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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

|     |                                                                                           | 
|---- | ----------------------------------------------------------------------------------------- | 
|[x]  | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.     | 
|    
|     | For the fiscal year ended December 31, 2001.                                              | 
|    
|     | or                                                                                        | 
|    
|[  ] | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. | 

Commission File Number: 000-24799

THE CORPORATE EXECUTIVE BOARD COMPANY
(Exact name of registrant as specified in its charter)

|                                                                                               |  |                                                   
|---------------------------------------------------------------------------------------------- |  | --------------------------------------------------
|Delaware
(State or other jurisdiction
of incorporation or organization)                        |  | 52-2056410
(I.R.S. Employer
Identification Number)
|                                                                                              
|2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
(Address of principal executive offices) |  | 20006
(Zip Code)                                  

(202) 777-5000
(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:    Not applicable

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share
(Title of class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [  ]

Based upon the closing price of the registrants common stock as of
February 15, 2002, the aggregate market value of the common stock held by
non-affiliates of the registrant is $1,168,276,575*.

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APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.

As of February 15, 2002, The Corporate Executive Board Company had
outstanding 34,905,186 shares of Common Stock, par value $0.01 per share.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents incorporated by reference and the
Part of the Form 10-K into which the document is incorporated:

None.



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|* |  | Solely for purposes of this calculation, all executive officers and
directors of the registrant and all shareholders reporting beneficial
ownership of more than 5% of the registrants common stock are considered
to be affiliates.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A NOTE ABOUT FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this Form 10-K, including the
sections entitled Managements Discussion and Analysis of Financial Condition
and Results of Operations and Business, that are based on our
managements beliefs and assumptions and on information currently available to
our management. Forward-looking statements include the information concerning
our possible or assumed results of operations, business strategies, financing
plans, competitive position and potential growth opportunities. Forward-looking
statements include all statements that are not historical facts and can be
identified by the use of forward-looking terminology such as the words
believes, expects, anticipates, intends, plans,
estimates or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these
forward-looking statements. You should not put undue reliance on any
forward-looking statements. We do not have any intention or obligation to
update forward-looking statements after we distribute this Form 10-K.

You should understand that many important factors could cause our results
to differ materially from those expressed in these forward-looking statements.
Among the factors that could cause our future results to differ from those reflected in forward-looking statements
are the risks discussed in this Form 10-K under the heading Business-Risk Factors.

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PART I

Item 1. Business.

Overview

We provide best practices research and
quantitative analysis focusing on corporate
strategy, operations and general management issues. Best practices research
supports senior executive decision making by identifying and analyzing specific management initiatives, processes and
strategies that have been determined to produce the best results in solving
common business problems or challenges.

We provide research and analysis to a membership of 1,802 of the worlds
largest and most prestigious corporations. For a fixed, annual fee, members of
each research program have access to an integrated set of services, including:



| |  |  | best practices research studies,                                              
| | - |  | ------------------------------------------------------------------------------
|
| |  |  | executive education seminars,                                                 
|
| |  |  | customized research briefs and                                                
|
| |  |  | web-based access to the programs content database and decision support tools.

For each of the last three years, our client renewal rate (defined as the
percentage of member institutions renewed, adjusted to reflect reductions in
member institutions resulting from mergers and acquisitions of members) and our
subscription renewal rate (defined as the percentage of membership
subscriptions renewed, adjusted to reflect reductions in membership
subscriptions resulting from mergers and acquisitions of members) have equaled
or exceeded 90% and 82%, respectively. More than 70% of the Fortune 500
companies are members of The Corporate Executive Board.

Our membership-based model, in which all customers (or members)
participate in our research and analysis, is central to our business strategy.
This model gives us access to the best business practices of our members and
enables us to provide comprehensive analysis on current business issues,
assessing the collective experiences and knowledge of our members on
leading-edge topics. By participating in The Corporate Executive Board, members
can learn about the best practices of the most progressive corporations in the
world at a fraction of the cost of a customized analysis performed by any of
the major consulting firms. We do not believe that in-house research and
analysis departments at individual corporations could obtain, at any price,
similar information from other corporations about their management practices.

In general, our membership comprises the most progressive companies in
each industry sector. Representative members include American Express, British
Airways, Charles Schwab, Cisco Systems, Citigroup, Coca-Cola, Dell, Deutsche
Bank, eBay, Hewlett-Packard, Merrill Lynch, Microsoft, Procter & Gamble, Sony
and Unilever. No one member accounted for more than 2% of revenues in any of
the last three fiscal years. We do not know of any other entity that enables
corporations to study a broad range of the best business practices of hundreds
of other business enterprises for fixed, annual fees.

We currently offer 18 discrete research programs, each focusing on
separate business constituencies, including:



| |  |  | human resources,            
| | - |  | ----------------------------
|
| |  |  | corporate strategy,         
|
| |  |  | information technology,     
|
| |  |  | sales and marketing,        
|
| |  |  | finance,                    
|
| |  |  | legal,                      
|
| |  |  | operations and procurement, 
|
| |  |  | research and development and
|
| |  |  | financial services.         

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We added six new research programs during the past two years and
anticipate adding three to four new research programs per year for the next two
to three years. Each research program charges a separate fixed, annual fee and
is served by a dedicated staff of analysts and researchers. Memberships
generally are renewable on a 12-month basis. The average price per research
program at December 31, 2001, was approximately $31,700.

Our revenues and costs have grown at compound annual rates of 34.2% and
24.8%, respectively, from December 31, 1998 through December 31, 2001. Because
each research program provides our membership with standardized best practices
research studies and executive education seminars, new members immediately add
to our revenues while only incrementally increasing our operating costs. Our
growth strategy is to cross-sell additional research programs to existing
members, to add new members and to develop new research programs and decision
support tools.

Industry Background

Corporations today are experiencing greater competitive demands and facing
increasingly complex strategic and operational issues. The globalization of the
economy, the transformation from an industrial era to an information age, the
accelerating pace of technological change and the emergence of e-business are
dramatically altering the business environment. In response to these trends,
companies are exploring new business strategies as well as reevaluating the
performance of individual departments within their organizations in order to
maintain their competitive edge. The pace of change is driving a greater
interest in gaining access to leading management practices and solutions to
common business problems on a cross-industry basis.

Participants in the professional information services industry have
approached the market for business-focused information by offering a variety of
products and services, including market research, strategic planning,
implementation services and educational programs. Services differ by the
level of engagement, with some offering project-driven or long-term consulting
contracts, and others providing continuous research publishing. Other entities,
such as trade associations, non-profit think tanks and research and database
companies, also offer research, consulting and education services.

