussed more fully in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of CEB's filings with the U.S. Securities and Exchange Commission, including, but not limited to, its 2006 Annual Report on Form 10-K. The forward-looking statements in this press release are made as of October 24, 2007, and we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

The Corporate Executive Board Company is a leading provider of best practices research and analysis focusing on corporate strategy, operations and general management issues. CEB provides its integrated set of services currently to more than 3,700 of the world's largest and most prestigious corporations, including over 80% of the Fortune 500. These services are provided primarily on an annual subscription basis and include best practices research studies, executive education seminars, customized research briefs and Web-based access to a library of over 275,000 corporate best practices.

                         Financial Highlights
                (In thousands, except per share data)
                             (Unaudited)


                Selected Three Months Ended Selected Nine Months Ended
                 Growth    September 30,     Growth    September 30,
                         ------------------          -----------------
                 Rates     2007      2006    Rates     2007     2006
                -------- --------- -------- -------- -------- --------
Financial
 Highlights
   (GAAP, as
    reported):
Revenues           15.1%  $136,288 $118,390    16.5% $390,510 $335,121
Net income          1.3%  $ 21,392 $ 21,112     3.7% $ 58,085 $ 55,994
Basic earnings
 per share         13.2%  $   0.60 $   0.53    12.1% $   1.57 $   1.40
Diluted
 earnings per
 share             13.5%  $   0.59 $   0.52    12.4% $   1.54 $   1.37
Weighted
 average shares
 outstanding:
      Basic                 35,932   39,759            37,106   39,937
      Diluted               36,346   40,481            37,626   41,007
                THE CORPORATE EXECUTIVE BOARD COMPANY
           Operating Statistic and Statements of Operations
                (In thousands, except per share data)
                             (Unaudited)

                Selected Three Months Ended Selected Nine Months Ended
                 Growth    September 30,     Growth    September 30,
                         ------------------          -----------------
                 Rates     2007     2006     Rates     2007     2006
                -------- -------- --------- -------- -------- --------

Operating
 Statistic

Contract Value
 (1) (at period
 end)              16.2% $523,134 $ 450,288

Financial
 Highlights
Revenues           15.1% $136,288 $ 118,390    16.5% $390,510 $335,121
Cost of
 services (2)              45,600    42,757           137,540  119,276
                         -------- ---------          -------- --------
    Gross
     profit                90,688    75,633           252,970  215,845

Member
 relations and
 marketing (2)             38,063    30,455  109,791   91,230
General and
 administrative
 (2)                       16,898    14,818            52,923   45,343
Depreciation
 and
 amortization               4,176     2,141            10,247    6,563
                         -------- ---------          -------- --------
    Income from
     operations    11.8%   31,551    28,219    10.0%   80,009   72,709

Other income,
 net                        3,233     6,109            14,437   18,337
                         -------- ---------          -------- --------

Income before
 provision for
   income taxes            34,784    34,328            94,446   91,046
Provision for
 income taxes              13,392    13,216            36,361   35,052
                         -------- ---------          -------- --------
    Net income      1.3% $ 21,392 $  21,112     3.7% $ 58,085 $ 55,994
                         ======== =========          ======== ========

Basic earnings
 per share         13.2% $   0.60 $    0.53    12.1% $   1.57 $   1.40
Diluted
 earnings per
 share             13.5% $   0.59 $    0.52    12.4% $   1.54 $   1.37

Weighted
 average shares
 outstanding
   Basic                   35,932    39,759            37,106   39,937
   Diluted                 36,346    40,481            37,626   41,007

Percentages of
 Revenues
Gross profit                66.5%     63.9%             64.8%    64.4%
Member
 relations and
 marketing                  27.9%     25.7%             28.1%    27.2%
General and
 administrative             12.4%     12.5%             13.6%    13.5%
Depreciation
 and
 amortization                3.1%      1.8%              2.6%     2.0%
Income from
 operations                 23.2%     23.8%             20.5%    21.7%

----------------------------------------------------------------------

(1) We define "Contract Value" as of the quarter-end as the aggregate
 annualized revenue attributed to all agreements in effect on such
 date, without regard to the remaining duration of any such agreement.
(2) The following amounts relating to share-based compensation are
 included in the Statements of Operations above for the three months
 ended September 30, 2007 and 2006, respectively: Cost of services,
 $2,753 and $2,812, Member relations and marketing, $1,248 and $1,365
 and General and administrative, $1,997 and $1,721. The following
 amounts relating to share-based compensation are included in the
 Statements of Operations above for the nine months ended September
 30, 2007 and 2006, respectively: Cost of services, $8,616 and $9,140,
 Member relations and marketing, $3,772 and $4,298 and General and
 administrative, $5,707 and $5,559.
                THE CORPORATE EXECUTIVE BOARD COMPANY
                CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)

