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The Corporate Executive Board Reports Third Quarter Earnings of $0.21 Per Diluted Share
WASHINGTON, Oct 23, 2002 (BUSINESS WIRE) -- The Corporate Executive Board Company (CEB) (Nasdaq:EXBD) today announced financial results for the third quarter and nine months ended September 30, 2002. Revenues for the third quarter increased 26.5% to $41,275,000 from $32,625,000 for the third quarter of 2001. Net income rose 34.5% to $7,837,000 from $5,825,000. Earnings per diluted share for the latest quarter were $0.21, up 31.3% from $0.16 for the comparable period in 2001.

For the first nine months of 2002, revenues were $117,845,000, a 26.8% increase from $92,964,000 for the first nine months of 2001. Net income grew 39.5% to $21,357,000 from $15,305,000. Earnings per diluted share for the first nine months of 2002 increased 35.7% to $0.57 from $0.42 for the same prior-year period. Pro forma net income for the first nine months of 2002, which excludes stock option and related expenses in all periods, increased 35.3% to $21,769,000 from $16,085,000 for the first nine months of 2001, and pro forma diluted earnings per share increased 31.8% to $0.58 from $0.44.

Jay McGonigle, chairman and chief executive officer of the Corporate Executive Board, commented, "We are very pleased today to announce another strong quarter. While the economic environment remains difficult, our focus on the needs of senior executives at large companies, our position as the low-cost producer of best practices research and unbiased decision-support, and our talented staff members work together to underpin strong execution and continued success in the market. All of our key growth metrics are on track; with the cross-sell ratio climbing to 2.55 membership programs per institution and contract value increasing 27.1% year-over-year. These metrics enable us to reiterate comfort with our full-year growth target of a minimum of 25% revenue growth.

"Today, we are also delighted to announce our third new product for 2002: the IT Infrastructure Executive Council. This program, an extension of our strong CIO membership, will serve the executives who are responsible for the "IT backbone" at major corporations; including voice and data network operations, end-user computing and disaster recovery. As always, the program design and inaugural agenda reflects the guidance of a stellar group of charter advisors; including the senior infrastructure executives from American Express, Eli Lilly, ExxonMobil, General Electric, Intel, Liberty Mutual, Target and United Parcel Service. We are very excited by the opportunity to serve this mission-critical function. The Infrastructure Executive Council is our third new launch of 2002 and brings our total number of membership programs to 21."

    Outlook for Fiscal 2002
The following statements summarize the Company's guidance for fiscal 2002:

For the fourth quarter of 2002, the Company is comfortable with revenue growth of a minimum of 25% and the existing range of analysts' estimates, which are:

Pro Forma Income from Operations    $11.1 million - $11.6 million
Pro Forma Diluted EPS               $0.21
For the full fiscal year 2002, the Company is comfortable with annual growth in revenue above its stated 25% minimum and continued modest expansion in the pro forma operating margin to its target annual range of 25 - 30%. As in the past, the pro forma operating margin may fluctuate on a quarterly basis.

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, our dependence on renewals of our membership-based services, our inability to know in advance if new products will be successful, difficulties we may experience in anticipating market trends, our need to attract and retain a significant number of highly skilled employees, restrictions on selling our products and services to the health care industry, continued consolidation in the financial institution industry which may adversely impact our business, fluctuations in operating results, our potential inability to protect our intellectual property rights, our potential exposure to litigation related content, our potential exposure to loss of revenue resulting from the unconditional service guarantee, various factors that could affect the estimated income tax rate, our ability to use our existing deferred tax assets, and possible volatility of stock price. These factors are discussed more fully in the 2001 annual report on Form 10-K that we filed with the Securities and Exchange Commission in February 2002. The forward-looking statements in this press release are made as of October 23, 2002, 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 1,800 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 180,000 corporate best practices.

