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The Corporate Executive Board Reports Third Quarter Earnings of $0.16 Per Share; Announces New Procurement Strategy Council
WASHINGTON, Oct 24, 2001 (BUSINESS WIRE) --

Elects Nancy Karch to the Company's Board of Directors

The Corporate Executive Board Company (CEB) (Nasdaq/NM:EXBD) today announced financial results for the third quarter and nine months ended September 30, 2001. Revenues for the quarter were $32,625,000, up 30.1% from $25,084,000 for the third quarter of 2000. Pro forma net income for the latest quarter increased 40.2% to $5,825,000 from $4,155,000 for the third quarter last year. Pro forma earnings per diluted share increased 33.3% to $0.16 for the third quarter from $0.12 for the comparable period in 2000. Pro forma adjustments exclude stock option and related expenses.

Revenues for the first nine months of 2001 were $92,964,000, an increase of 35.8% from $68,480,000 for the first nine months of 2000. Pro forma net income rose 43.9% to $16,085,000 from $11,176,000. Pro forma earnings per diluted share for the latest nine-month period rose 37.5% to $0.44 from $0.32 for the first nine months of 2000. Pro forma adjustments exclude stock option and related expenses for both periods.

Commenting on the announcement, Jay McGonigle, Chairman and Chief Executive Officer of the Corporate Executive Board, said, "We are obviously very pleased with our third-quarter performance, and with the way that the CEB franchise continues to perform in this challenging macro-economic environment. Our key growth metrics are on track, with the cross-sell ratio climbing to 2.25 at quarter end, price increases in-line with expectations, and companies like British Gas, CarMax, Kmart, Mutual of Omaha, Omni Hotels, Veritas Software, Whirlpool and the U.S. Marine Corps all joining our membership ranks. Our network of over 1,700 large companies around the world, focus on the needs of senior executives across multiple functions, and position as the low-cost alternative to more expensive sources of advice, ideas and decision-support all work together to underpin this success.

"Today, we are also delighted to announce the launch of our newest research program: the Procurement Strategy Council. This program is building a membership of Chief Procurement Officers (CPOs) at large companies around the world. These executives are leading a function very much in the ascendant -- wrestling with fascinating issues around new supplier relationships, supply chain innovations, risk management across the entire logistics system, procurement function performance metrics and, of course, cost-control. As always, the program design and inaugural research agenda reflect the guidance of a stellar group of charter advisors, including the CPOs from Baxter International, Capital One, Colgate-Palmolive, Department of Defense, EDS, Eli Lilly, Exxon Mobil, FedEx, IBM, Procter and Gamble and many others. Procurement is the third of our three planned new program launches for 2001, and brings our total number of research programs to eighteen."

CEB also today announced that Nancy Karch has been elected to the Company's Board of Directors, replacing Stephen Pagliuca, who is stepping down from the Board. Ms. Karch recently retired from a 26-year career with the international consulting firm, McKinsey & Company, where she was a Director, and she continues to serve on the McKinsey Advisory Council, a small group of former senior partners who provide advice to the firm. At McKinsey, Ms. Karch was involved in a variety of industries, including the retailing, apparel manufacturing, food and hospitality industries, and she held several leadership positions, including Managing Partner of the Retail and Consumer Industries Sector and Managing Partner of McKinsey Southeast United States. Ms. Karch also currently serves on the Board of Directors of two other publicly traded companies, Liz Claiborne, Inc. and Toys'R'Us.

Mr. McGonigle remarked, "We are very pleased to have an individual with Nancy Karch's extensive talents and experience join the CEB team. We look forward to her contributions to the strategy, operations, and continued profitable growth of the Company. In addition, on behalf of CEB's stockholders, we offer our thanks and appreciation to Steve Pagliuca for his years of service on our Board and excellent advice at all junctures since the Company's initial public offering."

    Outlook for Fiscal 2001
The following statements summarize the Company's guidance for fiscal 2001 and the fourth quarter ending December 31, 2001:

For fiscal 2001, the Company reiterates its target for annual growth in revenues of a minimum of 30% and continued modest expansion in the pro forma operating margin toward its target annual range of 25% - 30%.