We offer a distinctive approach that combines many of the benefits of
general management consulting and training and development firms. Our research
and analysis covers the same major business issues generally addressed by
management consulting firms, such as managing growth, reducing costs,
streamlining operations and developing strategy. What makes our approach
distinctive is that we provide the same, standardized product to our entire
membership at a fraction of the cost of consulting services. In
common with training and development firms, we offer education
services both on-site at member institutions and in large multi-company
settings. Unlike training and development firms, which typically invest only
periodically in new curriculum development, our curriculum is updated
constantly by our best practices research organization. Another distinguishing
characteristic is the seniority and breadth of our audiencewe brief executive
and senior management staff drawn from a broad range of industry sectors,
business units and departments. Because of our high quality research product,
unique approach to the market and network of leading companies, we believe that
we offer our customers a superior value proposition.

Business Strategy

Our goal is to research and analyze the most pertinent and timely
strategic and operational issues facing our membership, and to distribute the
results of this analysis to our membership in the most efficient, effective and
helpful manner. Our membership model allows us to draw upon a large and growing
universe of issues and solutions of relevance to todays leading corporations.
We actively engage our membership to help focus our research on the most urgent
challenges in the current business environment and to maintain and enhance our
position as the leading provider of best practices research and analysis.



| |  |  | Maintain Membership-Based Model.We believe that our
membership-based model is key to our success. We continually strive to
increase our ties to our members. We encourage members to view us as
their proprietary off-site research facility. Our fixed-fee economic
model promotes frequent use of our products and services. We believe
that member satisfaction grows as members access more of our services,
and that the growing roster of satisfied members validates our business
model and induces new members to join The Corporate Executive Board.                                   
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Focus on Best Practices Research.The focus of our work is on
researching best demonstrated business and management practices. Many
large corporations believe that there are research economies and other
benefits that can be realized by learning from the experiences of
similar entities facing common business problems. We believe that there
will be a continuing desire on the part of progressive corporations to
access ever-evolving solutions to these common business problems. We
believe that our success to date has uniquely positioned us as a
leading source for identifying,

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| |   |  | studying, evaluating and communicating these evolving solutions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Continue Research and Analysis Excellence.We believe that the
quality of our research and analysis has driven our success. We
regularly interact with senior executives at member institutions to
identify the most important strategic and operational issues for
research and analysis. Experienced program directors are responsible
for assuring that our research methodology is applied to all studies
and that research quality is maintained across all research programs.
We are highly selective in our hiring, recruiting only the top
graduates of the leading universities and graduate schools. We
emphasize continual training of all employees in key areas, including
industry analysis, economics, quantitative modeling, root-cause
analysis and presentation skills.
|
| |  |  | Build Membership Network.As our research programs grow in size
and influence, we constantly are expanding our network of executives at
our member companies. We believe that the growth of this network
benefits members by increasing the number of executives they can
contact for information, and by providing them with access to a broader
range of companies. We believe that these positive ''network effects
further strengthen our membership-based business model.                                                                                                                                                                                                                                                                                                         
|
| |  |  | Leverage Economic Model.We derive most of our revenues from
fixed, annual fees for our research programs. A large portion of our
costs of delivering our products and services in each research program
are fixed and do not vary with the number of members. We expect to
increase revenues and improve program-operating margins as we add new
members to our research programs.                                                                                                                                                                                                                                                                                                                                                                                                      

Growth Strategy

We believe that demand for our services will continue to grow, as even the
most prestigious corporations recognize the need to improve their performance
and seek access to other companies solutions to common business problems. Our
growth strategy centers on leveraging the formula that we have developed across
the past decade by cross-selling subscriptions to existing members, adding
new members and developing new research programs and decision support tools.



| |  |  | Cross-sell Additional Subscriptions to Existing Members.On
average, members currently participate in 2.42 research programs. We
actively are cross-selling additional membership subscriptions and
believe that most members are potential participants in up to 12 of the
research programs we currently offer, which are directed at corporate
staff positions maintained by most major companies. We believe that
membership subscription cross-selling opportunities will increase as we develop new research
programs.                                    
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Add New Members.We have targeted approximately 2,400 additional
institutions worldwide as potential new members, including U.S.
companies with revenues greater than $750 million and financial
institutions with assets in excess of $1 billion.                                                                                                                                                                                                                                                                                                              
|
| |  |  | Develop New Research Programs.We currently offer research
programs covering 18 business constituencies. We have added six new
research programs during the past two years. We also have identified
more than 50 additional corporate constituencies that we might target
as we develop new research programs. This list includes opportunities
to serve corporate functions beyond the 18 we serve today. We believe
that each is a unique constituency with the potential to support a
tailored research agenda and a suite of educational and other services.

The Membership Network

Our membership-based model, in which all members participate in our
research and analysis, is central to our business strategy. This model gives us
access to the best business practices of our members and enables us to provide
comprehensive analysis on current business issues, assessing the collective
experiences and knowledge of our members on leading-edge topics. By
participating in The Corporate Executive Board, members can learn about the
best practices and access tools and frameworks of the most progressive
corporations in the world at a fraction of the cost of a customized analysis
performed by any of the major consulting firms. We do not believe that in-house
research and analysis departments at individual corporations could obtain, at
any price, similar information from other corporations about their business
practices. We believe that there is no other entity that enables corporations
to study a broad range of the business practices of hundreds of other business
enterprises for fixed, annual fees.

We regularly interact with senior executives at member institutions to
identify the most important strategic and operational issues for research and
analysis and continually strive to increase our ties to our members. Our
products and services are available

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exclusively to members. Our fixed-fee economic model promotes frequent use of
our products and services. We encourage members to view us as their proprietary
off-site research facility. We believe that member satisfaction grows as
members access more of our services, and that the growing roster of satisfied
members validates our business model and induces new members to join The
Corporate Executive Board.

The following table sets forth
information with respect to members, subscriptions and renewals as of the dates
shown:

|                                             |  |              |        |      |  |      |        |      |  |      |        |   |  |   |         |   |  |   |         |  
|-------------------------------------------- |  | ------------ | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                             |  | December 31,
|                                             |  |              |        |      |  |      |        |      |  |     
|                                             |  | 1997         |        | 1998 |  | 1999 |        | 2000 |  | 2001
|                                             |  |              |        |      |  |      |        |      |  |     
|Membership programs                          |  |              | 9      |      |  |      | 10     |      |  |      | 12     |   |  |   | 15      |   |  |   | 18      |  
|Member institutions                          |  |              | 1,151  |      |  |      | 1,333  |      |  |      | 1,480  |   |  |   | 1,745   |   |  |   | 1,802   |  
|Total membership subscriptions               |  |              | 1,808  |      |  |      | 2,263  |      |  |      | 2,790  |   |  |   | 3,543   |   |  |   | 4,364   |  
|Average subscriptions per member institution |  |              | 1.57   |      |  |      | 1.70   |      |  |      | 1.89   |   |  |   | 2.03    |   |  |   | 2.42    |  
|Client renewal rate(1)                       |  |              | 89     | %    |  |      | 90     | %    |  |      | 90     | % |  |   | 90      | % |  |   | 90      | %
|Subscription renewal rate (2)                |  |              | 85     | %    |  |      | 85     | %    |  |      | 84     | % |  |   | 84      | % |  |   | 82      | %
|Contract value (in thousands of dollars)(3)  |  | $            | 46,264 |      |  | $    | 61,180 |      |  | $    | 80,633 |   |  | $ | 108,542 |   |  | $ | 138,474 |  



|(1) |  | For the year then ended. Client renewal rate is defined as the percentage
of member institutions renewed, adjusted to reflect reductions in member
institutions resulting from mergers and acquisitions of members.                
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | For the year then ended. Subscription renewal rate is defined as the
percentage of membership subscriptions renewed, adjusted to reflect
reductions in membership subscriptions resulting from mergers and
acquisitions of members.
|   
|(3) |  | Aggregate annualized revenue attributed to all agreements in effect at a
given date without regard to the remaining duration of any such agreement.                                                                                