                                          Sept. 30, 2007 Dec. 31, 2006
                                          -------------- -------------
                                           (Unaudited)
Assets

Current assets:
    Cash and cash equivalents               $     73,906  $    171,367
    Marketable securities                         20,799       119,534
    Membership fees receivable, net               84,489       153,107
    Deferred income taxes, net                    15,693        15,109
    Deferred incentive compensation               11,060        13,160
    Prepaid expenses and other current
     assets                                        9,147         9,881
                                          -------------- -------------
                    Total current assets         215,094       482,158

Deferred income taxes, net                        15,232        12,896
Marketable securities                             78,112       196,386
Goodwill                                          42,246         6,364
Other intangible assets                           20,566         1,462
Other non-current assets                          18,978         9,801
Property and equipment, net                       72,999        26,988
                                          -------------- -------------
                    Total assets            $    463,227  $    736,055
                                          ============== =============

Liabilities and stockholders' equity

Current liabilities:
    Accounts payable and accrued
     liabilities                            $     50,991  $     66,773
    Accrued incentive compensation                22,833        25,062
    Deferred revenues                            252,315       308,671
                                          -------------- -------------
                    Total current
                     liabilities                 326,139       400,506

Other liabilities                                 51,284        17,684
                                          -------------- -------------
                    Total liabilities            377,423       418,190

Total stockholders' equity                        85,804       317,865
                                          -------------- -------------
                    Total liabilities and
                     stockholders' equity   $    463,227  $    736,055
                                          ============== =============
                THE CORPORATE EXECUTIVE BOARD COMPANY
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands)
                             (Unaudited)
                                                   Nine Months Ended
                                                     September 30,
                                                 ---------------------
                                                    2007       2006
                                                 ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                    $  58,085  $  55,994
   Adjustments to reconcile net income to net
    cash flows provided by
       Operating activities:
       Depreciation and amortization                10,247      6,530
       Deferred income taxes, net                   (2,759)    34,328
       Share-based compensation                     18,103     18,997
       Excess tax benefits from share-based
        compensation arrangements                   (2,409)   (29,031)
       Amortization of marketable securities
        discounts, net                                (633)    (1,658)
       Changes in operating assets and
        liabilities:
            Membership fees receivable, net         70,159     46,423
            Deferred incentive compensation          2,100      1,589
            Prepaid expenses and other current
             assets                                    734     (1,502)
            Other non-current assets                (5,291)    (7,061)
            Accounts payable and accrued
             liabilities                           (20,244)    (8,891)
            Accrued incentive compensation          (2,229)    (6,684)
            Deferred revenues                      (56,356)   (37,430)
            Other liabilities                        2,400      5,694
                                                 ---------- ----------
                 Net cash flows provided by
                  operating activities              71,907     77,298
                                                 ---------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment, net        (16,482)   (13,487)
   Cost method investment                           (3,829)        --
   Acquisition of business, net of cash acquired   (58,288)        --
   Sales and maturities (purchases) of
    marketable securities, net                     219,098   (194,537)
                                                 ---------- ----------
                 Net cash flows provided by
                  (used in) investing activities   140,499   (208,024)
                                                 ---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from the exercise of common stock
    options                                            691      2,890
   Proceeds from the issuance of common stock
    under the Employee stock purchase plan           1,630      1,461
   Excess tax benefits from share-based
    compensation arrangements                        2,409     29,031
   Purchase of treasury shares                    (270,764)  (166,807)
   Payment of dividends                            (43,833)   (35,680)
   Reimbursement of common stock offering costs         --         70
   Payment of common stock offering costs               --        (70)
                                                 ---------- ----------
                 Net cash flows used in
                  financing activities            (309,867)  (169,105)
                                                 ---------- ----------

NET DECREASE IN CASH AND CASH EQUIVALENTS          (97,461)  (299,831)
Cash and cash equivalents, beginning of period     171,367    424,276
                                                 ---------- ----------

Cash and cash equivalents, end of period         $  73,906  $ 124,445
                                                 ========== ==========

CONTACT: The Corporate Executive Board Company
Timothy R. Yost, Chief Financial Officer, 202-777-5455
heroldl@executiveboard.com
www.executiveboard.com

SOURCE: The Corporate Executive Board Company