                 THE CORPORATE EXECUTIVE BOARD COMPANY
                         Financial Highlights
                 (in thousands, except per share data)
                              (Unaudited)
                           Three Months Ended    Nine Months Ended
                              September 30,        September 30,
                           ------------------   -------------------
                              2002     2001       2002      2001
                           --------  --------   --------   --------
Revenues                   $ 41,275  $ 32,625   $117,845   $ 92,964
Net income                 $  7,837  $  5,825   $ 21,357   $ 15,305
Basic earnings per share   $   0.21  $   0.17   $   0.58   $   0.45
Diluted earnings per share $   0.21  $   0.16   $   0.57   $   0.42
Weighted average shares
 outstanding:
   Basic                     37,123    34,750     36,572     33,725
   Diluted                   37,734    36,908     37,607     36,361
Pro forma: (1)
   Net income              $  7,837  $  5,825   $ 21,769   $ 16,085
Diluted earnings per share $   0.21  $   0.16   $   0.58   $   0.44
(1)  Excludes stock option and related expenses.
                 THE CORPORATE EXECUTIVE BOARD COMPANY
                         Financial Highlights
                 (in thousands, except per share data)
                              (Unaudited)
                                             Three Months Ended
                                  Selected      September 30,
                                   Growth   -------------------
                                    Rates     2002       2001
                                  --------  ---------  --------
Contract Value
  (at period end)                    27.1%  $ 163,399  $128,535
Statements of Income
Revenues                             26.5%  $  41,275  $ 32,625
Cost of services                               14,126    11,012
                                            ---------  --------
     Gross profit                              27,149    21,613
Member relations and marketing                 10,248     7,915
General and administrative                      4,388     4,215
Depreciation                                    1,399     1,198
Stock option and
  related expenses                                  -         -
                                            ---------  --------
     Income from operations          34.1%     11,114     8,285
Other income, net                               1,734     1,110
                                            ---------  --------
Income before provision
  for income taxes                             12,848     9,395
Provision for income taxes                      5,011     3,570
                                            ---------  --------
     Net income                      34.5%  $   7,837  $  5,825
                                            =========  ========
EPS-basic                                   $    0.21  $   0.17
EPS-diluted                          31.3%  $    0.21  $   0.16
Pro forma income from
  operations(1)                      34.1%  $  11,114  $  8,285
Pro forma net income (1)             34.5%  $   7,837  $  5,825
Pro forma EPS-basic (1)                     $    0.21  $   0.17
Pro forma EPS-diluted (1)            31.3%  $    0.21  $   0.16
Weighted average
  shares outstanding
   Basic                                       37,123    34,750
   Diluted                                     37,734    36,908
Percentages of Revenues
Gross profit                                     65.8%     66.2%
Member relations and marketing                   24.8%     24.3%
General and administrative                       10.6%     12.9%
Income from operations                           26.9%     25.4%
Net income                                       19.0%     17.9%
Pro forma income from
  operations (1)                                 26.9%     25.4%
Pro forma net income (1)                         19.0%     17.9%
                               Selected         Nine Months Ended
                                Growth            September 30,
                                           --------------------------
                                 Rates         2002           2001
                               ---------   -----------    -----------
Contract Value (at period end)
Statements of Income
Revenues                           26.8%   $   117,845    $    92,964
Cost of services                                40,659         33,164
                                           -----------    -----------
     Gross profit                               77,186         59,800
Member relations and marketing                  29,222         21,837
General and administrative                      13,215         12,111
Depreciation                                     3,988          3,121
Stock option and
  related expenses                                 668          1,258
                                           -----------    -----------
     Income from operations        40.1%        30,093         21,473
Other income, net                                4,563          3,212
                                           -----------    -----------
Income before provision for
  income taxes                                  34,656         24,685
Provision for income taxes                      13,299          9,380
                                           -----------    -----------
     Net income                    39.5%   $    21,357    $    15,305
                                           ===========    ===========
EPS-basic                                  $      0.58    $      0.45
EPS-diluted                        35.7%   $      0.57    $      0.42
Pro forma income from
  operations(1)                    35.3%   $    30,761    $    22,731
Pro forma net income (1)           35.3%   $    21,769    $    16,085
Pro forma EPS-basic (1)                    $      0.60    $      0.48
Pro forma EPS-diluted (1)          31.8%   $      0.58    $      0.44
Weighted average
 shares outstanding
   Basic                                        36,572         33,725
   Diluted                                      37,607         36,361
Percentages of Revenues
Gross profit                                      65.5%          64.3%
Member relations and marketing                    24.8%          23.5%
General and administrative                        11.2%          13.0%
Income from operations                            25.5%          23.1%