Products and Services

General

Our research products and services focus on identifying, analyzing and
describing best demonstrated management practices. In general, our research
focuses primarily on identifying best demonstrated management practices, and
secondarily on critiquing widely-followed but ineffective practices.
We believe that we add value by enabling member companies to enhance
revenues and reduce costs by objectively identifying best corporate
practices that solve pressing corporate problems, and developing
tools to help members implement these practices.

Our research programs offer a cost-effective, time-efficient opportunity
for senior executives to learn from the practices and experiences of other
corporations from around the world. Member institutions can participate in one
of our research programs for a fraction of the cost of proceeding independently
either through an internal research effort or through engaging a management
consulting firm.

Each research program is guided by a 12- to 18-month agenda. Each research
program has a research director who is responsible for applying our research
methodology to produce best practices studies and for maintaining research
quality across all research program services. Using web and fax polls, steering
sessions, teleconferences and one-on-one interviews, the research programs
director works closely with the membership of that program to identify agenda
topics of shared interest and to set the research programs priorities.
Each research program is staffed by a dedicated team of
researchers, analysts and instructors who collectively research and write the
best practices studies, complete the customized research briefs and present the
findings to the programs membership.

For a fixed, annual fee,
members of each research program have access to an integrated set of services,
including best practices research studies, executive education seminars,
customized research briefs and web-based access to the programs content
database and decision support tools. A description of each service follows.

Best Practices Research Studies

Each research program generally publishes five to ten best practices
research studies annually, each addressing a specific corporate issue or
problem identified in the research agenda. We design each best practices study
to present the conclusions and supporting best practices in a graphical format,
enabling the intended audience quickly to assimilate the 20 to 200 pages of
research content. We create each report using our structured research
methodology: topic selection, root cause analysis, secondary research, primary
interviewing, analysis of findings and report writing. Each program director
can call upon the support of the Chief Research Officer and his staff to
provide assistance in framing arguments, screening best practices, developing
web-based deliverables and editing studies and their derivative executive
education curriculum content.

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In the course of researching a best practices study topic, the research
team typically will review thousands of pages of business and academic
literature to ground their understanding of the issues. The teams
often will create and analyze primary data about members operations
and performance to understand key economic leverage points and direct
the research to areas that offer the highest return on member
investments. They then will initiate
the research process to identify and evaluate specific business processes,
strategies and management practices, typically conducting hundreds of in-depth
interviews with corporations, industry experts, management consultants and
academic leaders. During the course of its research, a team generally analyzes
and evaluates dozens of specific management practices in an attempt to isolate
the five to 15 most important practices worthy of potential implementation by
members, separating out demonstrated and proven business practices and
disposing of those concepts, whether popular or conventional, that largely have
failed.

Executive Education

We provide our executive education curriculum, which is based on our
proprietary best practices research, to member companies worldwide. We deliver
executive education services through two primary channelsgeneral membership
meetings and, in some programs, tailored on-site seminars. Our executive
education provides lively, interactive forums for reinforcing our published
best practices research studies.

Research Briefs

Members of most research programs may assign short-answer, customized
research requests. Individual briefs may take the form of a literature search,
vendor profile, data retrieval or original primary and secondary research,
depending upon the need of the requesting member. Once initiated, each
customized research effort takes from one to 20 business days to complete,
depending on the depth of the information request, the type of research product
desired and the time requirements of the member. Researchers typically begin
their inquiry with a review of our proprietary research archives and then
conduct a broad literature search to identify relevant background material and
practices.

Written research briefs generally contain three to five case studies or
profiles of interviewed institutions, highlighting significant trends,
successful practices and comparative responses to a range of questions. After
we have completed and delivered the written brief to the requesting member, we
make the best of these briefs accessible to other members through proprietary
databases. Members are able to search, select, view and print research briefs
directly from the research program web site at no additional charge.

We believe that the research service of our research programs builds our
proprietary databases, serves as an excellent marketing tool for attracting new
members and encourages members to view us as a reliable and effective resource
for primary research.

Web-based Proprietary Databases

Each research program maintains a proprietary database of best practices
and, in some cases, quantitative survey data accessible only to members of the
research program. We continually update our growing proprietary databases with
new corporate practices, quantitative performance data and related information
supplied by other members and derived by our researchers. We include all
information and graphics generated in best practices research studies and
customized research briefs in the databases and make them accessible to member
executives and our staff.

Since 1996, we have been offering our members internet access to research
content and other services through password-protected web sites. We believe that
the internet provides a convenient means for members to commission customized
research briefs, browse and access the electronic library of research studies
and graphics, review executive education modules and meeting schedules and
communicate with our staff and other members.

Pricing

Memberships in The Corporate Executive Board research programs are
principally one-year, renewable agreements. Research memberships are generally
payable by members at the beginning of the contract term. At December 31, 2001,
the average price for a program membership was approximately $31,700. The
actual price varies by size of member and by research program, and may be lower
for charter memberships to new research programs. By spreading our costs across
a broad membership and offering a largely standardized research product, we are
able to charge fees that are a small fraction of the typical engagement fees of
specialized research or consulting firms.

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We offer an unconditional service guarantee to our members. At any time, a
member may request a refund of their membership fee for a research
program, which is provided on a pro rata basis relative to the
remaining term of the membership. In
2001, members requested refunds for 13 memberships out of more than 3,500.

Sales and Marketing

We market an integrated set of services, consisting of best practices
research studies, executive education, customized research briefs and web-based
access to our content database and decision support tools, for a fixed fee per
research program. We believe that this marketing strategy highlights the value
to members of our range of services and emphasizes the membership nature of our
business model, actively engaging the membership and reinforcing members
commitment to The Corporate Executive Board.

The separation of responsibility for new membership sales and membership
renewals reflects the varying difficulty and cost of the respective functions.
New business development representatives are compensated with a base salary and
variable, goal-based incentive bonuses and travel on average 60% of the time,
conducting face-to-face meetings with senior executives at prospective member
institutions. Member services representatives assume more of an in-house
coordinating role, bringing the resources of programs to bear on
pressing member needs.

