Press Release

The Corporate Executive Board Reports First-Quarter Diluted Earnings Per Share of $0.45 and 10.8% Revenue Growth

ARLINGTON, Va.--(BUSINESS WIRE)--April 23, 2008--The Corporate Executive Board Company ("CEB" or the "Company") (NASDAQ: EXBD) today announces financial results for the first quarter ended March 31, 2008. Revenues for the first quarter increased 10.8% to $138.0 million from $124.5 million for the first quarter of 2007. Net income decreased 18.0% to $15.9 million from $19.4 million. Diluted earnings per share for the first quarter of 2008 decreased 10.0% to $0.45 from $0.50 for the first quarter of 2007. Diluted EPS was positively impacted by a shift in the timing of expenses, which is further discussed in the "Outlook for 2008" section below.

Contract Value growth in the first quarter of 2008 was 8.8%, as a result of new client acquisitions, continued cross-sales to existing clients, and new program launches. The average cross-sell ratio was 3.31, reflecting cross-sell ratios of 3.84 in the Company's large corporate market and 1.49 for middle market customers. Growth from new clients continued to be strong, as experienced over the past two years, and is tracking toward the high end of its target range. This strong growth came from both the traditional larger company market as well as from the middle market. Growth from new programs is tracking toward annual expectations and growth from cross-sales is tracking below its target at this early point in the year.

The Company also announces the second membership program launch of 2008, the Corporate Legal Exchange (CLEX). This program serves legal executives in middle market companies. This launch brings the total number of membership-based programs to 50. Companies joining their first CEB program in the quarter included: Birds Eye Limited; Boston Market Corporation; Fiskar Brands, Inc.; Morningstar, Inc.; Pirelli & C. S.p.A.; and Under Armour, Inc.

Tom Monahan, Chairman and Chief Executive Officer commented, "I'm encouraged by our progress across the first quarter. Contract value growth got off to a solid start, offset by continued overhang from a weaker than expected Q4 2007 and a shift in the seasonality of our renewals. Our performance reflects continuing progress against two of our key priorities: restoring momentum to our North American sales organization and developing products to target new member budgets. At the same time, we have not yet fully realized the results of the sales and service initiatives we are implementing to address our other two priorities: increasing cross-sales at our largest member companies and increasing utilization, especially among new members. These initiatives are just in their early stages and it will take several quarters for the returns to fully materialize. Across the balance of the year, we will remain intensely focused on ensuring that our members and prospective members realize immediate value from our insights and resources - especially as they navigate a very challenging economic environment. We have confidence that we are on the right set of priorities to drive 2008 outcomes and longer-term growth, but we realize that we need very sharp execution given the selling environment that we confront."


During the quarter ended March 31, 2008, the Company repurchased approximately 940,000 shares of its common stock at a total cost of $37.6 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.


The following statements summarize the Company's guidance for 2008. The Company is maintaining its guidance for full year Contract Value growth of 10% to 15%, and annual revenue growth for 2008 of approximately 5%-10%, or $561-$586 million. On a quarterly basis, the Company expects a revenue distribution as follows: Approximately $134-$141 million for the second quarter, $139-$152 million for the third quarter, and $150-$165 million for the fourth quarter of 2008.

The Company is maintaining its guidance range on annual diluted earnings per share for 2008 of $2.06 to $2.22. Reflecting a shift in expense timing for the balance of 2008, the Company expects diluted earnings per share of $0.41 to $0.47 for the second quarter, $0.53 to $0.63 for the third quarter, and $0.64-$0.72 for the fourth quarter. Included in the guidance above is approximately $4.5 million of expense relating to share-based compensation for each remaining quarter of 2008.

The Company expects an EBITDA margin of approximately 24%.

For the full year 2008, the Company expects Depreciation and amortization expense of $22 to $23 million, Other income of approximately $4.0 million, an effective income tax rate of approximately 40.0% and diluted weighted average shares outstanding of approximately 34.25 -34.75 million.