For the fourth quarter ending December 31, 2001, the Company is currently comfortable with a range for revenues of $34.0 - $34.6 million and the existing range of analysts' estimates as follows:

Pro forma income from operations            $8.1 - $8.6 million
Pro forma diluted EPS                       $0.16
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 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, the dependence on renewal of membership based services, dependence on key personnel, the need to attract and retain qualified personnel, management of growth, new product development, competition, risks associated with anticipating market trends, industry consolidation, variability of quarterly operating results, various factors that could affect the estimated tax rate and possible volatility of the stock price. These factors are discussed more fully in a registration statement on Form S-3 that the Company filed with the Securities and Exchange Commission on February 20, 2001. The Company undertakes 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 1,700 of the world's largest and most prestigious corporations, including over 70% 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 140,000 corporate best practices.

                 THE CORPORATE EXECUTIVE BOARD COMPANY
                    Unaudited Financial Highlights
                 (in thousands, except per share data)
                              Three Months Ended    Nine Months Ended
                                 September 30,         September 30,
                              ------------------   -------------------
                                 2001     2000       2001       2000
                              --------  --------   --------  ---------
Revenues                      $ 32,625  $ 25,084   $ 92,964  $  68,480
Net income                    $  5,825  $  4,090   $ 15,305  $  10,398
Basic earnings per share      $   0.17  $   0.13   $   0.45  $    0.35
Diluted earnings per share    $   0.16  $   0.12   $   0.42  $    0.30
Weighted average shares
  outstanding:
   Basic                        34,750    30,937     33,725     30,082
   Diluted                      36,908    35,072     36,361     34,418
Pro forma: (1)
   Net income                 $  5,825  $  4,155   $ 16,085  $  11,176
Diluted earnings per share    $   0.16  $   0.12   $   0.44  $    0.32
(1) Excludes stock option and related expenses.
                 THE CORPORATE EXECUTIVE BOARD COMPANY
                    Unaudited Financial Highlights
                 (in thousands, except per share data)
                                    Selected      Three Months Ended
                                     Growth          September 30,
                                              ------------------------
                                     Rates        2001       2000
                                 -----------  ----------   -----------
Contract Value (at period end)          30.2%   $128,535    $98,692
Statements of Income
Revenues                                30.1%    $32,625    $25,084
Cost of services                                  11,012      9,049
                                                --------   --------
     Gross profit                                 21,613      16,035
Member relations and marketing                     7,915       5,611
General and administrative                         4,215       3,465
Depreciation                                       1,198         742
Stock option and related expenses                    --          107
                                                 -------    --------
     Income from operations                        8,285       6,110
Other income, net                                  1,110         595
                                                 -------    --------
Income before provision for
  income taxes                                     9,395       6,705
Provision for income taxes                         3,570       2,615
                                                  ------    --------
     Net income                                   $5,825      $4,090
                                                 =======    ========
EPS-basic                                          $0.17       $0.13
EPS-diluted                                        $0.16       $0.12
Pro forma income from
  operations (1)                        33.3%     $8,285      $6,217
Pro forma net income (1)                40.2%     $5,825      $4,155
Pro forma EPS-basic (1)                            $0.17       $0.13
Pro forma EPS-diluted (1)               33.3%      $0.16       $0.12
Weighted average shares
  outstanding
   Basic                                          34,750      30,937
   Diluted                                        36,908      35,072
Percentages of Revenues
Gross profit                                        66.2%      63.9%
Member relations and marketing                      24.3%      22.4%
General and administrative                          12.9%      13.8%
Depreciation                                         3.7%       3.0%
Pro forma income from
  operations (1)                                    25.4%      24.8%
Pro forma net income (1)                            17.9%      16.6%
                                      Selected    Nine Months Ended
                                       Growth        September 30,
                                       Rates      2001         2000
                                      --------   ------       ------
Contract Value (at period end)
Statements of Income
Revenues                                35.8%    $92,964    $68,480
Cost of services                                  33,164     25,898
                                                  ------    --------
     Gross profit                                 59,800     42,582
Member relations and marketing                    21,837     15,120
General and administrative                        12,111      9,113
Depreciation                                       3,121      1,657
Stock option and related expenses                  1,258      1,275
                                                  ------    --------
     Income from operations                       21,473     15,417
Other income, net                                  3,212      1,630
                                                  ------    --------
Income before provision for
  income taxes                                    24,685     17,047
Provision for income taxes                         9,380      6,649
                                                  ------    --------
     Net income                                  $15,305    $10,398
                                                ========    ========
EPS-basic                                          $0.45      $0.35