Competition

We currently have few direct competitors, and those that do exist
generally compete only against a single research program. We compete indirectly
against other professional information services providers, including management
consulting firms, training and development companies, non-profit think tanks
and research and database companies. We are not aware of any other entity that
enables corporations to study as broad a range of the best corporate management
practices for fixed, annual fees.

We believe that the principal competitive factors in our market include
quality and timeliness of research and analysis, reliable delivery, depth and
quality of the membership network, ability to meet changing customer needs,
superior service and affordably priced products. We believe we compete
favorably with respect to each of these factors.

The Advisory Board Company provides products and services to the health
care industry that are similar to the types of products and services that we
generally provide. We have entered into a noncompetition agreement with The
Advisory Board Company and David Bradley, its former sole stockholder. The
noncompetition agreement generally prohibits us from competing with The
Advisory Board Company with respect to health care clients and issues and
prohibits The Advisory Board Company and Mr. Bradley from competing with us
with respect to non-health care clients and issues, other than products and
services relating to advertising, magazines and newspapers, and government
relations and lobbying activities. The agreement was amended in 2001
to extend through January 1,
2007.

Employees

At December 31, 2001, we employed 818 persons. Of these employees, 768
were located at our headquarters in Washington, DC and 50 were located at our
facilities in London, England. None of our employees are represented by a
collective bargaining arrangement. We believe that our relations with our
employees are favorable.

We believe strongly in a culture of meritocracy, rewarding key
contributors with opportunities for rapid professional growth and advancement
as well as competitive compensation. Training is a critical job component for
all of our employees, including industry analysis, economics, quantitative
modeling, root-cause analysis and presentation skills.

Risk Factors

In addition to the other information contained in this Form 10-K, you
should carefully consider the following risk factors in evaluating us and our
business.

We depend on renewals of our membership-based services.

We derive most of our revenues from annual memberships for our products
and services. Our prospects therefore depend on our ability to achieve and
sustain high renewal rates on existing research programs and to enter into new
membership arrangements. Failure to achieve high membership renewal rate levels
would have a material adverse affect on our operating

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results. Our ability to secure membership renewals depends upon our ability to
deliver consistent, high quality and timely research and analysis with respect
to issues, developments and trends that members view as important. We cannot
assure you that we will be able to sustain the necessary level of performance
to achieve a high rate of membership renewals. Although we actively market our
research programs throughout the year, historically more than 42% of all
renewals have taken place in the fourth quarter of the year. See Managements
Discussion and Analysis of Financial Condition and Results of Operations and
Business.

We cannot know in advance if new products will be successful.

Our future success will depend on our ability to develop new research
programs that address specific industry and business constituencies and the
changing needs of our current and prospective members for information, analysis
and advice. We cannot assure you that our efforts to introduce new research
programs will be successful. The process of internally researching, developing,
launching and gaining client acceptance of new research programs is
time-consuming, expensive and inherently risky. Delays or failures during
development or implementation, or lack of market acceptance, of new research
programs could have a material adverse effect on our business, financial
condition and results of operations. Our business, financial condition and
results of operations would be materially adversely affected if we were unable
to develop and introduce successful new research programs or other new
products, or to make enhancements to existing research programs in a timely
manner in response to member requirements. See BusinessProducts and
Services.

We may experience difficulties in anticipating market trends.

Our future success also will depend upon our ability to anticipate rapidly
changing market trends and to adapt our research and analysis to meet the
changing information needs of our members. We may fail to continue to provide
helpful and timely research and analysis of developments and trends in a manner
that meets market needs. Any such failure would have a material adverse effect
on our business, financial condition and results of operations. The industry
and business sectors that we analyze undergo frequent and often dramatic
changes, including the introduction of new and the obsolescence of old
products, shifting strategies and market positions of major industry
participants and changing objectives and expectations of users of members
products and services. This environment of rapid and continuous change presents
significant challenges to our ability to provide our members with current and
timely research and analysis on issues of importance. Meeting these challenges
requires the commitment of substantial resources.

We must attract and retain a significant number of highly skilled employees.

Our future success also will depend upon our ability to hire, train,
motivate and retain a significant number of highly-skilled employees,
particularly research analysts and sales and marketing staff. Our inability to
do so would have a material adverse effect on our business. We have
experienced, and expect to continue to experience, intense competition for
professional personnel from management consulting firms and other producers of
research and analysis products and services. Many of these firms have
substantially greater financial resources than we do to attract and compensate
qualified personnel. We cannot assure you that we will be successful in
attracting a sufficient number of highly-skilled employees in the future, or
that we will be successful in training, motivating and retaining the employees
we are able to hire. See BusinessEmployees.

We are restricted from selling our products and services to the health care industry.

At the time of our initial public offering, we entered into an agreement
with The Advisory Board Company that restricts us from selling our
membership-based products and services to companies principally engaged in the
health care business, although we may sell such products and services to
non-health care divisions or subsidiaries of health care companies. The
agreement has been extended through January 1, 2007. This restriction may limit
our future growth opportunities.

Continued consolidation in the financial institution industry may adversely impact our business.

A number of our research
programs are oriented toward companies in the financial services industry. The financial services industry is continuing to experience substantial
consolidation. This consolidation has resulted, and is expected to continue to
result, in a reduction in the number of our financial institution members. We
cannot assure you that this consolidation will not materially and adversely
affect our results of operations. At December 31, 2001, less than 30% of our
Contract Value was attributable to financial institution members, which include
commercial banks, thrifts, credit unions, credit card issuers, mutual fund
companies, consumer credit lenders, brokerage houses, private and trust banks
and insurance companies. We calculate Contract Value as the aggregate
annualized revenue attributed to all agreements in effect at a given time
without regard to the remaining duration of any such agreement.

We may experience fluctuations in operating results.

Our operating results may fluctuate significantly due to various factors,
including the growth in and timing of new programs,

9



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the timing of the development, introduction and marketing of new products and
services, the timing of executive education seminars, the timing of the hiring of research analysts and sales and marketing
staff, changes in the spending patterns of our members, our accounts receivable
collection experience, changes in market demand for research and analysis,
foreign currency exchange rate fluctuations, competitive conditions in the
industry and general economic conditions. See Managements Discussion and
Analysis of Financial Condition and Results of Operations.

We may be unable to protect our intellectual property rights.

We rely on copyright laws, as well as nondisclosure and confidentiality
arrangements, to protect our proprietary rights in our products and services.
We cannot assure you that the steps we have taken to protect our intellectual
property rights will be adequate to deter misappropriation of our rights or
that we will be able to detect unauthorized uses and take timely and effective
steps to enforce our rights. If substantial and material unauthorized uses of
our proprietary products and services were to occur, we would be required to
engage in costly and time-consuming litigation to enforce our rights. We cannot
assure you that we would prevail in such litigation. If others were able to use
our intellectual property, our ability to charge our fees for our products and
services would be adversely affected.

We may be exposed to litigation related to content.