Net income                                        18.1%          16.5%
Pro forma income from
  operations (1)                                  26.1%          24.5%
Pro forma net income (1)                          18.5%          17.3%
(1)  Excludes stock option and related expenses.
                 THE CORPORATE EXECUTIVE BOARD COMPANY
                       CONDENSED BALANCE SHEETS
                            (in thousands)
                                          Sept. 30, 2002 Dec. 31, 2001
                                          -------------- -------------
                                            (Unaudited)
Assets
Current assets:
    Cash and cash equivalents                $ 33,968      $   48,271
    Marketable securities                      16,546          35,735
    Membership fees receivable, net            26,436          42,011
    Deferred income taxes, net                 26,576          19,881
    Deferred incentive compensation             3,551           4,216
    Prepaid expenses and
      other current assets                      4,323           3,042
                                             --------      ----------
         Total current assets                 111,400         153,156
Deferred income taxes, net                     37,752          38,639
Marketable securities                         143,480          48,463
Property and equipment, net                    15,755          17,260
                                             --------      ----------
            Total assets                    $ 308,387       $ 257,518
                                            =========       =========
Liabilities and
  stockholders' equity
Current liabilities:
    Accounts payable and
      accrued liabilities                    $ 10,589       $  10,683
    Accrued incentive
      compensation                              7,104           6,387
    Deferred revenues                          83,001          94,683
                                             --------       ---------
         Total current liabilities            100,694         111,753
Other liabilities                               2,627           1,781
                                             --------       ---------
           Total liabilities                  103,321         113,534
Stockholders' equity                          205,066         143,984
                                             --------       ---------
              Total liabilities and
                 stockholders' equity       $ 308,387       $ 257,518
                                            =========       =========
                 THE CORPORATE EXECUTIVE BOARD COMPANY
                       STATEMENTS OF CASH FLOWS
                            (in thousands)
                              (Unaudited)
                                                 Nine Months Ended
                                                    September 30,
                                              ------------------------
                                                  2002         2001
CASH FLOWS FROM OPERATING ACTIVITIES:         -----------  -----------
     Net income                               $    21,357  $   15,305
     Adjustments to reconcile
      net income to net cash
        flows from operating activities:
        Depreciation                                3,988       3,121
        Deferred income taxes                      13,299       9,380
        Stock option repurchases                       --      (3,140)
        Stock option and
          related expenses                             --         186
        Amortization of marketable
          securities premiums, net                  1,072         453
        Changes in operating assets
         and liabilities:
           Membership fees
             receivable, net                       15,575       9,548
           Deferred incentive compensation            665         414
           Prepaid expenses and other
             current assets                        (1,281)       (577)
           Accounts payable and accrued
             liabilities                             (222)       (186)
           Accrued incentive compensation             717        (193)
           Deferred revenues                      (11,682)     (6,424)
           Other liabilities                          846         318
                                               -----------  ----------
              Net cash flows provided by
                operating activities               44,334      28,205
                                               -----------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and
       equipment, net                              (2,483)     (4,010)
     Purchase of marketable
       securities, net                            (69,176)    (36,544)
                                              ------------ -----------
              Net cash flows used in
                investing activities              (71,659)    (40,554)
                                              ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from the exercise of common
        stock options                              12,409      12,471
     Proceeds from the issuance of common
        stock under the employee stock
        purchase plan                                 485         542
     Reimbursement of common stock
        offering costs                                300         375
     Payment of common stock
        offering costs                               (172)       (375)
                                               -----------  ----------
              Net cash flows provided by
                financing activities               13,022      13,013
                                               -----------  ----------
NET INCREASE (DECREASE) IN CASH AND
     CASH EQUIVALENTS                             (14,303)        664
Cash and cash equivalents,
  beginning of period                              48,271      19,493
                                               -----------  ----------
Cash and cash equivalents, end of period      $    33,968  $   20,157
                                               ===========  ==========
CONTACT:          The Corporate Executive Board Company
                  Timothy R. Yost, 202/777-5455
                  heroldl@executiveboard.com
                  www.executiveboard.com

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