The diluted earnings per share, interest income and weighted average shares outstanding guidance includes only share repurchases made as of March 31, 2008.


This press release and the accompanying tables include a discussion of EBITDA, which is a non-GAAP financial measure provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The term "EBITDA" refers to a financial measure that we define as earnings before Other income, net (primarily comprised of interest income), Income taxes, and Depreciation and amortization. This non-GAAP measure may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Furthermore, we intend to continue to provide this non-GAAP financial measure as part of our future earnings discussions and, therefore, the inclusion of this non-GAAP financial measure will provide consistency in our financial reporting. A reconciliation of this non-GAAP measure to GAAP is provided below.

                                                    Three Months Ended
                                                        March 31,
                                                      2008      2007
                                                    --------- --------
         Net income                                  $15,886  $19,370
         Other income, net                              (698)  (5,915)
         Depreciation and amortization                 5,562    2,906
         Provision for income taxes                   10,591   12,125
                                                    --------  -------
         EBITDA                                      $31,341  $28,486
                                                    ========  =======

We believe that EBITDA is relevant and useful information for our investors. We use this non-GAAP financial measure for internal budgeting and other managerial purposes, when publicly providing our business outlook and as a measurement for potential acquisitions. A limitation associated with EBITDA is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. Management compensates for these limitations by also relying on the comparable GAAP financial measure of Income from operations, which includes Depreciation and amortization.


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, the sale of additional programs to existing members and our ability to attract new members, our potential failure to adapt to member needs and demands and to anticipate or adapt to market trends, our potential inability 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), our potential inability to make, integrate and maintain acquisitions and investments, the amount and timing of the benefits expected from acquisitions and investments 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 2007 Annual Report on Form 10-K. The forward-looking statements in this press release are made as of April 23, 2008, 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 4,700 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)

                                         Selected   Three Months Ended
                                       Growth Rates     March 31,
                                       ------------ ------------------
Financial Highlights:
   (GAAP, as reported):                               2008      2007
                                                    --------- --------
Revenues                                      10.8%  $138,023 $124,525
Net income                                  (18.0)%  $ 15,886 $ 19,370
Basic earnings per share                     (8.0)%  $   0.46 $   0.50
Diluted earnings per share                  (10.0)%  $   0.45 $   0.50
Weighted average shares outstanding:
   Basic                                               34,728   38,412
   Diluted                                             34,962   39,117
           Operating Statistic and Statements of Operations
                (In thousands, except per share data)

                                          Selected Three Months Ended
                                           Growth       March 31,
                                           Rates     2008      2007
                                          -------- --------- ---------
Operating Statistic
Contract Value (1) (at period end)           8.8%  $535,943  $492,519

Financial Highlights
Revenues                                    10.8%  $138,023  $124,525
Cost of services (2)                                 45,055    44,676
                                                   --------- ---------
      Gross profit                                   92,968    79,849

Member relations and marketing (2)                   41,900    34,246
General and administrative (2)                       19,727    17,117
Depreciation and amortization                         5,562     2,906
                                                   --------- ---------
      Income from operations                 0.8%    25,779    25,580

Other income, net                                       698     5,915
                                                   --------- ---------

Income before provision for income taxes             26,477    31,495
Provision for income taxes                           10,591    12,125
                                                   --------- ---------
      Net income                           (18.0)% $ 15,886  $ 19,370
                                                   ========= =========

Basic earnings per share                    (8.0)% $   0.46  $   0.50
Diluted earnings per share                 (10.0)% $   0.45  $   0.50

Weighted average shares outstanding
   Basic                                             34,728    38,412
   Diluted                                           34,962    39,117

Percentages of Revenues
Gross profit                                           67.4%     64.1%
Member relations and marketing                         30.4%     27.5%
General and administrative                             14.3%     13.7%
Depreciation and amortization                           4.0%      2.3%
Income from operations                                 18.7%     20.5%
EBITDA (3)                                             22.7%     22.9%