As a publisher and distributor of original research and analysis and user
of third party content, we face potential liability for defamation,
negligence and copyright and trademark infringement. Any such litigation,
whether or not resulting in a judgment against us, could have a material
adverse effect on our financial condition and results of operations. Third
party content includes information created or provided by information services
organizations and consultants whom we retain and may be delivered in writing,
over the Internet or orally to clients.

We may be exposed to loss of revenue resulting from our unconditional service guarantee.

We offer an unconditional service guarantee to our members. At any time, a
member may request a refund of their membership fee for a research
program, which is  provided on a pro rata basis relative to the
remaining term of the membership.
Requests for refunds of membership fees by a significant number of our members
could have a material adverse effect on our financial condition and results of
operations.

Item 2. Properties.

Our headquarters currently are located in approximately 170,000 square
feet of office space in Washington, DC. The facilities accommodate research,
marketing and sales, information technology, administration, graphic services
and operations personnel. We believe that our existing and planned facilities
will be adequate for our current needs and that additional facilities are
available for lease to meet future needs.

Item 3. Legal Proceedings.

From time to time, we are
subject to ordinary routine litigation incidental to our normal business
operations. We are not currently a party to, and our property is not subject
to, any material legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

10



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##### 



PART II

Item 5. Market for Registrants Common Equity and Related Stockholder Matters.

Our common stock has been quoted on the Nasdaq National Market under the
symbol EXBD since our initial public offering on February 23, 1999. As of
February 15, 2002, there were 29 stockholders of record of the common stock.
The following table sets forth, for the periods indicated, the high and low
sales prices per share of our common stock as reported on the Nasdaq National
Market.

|      |                |  |      |        |     |  |   |        | 
|----- | -------------- |  | ---- | ------ | --- |  | - | ------ | 
|      |                |  | High |        | Low
|      |                |  |      |        |    
|2000: |                |  |      |        |     |  |   |       
|      | First quarter  |  | $    | 31.875 |     |  | $ | 20.250 | 
|      | Second quarter |  |      | 32.000 |     |  |   | 22.000 | 
|      | Third quarter  |  |      | 45.625 |     |  |   | 30.469 | 
|      | Fourth quarter |  |      | 47.250 |     |  |   | 26.000 | 
|2001: |                |  |      |        |     |  |   |       
|      | First quarter  |  | $    | 43.000 |     |  | $ | 24.250 | 
|      | Second quarter |  |      | 42.240 |     |  |   | 24.625 | 
|      | Third quarter  |  |      | 43.600 |     |  |   | 22.850 | 
|      | Fourth quarter |  |      | 39.550 |     |  |   | 26.000 | 

We have not declared or paid any cash dividend on our common stock since
the closing of our initial public offering. We do not anticipate declaring or
paying any cash dividends in the foreseeable future. The timing and amount of
future cash dividends, if any, would be determined by our Board of Directors
and would depend upon our earnings, financial condition and cash requirements.

We have adjusted all historical share and per share data in this Form 10-K
to reflect our 2-for-1 stock split in September 2000.

Item 6. Selected Financial Data.

The following table sets forth selected financial and operating data. The
selected financial data presented below as of December 31, 1997, 1998, 1999,
2000 and 2001, and for each of the years in the five-year period ended December
31, 2001, have been derived from our financial statements which have been
audited by Arthur Andersen LLP, independent public accountants. You should read
the selected financial data presented below in conjunction with our financial
statements, the notes to our financial statements and Managements Discussion
and Analysis of Financial Condition and Results of Operations appearing
elsewhere in this Form 10-K.

11



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##### 



|                                            |                                           |                          |        |                                          |        |      |        |        |        |      |        |        |        |   |        |        |        |   |         |        |        | 
|------------------------------------------- | ----------------------------------------- | ------------------------ | ------ | ---------------------------------------- | ------ | ---- | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------- | ------ | ------ | 
|                                            |                                           |                          |        | Year Ended December 31,                 
|                                            |                                           |                          |        |                                         
|                                            |                                           |                          |        | 1997                                     |        | 1998 |        | 1999   |        | 2000 |        | 2001  
|                                            |                                           |                          |        |                                          |        |      |        |        |        |      |        |       
|                                            |                                           |                          |        | (In thousands, except per share amounts)
|Statements of Income Data:                  |                                           |                          |        |                                          |        |      |        |        |        |      |        |        |        |   |        |        |        |   |         |       
|Revenues                                    |                                           | $                        | 38,669 |                                          |        | $    | 53,030 |        |        | $    | 70,767 |        |        | $ | 95,491 |        |        | $ | 128,112 |       
|Costs and expenses:                         |                                           |                          |        |                                          |        |      |        |        |        |      |        |        |        |   |        |        |        |   |         |       
|                                            | Cost of services                          |                          |        | 20,036                                   |        |      |        | 25,373 |        |      |        | 28,602 |        |   |        | 36,094 |        |   |         | 45,738 |       
|                                            | Member relations and marketing            |                          |        | 8,106                                    |        |      |        | 11,676 |        |      |        | 15,525 |        |   |        | 21,236 |        |   |         | 30,219 |       
|                                            | General and administrative                |                          |        | 5,660                                    |        |      |        | 6,920  |        |      |        | 8,485  |        |   |        | 12,021 |        |   |         | 15,877 |       
|                                            | Depreciation                              |                          |        | 722                                      |        |      |        | 885    |        |      |        | 1,318  |        |   |        | 2,573  |        |   |         | 4,412  |       
|                                            | Stock option and related expenses (1) (2) |                          |        | 3,063                                    |        |      |        | 5,342  |        |      |        | 383    |        |   |        | 1,371  |        |   |         | 1,260  |       
|                                            |                                           |                          |        |                                          |        |      |        |        |        |      |        |        |        |   |        |        |        |   |         |       
|                                            |                                           | Total costs and expenses |        |                                          | 37,587 |      |        |        | 50,196 |      |        |        | 54,313 |   |        |        | 73,295 |   |         |        | 97,506 | 
|                                            |                                           |                          |        |                                          |        |      |        |        |        |      |        |        |        |   |        |        |        |   |         |       
|Income from operations                      |                                           |                          | 1,082  |                                          |        |      | 2,834  |        |        |      | 16,454 |        |        |   | 22,196 |        |        |   | 30,606  |       
|Other income, net                           |                                           |                          | 122    |                                          |        |      | 786    |        |        |      | 1,114  |        |        |   | 2,263  |        |        |   | 4,283   |       
|                                            |                                           |                          |        |                                          |        |      |        |        |        |      |        |        |        |   |        |        |        |   |         |       
|Income before provision for income taxes    |                                           |                          | 1,204  |                                          |        |      | 3,620  |        |        |      | 17,568 |        |        |   | 24,459 |        |        |   | 34,889  |       
|Provision for income taxes (3)              |                                           |                          | 120    |                                          |        |      | 361    |        |        |      | 4,322  |        |        |   | 9,539  |        |        |   | 13,257  |       
|                                            |                                           |                          |        |                                          |        |      |        |        |        |      |        |        |        |   |        |        |        |   |         |       
|Net income                                  |                                           | $                        | 1,084  |                                          |        | $    | 3,259  |        |        | $    | 13,246 |        |        | $ | 14,920 |        |        | $ | 21,632  |       
|                                            |                                           |                          |        |                                          |        |      |        |        |        |      |        |        |        |   |        |        |        |   |         |       
|Earnings per sharebasic (3)                |                                           | $                        | 0.04   |                                          |        | $    | 0.13   |        |        | $    | 0.50   |        |        | $ | 0.49   |        |        | $ | 0.64    |       
|Weighted average shares outstandingbasic   |                                           |                          | 25,009 |                                          |        |      | 25,009 |        |        |      | 26,446 |        |        |   | 30,321 |        |        |   | 34,003  |       
|Earnings per sharediluted (3)              |                                           | $                        | 0.04   |                                          |        | $    | 0.11   |        |        | $    | 0.41   |        |        | $ | 0.43   |        |        | $ | 0.59    |       
|Weighted average shares outstandingdiluted |                                           |                          | 27,504 |                                          |        |      | 29,900 |        |        |      | 32,054 |        |        |   | 34,638 |        |        |   | 36,465  |       