EPS-diluted                                        $0.42      $0.30
Pro forma income from
  operations (1)                        36.2%    $22,731    $16,692
Pro forma net income (1)                43.9%    $16,085    $11,176
Pro forma EPS-basic (1)                            $0.48      $0.37
Pro forma EPS-diluted (1)               37.5%      $0.44      $0.32
Weighted average shares
  outstanding
   Basic                                          33,725     30,082
   Diluted                                        36,361     34,418
Percentages of Revenues
Gross profit                                        64.3%     62.2%
Member relations and marketing                      23.5%     22.1%
General and administrative                          13.0%     13.3%
Depreciation                                         3.4%      2.4%
Pro forma income from
  operations (1)                                    24.5%     24.4%
Pro forma net income (1)                            17.3%     16.3%
(1) Excludes stock option and related expenses.
                 THE CORPORATE EXECUTIVE BOARD COMPANY
                       CONDENSED BALANCE SHEETS
                            (in thousands)
                                        Sept. 30,   Dec. 31,
                                          2001       2000
                                       ---------- ----------
                                       (Unaudited)
Assets
Current assets:
 Cash and cash equivalents               $ 20,157    $ 19,493
 Marketable securities                     36,766       5,765
 Membership fees receivable, net           19,971      29,519
 Deferred income taxes, net                15,518      14,742
 Deferred incentive compensation            2,413       2,827
 Prepaid expenses and other
   current assets                           3,592       3,015
                                        ----------   --------
      Total current assets                 98,417      75,361
Deferred income taxes, net                 45,722      16,606
Marketable securities                      51,193      44,115
Property and equipment, net                17,301      16,412
                                        ----------    -------
      Total assets                     $  212,633   $ 152,494
                                        ==========  =========
Liabilities and stockholders'
  equity
Current liabilities:
    Accounts payable and
      accrued liabilities              $    7,916   $   8,102
    Accrued incentive compensation          2,820       3,013
    Stock option repurchase liability         --        3,140
    Deferred revenues                      64,857      71,281
                                          --------  ---------
       Total current liabilities           75,593      85,536
Other liabilities                           1,715       1,397
                                          --------  ---------
       Total liabilities                   77,308      86,933
       Total stockholders' equity         135,325      65,561
                                         ---------  ---------
Total liabilities and stockholders'
  equity                                $ 212,633   $ 152,494
                                        ==========  =========
                 THE CORPORATE EXECUTIVE BOARD COMPANY
                  CONDENSED STATEMENTS OF CASH FLOWS
                            (in thousands)
                              (Unaudited)
                                                 Nine Months Ended
                                                    September 30,
                                                --------------------
                                                  2001         2000
                                                ---------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                   $    15,305  $    10,398
 Adjustments to reconcile net income to
   net cash flows from operating
    activities:
    Depreciation                                    3,121        1,657
    Deferred income taxes                           9,380        6,649
    Stock option and related expenses                 186          288
    Changes in operating assets and
     liabilities:
       Membership fees receivable, net              9,548       17,829
       Deferred incentive compensation                414          592
       Prepaid expenses and other
         current assets                              (577)      (1,926)
       Accounts payable and accrued
         liabilities                                 (186)         (52)
       Accrued incentive compensation                (193)      (2,308)
       Deferred revenues                           (6,424)      (8,595)
       Other liabilities                              318          558
                                              -----------  -----------
            Net cash flows provided by
               operating activities                30,892       25,090
                                              -----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of property and equipment, net           (4,010)      (6,999)
 Purchase of marketable securities, net           (36,091)     (18,782)
                                              -----------  -----------
            Net cash used in investing
              activities                          (40,101)     (25,781)
                                              -----------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from the exercise of common
    stock options                                  12,471        5,163
 Proceeds from the purchase of common stock
    under the employee stock purchase plan            542           --
 Reimbursement of offering costs                      375          650
 Payment of offering costs                           (375)        (650)
 Stock option repurchases                          (3,140)      (1,570)
                                              -----------  -----------
            Net cash provided by
              financing activities                  9,873        3,593
                                              -----------  -----------
NET INCREASE IN CASH AND
 CASH EQUIVALENTS                                     664        2,902
Cash and cash equivalents,
  beginning of period                              19,493       19,726
                                              -----------  -----------
Cash and cash equivalents, end of period      $    20,157  $    22,628
                                              ===========  ===========
CONTACT:          The Corporate Executive Board Company
                  Clay Whitson, 202/777-5193
                  johnsonj@executiveboard.com
                  www.executiveboard.com

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