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The Corporate Executive Board Reports First Quarter Earnings of $0.31 Per Diluted Share and 35% Revenue Growth; Launches Communications Executive Council

WASHINGTON, Apr 28, 2004 (BUSINESS WIRE) -- The Corporate Executive Board Company (CEB) (NASDAQ/NM:EXBD) today announced financial results for the first quarter ended March 31, 2004. Revenues for the first quarter increased 35.3% to $64.0 million from $47.3 million for the first quarter of 2003. Net income increased 43.7% to $12.0 million from $8.3 million. Earnings per diluted share for the first quarter increased 40.9% to $0.31 from $0.22 for the first quarter of 2003.

In October 2003, the Office of Tax and Revenue of the District of Columbia accepted CEB's certification as a Qualified High Technology Company (QHTC). As a QHTC, the Company's Washington, D.C. statutory income tax rate was reduced to 0.0%, from 9.975%, and the Company adjusted its tax rate in the third quarter of 2003 to reflect the new QHTC tax benefits. In order to present financial results on a comparable basis, CEB is also providing pro forma net income and earnings per diluted share in 2004 that adjust the 2003 tax rate to reflect the QHTC certification as if it had been made at the beginning of 2003. By this methodology, pro forma net income for the first quarter of 2004 increased 27.0% to $12.0 million from an adjusted $9.4 million in 2003. Pro forma earnings per diluted share for the first quarter of 2004 increased 24.0% to $0.31 from an adjusted $0.25. A reconciliation of CEB's reported and pro forma results is set forth in the notes to the Financial Highlights section below.

Jay McGonigle, Chairman and CEO of the Corporate Executive Board commented, "We are obviously happy with our first quarter and an excellent start to 2004. Our 90% client renewal rate in 2003 positioned us well for 2004, and all our key growth metrics are performing at, or slightly better than plan. The cross-sell ratio climbed to 3.04 membership programs per institution, up from 2.74 at this time last year. New client growth was also ahead of plan and some terrific companies and institutions joined their first CEB program in the quarter, including Canon U.S.A., Inc., Carlsberg A/S, Corus Group plc, National Institutes of Health, Papa John's International, Inc., Penn Mutual Life Insurance Company, Tommy Hilfiger, Inc. and WebMD Inc. Price increases are running within our 3-5% target range, and you can see the total impact of these key growth metrics reflected in our 34.3% contract value growth for the quarter.

"Today, I am also delighted to announce our 28th program: the Communications Executive Council (CEC). This program targets senior executives responsible for media relations, internal communications, and support of major change management efforts at the world's largest companies. The inaugural agenda is focused on best practices in managing company reputation, stakeholder perceptions, and communications department performance. As always, the Communications program has benefited enormously from the advice and guidance of our charter members, including senior executives from: Alcoa Inc., Caterpillar Inc., Diageo plc, Georgia-Pacific Corporation, Honeywell International Inc., Reed Elsevier plc and Royal Dutch/Shell Group of Companies. The Communications Executive Council is off to a terrific start - actually our fastest launch ever in its first few months. CEC is the second of our planned 4 to 5 new product launches for 2004 and brings our total number of membership-based research programs to 28."

Share Repurchase

During the first quarter of 2004, the Company repurchased 391,766 shares of its common stock at a total cost of approximately $18.7 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. At March 31, 2004, the Company had $303.0 million in cash and marketable securities and no debt.

Outlook for 2004

The following statements summarize the Company's guidance for 2004.

The Company is increasing its target for annual growth in revenues to a minimum of 27.0%, accompanied by continued modest expansion in the operating margin within its target annual range of 25 - 30%. As in the past, the operating margin may fluctuate on a quarterly basis. The Company expects a quarterly revenue distribution of approximately $65.0 million for the second quarter, $66.8 million for the third quarter and $71.9 million for the fourth quarter of 2004.

For 2004, the Company expects other income of approximately $9.7 million, an effective income tax rate of approximately 33% and diluted weighted shares outstanding of approximately 40.2 million to 40.7 million.

The Company is raising its guidance on earnings per diluted share for 2004 to $1.39. For the balance of 2004, the Company expects earnings per diluted share of $0.31 for the second quarter, $0.37 for the third quarter, and $0.40 for the fourth quarter.