|                                                 |  |              |        |                |  |      |        |      |  |      |        |  |  |   |         |  |  |   |         | 
|------------------------------------------------ |  | ------------ | ------ | -------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------- |  |  | - | ------- | 
|                                                 |  | December 31,
|                                                 |  |             
|                                                 |  | 1997         |        | 1998           |  | 1999 |        | 2000 |  | 2001
|                                                 |  |              |        |                |  |      |        |      |  |     
|                                                 |  |              |        | (In thousands)
|Balance Sheet Data:                              |  |              |        |                |  |      |        |      |  |      |        |  |  |   |         |  |  |   |         | 
|Cash, cash equivalents and marketable securities |  | $            | 12,691 |                |  | $    | 16,104 |      |  | $    | 33,074 |  |  | $ | 69,373  |  |  | $ | 132,469 | 
|Deferred income taxes                            |  |              | 1,150  |                |  |      | 1,438  |      |  |      | 8,047  |  |  |   | 31,348  |  |  |   | 58,520  | 
|Total assets                                     |  |              | 39,868 |                |  |      | 48,928 |      |  |      | 81,764 |  |  |   | 152,494 |  |  |   | 257,518 | 
|Deferred revenues                                |  |              | 31,474 |                |  |      | 39,061 |      |  |      | 55,436 |  |  |   | 71,281  |  |  |   | 94,683  | 
|Total stockholders equity (deficit)             |  |              | (5,042 | )              |  |      | (8,147 | )    |  |      | 10,846 |  |  |   | 65,561  |  |  |   | 143,984 | 

|                                             |  |              |        |      |  |      |        |      |  |      |        |   |  |   |         |   |  |   |         |  
|-------------------------------------------- |  | ------------ | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                             |  | December 31,
|                                             |  |             
|                                             |  | 1997         |        | 1998 |  | 1999 |        | 2000 |  | 2001
|                                             |  |              |        |      |  |      |        |      |  |     
|Other Operating Data (unaudited):            |  |              |        |      |  |      |        |      |  |      |        |   |  |   |         |   |  |   |         |  
|Membership programs                          |  |              | 9      |      |  |      | 10     |      |  |      | 12     |   |  |   | 15      |   |  |   | 18      |  
|Member institutions                          |  |              | 1,151  |      |  |      | 1,333  |      |  |      | 1,480  |   |  |   | 1,745   |   |  |   | 1,802   |  
|Total membership subscriptions               |  |              | 1,808  |      |  |      | 2,263  |      |  |      | 2,790  |   |  |   | 3,543   |   |  |   | 4,364   |  
|Average subscriptions per member institution |  |              | 1.57   |      |  |      | 1.70   |      |  |      | 1.89   |   |  |   | 2.03    |   |  |   | 2.42    |  
|Client renewal rate(4)                       |  |              | 89     | %    |  |      | 90     | %    |  |      | 90     | % |  |   | 90      | % |  |   | 90      | %
|Subscription renewal rate (5)                |  |              | 85     | %    |  |      | 85     | %    |  |      | 84     | % |  |   | 84      | % |  |   | 82      | %
|Contract value (in thousands of dollars)(6)  |  | $            | 46,264 |      |  | $    | 61,180 |      |  | $    | 80,633 |   |  | $ | 108,542 |   |  | $ | 138,474 |  



|(1) |  | Prior to our spin-off from The Advisory Board Company in October 1997,
The Advisory Board Company entered into agreements with certain employees
to repurchase outstanding stock options at fixed amounts. For background
information on the spin-off, see Managements Discussion and Analysis of
Financial Conditions and Results of OperationsOverview. We assumed the
obligations under these agreements in the spin-off to the extent they were
attributable to our employees. We reflect the charges relating to these
agreements as stock option repurchase expenses over the required
employment period ended December 31, 1998. In addition, we substituted our
stock options for The Advisory Board Company stock options in the
spin-off. The terms of the stock option substitution resulted in
compensation expense being charged for the intrinsic value of certain
stock options. We reflect these charges as stock option expenses over the
vesting period of the options. After calendar year 2001, we will recognize
no additional compensation expense related to these substitution
agreements. Furthermore, in December 1998, we and our selling
stockholder at the time agreed to make certain payments in the aggregate
amount of $2.4 million to selected employees under a special bonus plan.
We recorded the special bonus plan charge of $2.4 million at the time of
the commitment in December 1998. See Managements Discussion and
Analysis of Financial Condition and Results of OperationYears Ended
December 31, 1999, 2000 and 2001Stock option and related
expenses.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | For the years ended December 31, 2000 and 2001, we recognized $1.0
million and $1.1 million, respectively, in compensation expense reflecting
additional Federal Insurance Corporation Act (FICA) taxes as a result
of the taxable income that the employees recognized upon the exercise of
common stock options, primarily in conjunction with the sale of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

12



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|    |  | our common stock in the secondary offerings in February 2000 and in March
and April 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(3) |  | Prior to our initial public offering in February 1999, we had elected to
be taxed under subchapter S of the Internal Revenue Code. In February
1999, we terminated our S corporation election and became subject to U.S.
Federal and state income taxes at prevailing corporate rates. If we had
elected to be taxed under subchapter C of the Internal Revenue Code for
U.S. Federal and state income tax purposes beginning January 1, 1997 and
recorded income tax expense using an annual effective rate of 41.0%, pro
forma net income (unaudited) and basic and diluted earnings per share
(unaudited) would have been $0.7 million, $0.03 and $0.03, respectively,
for 1997, $2.1 million, $0.09 and $0.07, respectively, for 1998, and $10.4
million, $0.39 and $0.32, respectively, for 1999.
|   
|(4) |  | For the year then ended. Client renewal rate is defined as the percentage
of membership institutions renewed, adjusted to reflect reductions in
membership institutions resulting from mergers and acquisitions of
members.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(5) |  | For the year then ended. Subscription renewal rate is defined as the
percentage of membership subscriptions renewed for the year, adjusted to
reflect reductions in membership subscriptions resulting from mergers and
acquisitions of members.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(6) |  | Aggregate annualized revenue attributed to all agreements in effect at a
given date without regard to the remaining duration of any such agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Item 7. Managements Discussion and Analysis of Financial Condition and Results
of Operations.