(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 March 31, 2008 and 2007, respectively (in millions): Cost of
 services, $.9 and $3.3, Member relations and marketing, $(.3) and
 $1.3 and General and administrative, $2.0 and $2.0.
(3) See "NON-GAAP FINANCIAL MEASURE" for further explanation.
                            (In thousands)

                                      March 31, 2008 December 31, 2007
                                      -------------- -----------------

Current assets:
    Cash and cash equivalents           $     55,470      $     47,585
    Marketable securities                     36,075            24,153
    Membership fees receivable, net          118,063           161,336
    Deferred income taxes, net                12,752            12,710
    Deferred incentive compensation           13,831            15,544
    Prepaid expenses and other
     current assets                            9,369            10,638
                                      -------------- -----------------
               Total current assets          245,560           271,966

Deferred income taxes, net                    24,393            24,307
Marketable securities                         60,800            72,618
Property and equipment, net                  106,091            91,904
Goodwill                                      42,626            42,626
Intangible assets, net                        20,691            22,143
Other non-current assets                      18,377            19,208
                                      -------------- -----------------
               Total assets             $    518,538      $    544,772
                                      ============== =================

Liabilities and stockholders' equity

Current liabilities:
    Accounts payable and accrued
     liabilities                        $     54,345      $     62,681
    Accrued incentive compensation            32,106            31,355
    Deferred revenues                        335,522           323,395
                                      -------------- -----------------
               Total current
                liabilities                  421,973           417,431

Other liabilities                             61,963            59,794
                                      -------------- -----------------
               Total liabilities             483,936           477,225

Total stockholders' equity                    34,602            67,547
                                      -------------- -----------------
               Total liabilities and
                stockholders' equity    $    518,538      $    544,772
                                      ============== =================
                            (In thousands)
                                                   Three Months Ended
                                                       March 31,
                                                    2008       2007
                                                  --------- ----------
      Net income                                  $ 15,886  $  19,370
      Adjustments to reconcile net income to net
       cash flows provided by operating
          Depreciation and amortization              5,562      2,906
          Deferred income taxes                       (491)    (1,097)
          Share-based compensation                   2,583      6,578
          Excess tax benefits from share-based
           compensation arrangements                    --       (733)
          Amortization of marketable securities
           premiums (discounts), net                   188       (431)
          Changes in operating assets and
               Membership fees receivable, net      43,273     69,013
               Deferred incentive compensation       1,713      1,112
               Prepaid expenses and other current
                assets                               1,269       (377)
               Other non-current assets                831     (1,283)
               Accounts payable and accrued
                liabilities                         (1,932)   (21,970)
               Accrued incentive compensation          751      2,542
               Deferred revenues                    12,127      6,504
               Other liabilities                     2,169      2,033
                                                  --------- ----------
                    Net cash flows provided by
                     operating activities           83,929     84,167
                                                  --------- ----------

      Purchases of property and equipment, net     (24,702)    (3,726)
      Maturities (purchases) of marketable
       securities, net                                 815       (201)
                                                  --------- ----------
                    Net cash flows used in
                     investing activities          (23,887)    (3,927)
                                                  --------- ----------

      Proceeds from the exercise of common stock
       options                                         100        158
      Proceeds from the issuance of common stock
       under the employee stock purchase plan          403        559
      Excess tax benefits from share-based
       compensation arrangements                        --        733
      Purchase of treasury shares                  (37,614)  (126,401)
      Payment of dividends                         (15,046)   (15,043)
                                                  --------- ----------
                    Net cash flows used in
                     financing activities          (52,157)  (139,994)
                                                  --------- ----------

 EQUIVALENTS                                         7,885    (59,754)
Cash and cash equivalents, beginning of period      47,585    171,367
                                                  --------- ----------

Cash and cash equivalents, end of period          $ 55,470  $ 111,613
                                                  ========= ==========

CONTACT: The Corporate Executive Board Company
Timothy R. Yost, Chief Financial Officer, 571-303-4080

SOURCE: The Corporate Executive Board Company