Rusty Siebert Leaving Board of Directors

The Company also announced today the Rusty Siebert has asked that he not stand for reelection to the CEB Board of Directors when his term expires at the next annual meeting. Mr. Siebert is leaving the Board to devote more time to other responsibilities. Mr. McGonigle commented, "I want to recognize the many contributions to our strategy, our operations, and our sanity that Rusty Siebert has brought to the Company across more than a decade as a friend and across the past five years as a director. Rusty has been a steadfast supporter of CEB and our mission across the years, and we wish him all the best in his other endeavors."

Forward-Looking Statements

The Outlook section of 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 institutions industry, which may limit our business with such companies, fluctuations in operating results, our potential inability to protect our intellectual property rights, our potential exposure to litigation related to our content, 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, whether the Washington, D.C. Office of Tax and Revenue withdrawals our QHTC status and possible volatility of our stock price. These 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 Securities and Exchange Commission, including, but not limited to, its 2003 annual report on Form 10-K. The forward-looking statements in this press release are made as of April 28, 2004 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 2,100 of the world's largest and most prestigious corporations, including over 75% 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.

                 THE CORPORATE EXECUTIVE BOARD COMPANY
                         Financial Highlights
                 (in thousands, except per share data)
                              (Unaudited)

                                                    Three Months Ended
                                                    ------------------
                                                        March 31,
                                                    ------------------
                                                      2004     2003
                                                    --------- --------
Revenues                                             $63,979  $47,283
Net income                                           $11,980   $8,336
Basic earnings per share                               $0.32    $0.22
Diluted earnings per share                             $0.31    $0.22
Weighted average shares outstanding:
  Basic                                               37,187   37,223
  Diluted                                             38,868   37,878

Pro forma net income (1)                             $11,980   $9,432
Pro forma diluted earnings per share (1)               $0.31    $0.25


(1) Reconciliation of GAAP to pro forma net income and pro forma
    diluted earnings per share:

  Net income, as reported                            $11,980   $8,336
  Change in tax status and a new statutory
       Washington, D.C. income tax rate of 0.0%           --    1,096
                                                    --------- --------
  Pro forma net income                               $11,980   $9,432
                                                    ========= ========

  Diluted earnings per share, as reported              $0.31    $0.22
  Change in tax status and a new statutory
       Washington, D.C. income tax rate of 0.0%           --     0.03
                                                    --------- --------
  Pro forma diluted earnings per share                 $0.31    $0.25
                                                    ========= ========

The Company believes its calculation of pro forma net income and
pro forma diluted earnings per share provides additional information
about CEB's ongoing operating performance and provides additional
information to compare to prior periods. Pro forma financial results
should not be considered as measures of financial performance under
accounting principles generally accepted in the United States, and the
items excluded from them are significant components in understanding
and assessing financial performance. Because pro forma financial
results are not measurements determined in accordance with generally
accepted accounting principles and are thus susceptible to varying
calculations, they may not be comparable as presented to other
similarly titled measures of other companies. The change in tax status
for a new statutory Washington, D.C. income tax rate and other tax
benefits available to the Company as a QHTC are discussed more fully
in CEB's filings with the Securities and Exchange Commission,
including its 2003 annual report on Form 10-K.


                 THE CORPORATE EXECUTIVE BOARD COMPANY
             Operating Statistic and Financial Highlights
                 (in thousands, except per share data)
                              (Unaudited)

                                                    Three Months Ended
                                          Selected       March 31,
                                           Growth  -------------------
                                            Rates    2004        2003
                                          -------- --------- ---------
Operating Statistic

Contract Value (1) (at period end)           34.3% $244,836  $182,264

Financial Highlights

Revenues                                     35.3%  $63,979   $47,283
Cost of services                                     21,400    16,118
                                                   --------- ---------
     Gross profit                                    42,579    31,165

Member relations and marketing                       17,881    12,387
General and administrative                            7,238     5,330
Depreciation                                          1,748     1,356
Stock option and related expenses                        --       111
                                                   --------- ---------
     Income from operations                  31.1%   15,712    11,981

Other income, net                                     2,168     1,775
                                                   --------- ---------
Income before provision for income taxes             17,880    13,756

Provision for income taxes                            5,900     5,420
                                                   --------- ---------
     Net income                              43.7%  $11,980    $8,336
                                                   ========= =========

Basic earnings per share                              $0.32     $0.22
Diluted earnings per share                   40.9%    $0.31     $0.22

Weighted average shares outstanding
  Basic                                              37,187    37,223
  Diluted                                            38,868    37,878

Pro forma net income                         27.0%  $11,980    $9,432
Pro forma diluted earnings per share         24.0%    $0.31     $0.25

Percentages of Revenues
Gross profit                                           66.6%     65.9%
Member relations and marketing                         27.9%     26.2%
General and administrative                             11.3%     11.3%
Income from operations                                 24.6%     25.3%
Net income                                             18.7%     17.6%

(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.