Overview

We provide best
practices research and analysis focusing on corporate
strategy, operations and general management issues. Best practices research
identifies and analyzes specific management initiatives, processes and
strategies that have been determined to produce the best results in solving
common business problems or challenges. For a fixed, annual fee, members of
each research program have access to an integrated set of services, including
best practices research studies, executive education seminars, customized
research briefs and web-based access to the programs content database and
decision support tools.

We were incorporated on September 11, 1997, under the laws of the State of
Delaware. Our business was operated as a division of The Advisory Board
Company, a Maryland corporation, until October 31, 1997 when the business was
contributed to us and spun-off to The Advisory Board Companys sole
stockholder. In February 1999, 18,830,560 shares of our common stock were sold
in an initial public offering. In February 2000 and in March and April 2001, 11,023,030 shares
and 3,035,000 shares, respectively, of our common stock were sold in secondary public offerings.
We did not directly receive any proceeds pursuant to the sales of our common
stock. All of the shares sold in the foregoing offerings were sold by
stockholders and option holders. However, we did receive cash from the exercise of common stock
options in conjunction with the sale of our common stock. Subsequent to the
sale of common stock in the secondary offering in February 2000, the former sole stockholder
owns no shares of our common stock.

Membership subscriptions, which are principally annually renewable
agreements, are generally payable by members at the beginning of the contract
term. Billings attributable to memberships in our research programs initially are recorded as
deferred revenues and then recognized pro rata over the membership contract term.
At any time, a member may request a refund of their membership fee
for a research program, which is provided on a pro rata basis relative
to the remaining term of the membership.

Over the last three years, our revenues have grown at a compound annual
growth rate of 34.2% from $53.0 million in 1998 to $128.1 million in 2001,
while costs have grown at a compound annual growth rate of 24.8% from $50.2
million in 1998 to $97.5 million in 2001. The increase in revenues was
primarily attributable to cross-selling additional subscriptions to existing
members, adding new members, price increases and the introduction of new
research programs. The increase in costs has been driven principally by the
increase in the number of employees required to support subscription growth.

One measure of our
business is its annualized Contract Value, which we
calculate as the aggregate annualized revenue attributed to all agreements in
effect at a given point in time, without regard to the remaining duration of
any such agreement. Our experience has been that a substantial portion of
members renew subscriptions for an equal or higher level each year. Contract
Value has grown at a compound annual growth rate of 31.3% over the past three
years and was $138.5 million at December 31, 2001.

Our operating costs and expenses consist of cost of services, member
relations and marketing, general and administrative expenses, depreciation, and
stock option and related expenses. Cost of services represents the costs
associated with the production and delivery of our products and services,
including compensation of research personnel and in-house faculty, the
production of published materials, the organization of member meetings and all
associated support services. Member relations and marketing expenses include
the costs of acquiring new members, the costs of servicing and
renewing existing members, compensation expense
(including sales commissions), travel and all associated support services.
General and administrative expenses include the costs of human resources and
recruiting, finance and accounting, management information systems, facilities
management, new product development and other administrative functions. Stock
option and related expenses includes non-cash compensation expense related to
certain stock option agreements in existence at the time of the spin-off from
The Advisory Board Company and

13



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##### 



includes additional cash payroll taxes for compensation expense relating to the
taxable income recognized by employees upon the exercise of non-qualified
common stock options.

Results of Operations

The following table sets forth certain financial data as a percentage of
total revenues for the periods indicated:

|                                         |                                   |                          |       |                         |      |      |       |      |      |  |       |      |      | 
|---------------------------------------- | --------------------------------- | ------------------------ | ----- | ----------------------- | ---- | ---- | ----- | ---- | ---- |  | ----- | ---- | ---- | 
|                                         |                                   |                          |       | Year Ended December 31,
|                                         |                                   |                          |       |                        
|                                         |                                   |                          |       | 1999                    |      | 2000 |       | 2001
|                                         |                                   |                          |       |                         |      |      |       |     
|Revenues                                 |                                   |                          | 100.0 | %                       |      |      | 100.0 | %    |      |  | 100.0 | %   
|                                         | Cost of services                  |                          |       | 40.4                    |      |      |       | 37.8 |      |  |       | 35.7 |     
|                                         |                                   |                          |       |                         |      |      |       |      |      |  |       |     
|Gross profit                             |                                   |                          | 59.6  |                         |      |      | 62.2  |      |      |  | 64.3  |     
|Costs and expenses:                      |                                   |                          |       |                         |      |      |       |      |      |  |       |     
|                                         | Member relations and marketing    |                          |       | 21.9                    |      |      |       | 22.2 |      |  |       | 23.6 |     
|                                         | General and administrative        |                          |       | 12.0                    |      |      |       | 12.6 |      |  |       | 12.4 |     
|                                         | Depreciation                      |                          |       | 1.9                     |      |      |       | 2.7  |      |  |       | 3.4  |     
|                                         | Stock option and related expenses |                          |       | 0.5                     |      |      |       | 1.5  |      |  |       | 1.0  |     
|                                         |                                   |                          |       |                         |      |      |       |      |      |  |       |     
|                                         |                                   | Total costs and expenses |       |                         | 36.3 |      |       |      | 39.0 |  |       |      | 40.4 | 
|                                         |                                   |                          |       |                         |      |      |       |      |      |  |       |     
|Income from operations                   |                                   |                          | 23.3  |                         |      |      | 23.2  |      |      |  | 23.9  |     
|Other income, net                        |                                   |                          | 1.6   |                         |      |      | 2.4   |      |      |  | 3.3   |     
|                                         |                                   |                          |       |                         |      |      |       |      |      |  |       |     
|Income before provision for income taxes |                                   |                          | 24.9  |                         |      |      | 25.6  |      |      |  | 27.2  |     
|Provision for income taxes               |                                   |                          | 6.2   |                         |      |      | 10.0  |      |      |  | 10.3  |     
|                                         |                                   |                          |       |                         |      |      |       |      |      |  |       |     
|Net income                               |                                   |                          | 18.7  | %                       |      |      | 15.6  | %    |      |  | 16.9  | %   
|                                         |                                   |                          |       |                         |      |      |       |      |      |  |       |     

Years Ended December 31, 1999, 2000 and 2001

Revenues.Total revenues increased 34.9% from $70.8 million for 1999 to
$95.5 million for 2000, and 34.2% to $128.1 million for 2001. The increase in
revenues was attributable primarily to cross-selling additional subscriptions
to existing members, adding new members, price increases and the introduction
of new research programs. The average subscription price increased 6.9% in
1999, 6.0% in 2000 and 3.6% in 2001. We introduced two new research programs in
1999, three new research programs in 2000, and three new research programs in
2001.