                 THE CORPORATE EXECUTIVE BOARD COMPANY
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                               March 31,    Dec. 31,
                                                   2004        2003
                                               ----------- -----------
                                               (Unaudited)
Assets

Current assets:
   Cash and cash equivalents                      $84,553    $118,568
   Marketable securities                           27,262      11,859
   Membership fees receivable, net                 43,066      63,160
   Deferred income taxes, net                      31,433      30,972
   Deferred incentive compensation                  6,929       7,332
   Prepaid expenses and other current assets        8,478       5,933
                                               ----------- -----------
       Total current assets                       201,721     237,824

Deferred income taxes, net                             --       6,701
Marketable securities                             191,141     163,492
Property and equipment, net                        18,696      15,465
                                               ----------- -----------
       Total assets                              $411,558    $423,482
                                               =========== ===========

Liabilities and stockholders' equity

Current liabilities:
   Accounts payable and accrued liabilities       $11,423     $12,480
   Accrued incentive compensation                   7,574      11,072
   Deferred revenues                              155,681     154,844
                                               ----------- -----------
       Total current liabilities                  174,678     178,396

Other liabilities                                   3,150       3,093
                                               ----------- -----------
       Total liabilities                          177,828     181,489

Stockholders' equity                              233,730     241,993
                                               ----------- -----------
       Total liabilities and stockholders'
        equity                                   $411,558    $423,482
                                               =========== ===========


                 THE CORPORATE EXECUTIVE BOARD COMPANY
                 CONSOLIDTED STATEMENTS OF CASH FLOWS
                            (in thousands)
                              (Unaudited)
                                                   Three Months Ended
                                                   -------------------
                                                        March 31,
                                                   -------------------
                                                     2004      2003
                                                   --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                     $11,980    $8,336
        Adjustments to reconcile net income to net
         cash flows from operating activities:
        Depreciation                                  1,748     1,356
        Deferred income taxes                         5,545     5,420
        Amortization of marketable securities
         premiums, net                                  727       422
        Changes in operating assets and
         liabilities:
            Membership fees receivable, net          20,094    29,109
            Deferred incentive compensation             403       516
            Prepaid expenses and other current
             assets                                  (2,545)   (2,853)
            Accounts payable and accrued
             liabilities                             (1,057)       63
            Accrued incentive compensation           (3,498)   (4,447)
            Deferred revenues                           837    (9,877)
            Other liabilities                            57       113
                                                   --------- ---------
                 Net cash flows provided by
                  operating activities               34,291    28,158
                                                   --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment, net         (4,979)   (1,482)
       Maturity and sale (purchase) of marketable
        securities, net                             (41,999)    4,001
                                                   --------- ---------
                 Net cash flows provided by
                  (used in) investing activities    (46,978)    2,519
                                                   --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from the exercise of common
      stock options                                      --     7,326
     Proceeds from the issuance of common stock
      under the employee stock purchase plan            200       166
     Purchase of treasury shares                    (18,731)  (13,398)
     Payment of dividends                            (2,797)       --
     Reimbursement of common stock offering costs        --       175
     Payment of common stock offering costs              --       (60)
                                                   --------- ---------
                 Net cash flows used in financing
                  activities                        (21,328)   (5,791)
                                                   --------- ---------

NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                   (34,015)   24,886

Cash and cash equivalents, beginning of period      118,568    71,346
                                                   --------- ---------

Cash and cash equivalents, end of period            $84,553   $96,232
                                                   ========= =========

SOURCE: The Corporate Executive Board Company

The Corporate Executive Board Company, Washington
Timothy R. Yost, 202-777-5455
heroldl@executiveboard.com
www.executiveboard.com
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