Cost of services.Cost of services increased 26.2% from $28.6 million
for 1999 to $36.1 million for 2000, and 26.7% to $45.7 million for 2001. The
increase in cost of services was principally due to increased research staffing
and related compensation costs to support new research programs and an increase in short answer research and executive education
services staffing to serve the growing membership base across all programs.
Cost of services as a percentage of revenues decreased from 40.4% for 1999 to
37.8% for 2000 and to 35.7% for 2001. This decrease was attributable to the
fixed nature of a portion of the production costs of best practices research
studies, as these costs are not significantly affected by growth in the number
of membership subscriptions.

Gross profit trend.Historically, the gross profit margin (gross profit
as a percentage of total revenues) has fluctuated based upon the growth in
revenues offset by the costs of delivering best practices research studies, the
timing of executive education seminars, the volume of customized research
briefs and the hiring of personnel. Accordingly, the gross margin for the year
ended December 31, 2001, may not be indicative of future results.

Member relations and marketing.Member relations and marketing costs
increased 36.8% from $15.5 million for 1999 to $21.2 million for 2000, and
42.3% to $30.2 million for 2001. The increase in member relations and marketing
costs is primarily due to the increase in sales staff and related costs, the
increase in commission expense associated with increased revenues, and the
increase in member relations personnel and related costs to serve the expanding
membership base. Member relations and marketing costs as a percentage of total
revenues have increased during the period 1999 to 2001 as we have
added member relations and marketing resources to serve the expanding
membership base.

General and administrative.General and administrative expenses
increased 41.7% from $8.5 million for 1999 to $12.0 million for 2000, and 32.1%
to $15.9 million for 2001. The increase in general and administrative expenses
resulted principally from staffing increases in general management, human
resources and recruiting, finance and accounting, management information
systems, and facilities management to support our growth and additional
consulting and training expenses associated with investments in management
information software. Although general and administrative expenses increased
during the period 1999 through 2001, general and administrative expenses have
remained relatively consistent as a percentage of revenues during the period
1999 to 2001.

Depreciation.Depreciation expense increased 95.2% from $1.3 million for
1999 to $2.6 million for 2000, and 71.5% to $4.4 million for 2001. The increase
in depreciation expense was principally due to the additional investment in
leasehold

14



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##### 



improvements for additional office space in Washington, D.C., and the purchase
of computer equipment and software to support organizational growth.

Stock option and related expenses.We recognized $0.4 million, $0.4
million, and $0.2 million for 1999, 2000 and 2001, respectively, related to
stock option agreements in existence at the time of the spin-off from The
Advisory Board Companys sole stockholder. In connection with the spin-off, we
executed substitution agreements with each of our employees participating in
The Advisory Board Company stock option plan. These substitution agreements
resulted in compensation expense being recognized by us over the vesting
period. After 2001, we will recognize no additional compensation expense
related to these substitution agreements.

We recognized $1.0 million and $1.1 million in compensation expense during
the years ended December 31, 2000 and 2001, respectively, reflecting additional
Federal Insurance Corporation Act (FICA) taxes as a result of the taxable
income that the employees recognized upon the exercise of common stock options,
primarily in conjunction with the sale of our common stock in the secondary
offerings of common stock in February 2000 and in March and April 2001.

Other income, net.Other income, net consists primarily of interest
income earned on a portfolio of cash equivalents and marketable securities and
the realized gain (loss) on the sale of marketable securities. During 2000,
other income, net also included the realized loss on the write-off of property
and equipment. Other income increased 103.1% from $1.1 million for 1999 to $2.3
million for 2000, and 89.3% to $4.3 million for 2001. The growth in other
income, net was due primarily to the increase in interest income associated
with the increased level of cash, cash equivalents and marketable securities.
Cash, cash equivalents and marketable securities increased as a result of cash
flows from operating activities and cash flows from financing activities
further discussed in the liquidity and capital resources section below.

Provision for income taxes.We recorded a provision for income taxes of
$4.3 million, $9.5 million, and $13.3 million for 1999, 2000 and 2001,
respectively. Prior to February 22, 1999, we were treated as an S corporation
for Federal income tax purposes and recognized income taxes only related to the
District of Columbia. Just prior to our initial public offering, we terminated
our S corporation status and are now subject to Federal and state income taxes
at prevailing corporate rates. The difference in the effective income tax rates
for 1999 and 2000 primarily reflects the termination of the S corporation
status just prior to the initial public offering in February 1999 offset by the
benefit of Federal income tax incentives associated with the location of our
office facilities. If we had elected to be taxed under subchapter C of the
Internal Revenue Code for U.S. Federal and state income tax purposes beginning
January 1, 1999, and recorded income tax expense using an annual effective rate
of 41.0%, pro forma net income and basic and diluted earnings per share would
have been $10.4 million, $0.39 and $0.32 for 1999. The difference in the
effective income tax rates for 2000 and 2001 primarily reflects the increase in
the amount of tax-exempt interest income earned on the portfolio of cash, cash
equivalents and marketable securities and in the increased benefit from Federal
income tax incentives associated with the location of our office facilities.

Liquidity and Capital Resources

Cash flows from operating activities.We have financed our operations to
date through funds generated from operating activities. Membership
subscriptions, which are principally annually renewable agreements, are
generally payable by members at the beginning of the contract term. The
combination of revenue growth and advance payment of membership subscriptions
has historically resulted in net positive cash flows provided by operating
activities. We generated net cash flows from operating activities of $23.7
million, $38.7 million, and $52.8 million for 1999, 2000 and 2001,
respectively. For 1999, 2000 and 2001, operating cash flows were generated
within the period principally by net income, the utilization of tax benefits
created by the exercise of common stock options, and the growth in deferred
revenues, partially offset by the growth in membership fees receivable. As of
December 31, 2000 and 2001, we had cash, cash equivalents and marketable
securities of $69.4 million and $132.5 million, respectively. We expect that
out current cash, cash equivalents and marketable securities balances and
anticipated net positive cash flows from operations will satisfy working
capital, financing, and capital expenditure requirements for the next twelve
months.

Cash flows from investing activities.We used net cash flows in investing
activities of $11.5 million, $44.5 million, and $38.6 million during the years
ended December 31, 1999, 2000, and 2001, respectively. During 1999, 2000, and
2001, investing cash flows were used within the period to purchase
available-for-sale marketable securities and to purchase leasehold improvements
for additional office space in Washington, D.C., computer equipment and
software. During 1999, we also received $6.5 million for the repayment of a
note receivable from our previous sole stockholder.

Cash flows from financing activities.We used net cash flows in
financing activities of $4.7 million during the year ended December 31, 1999.
We generated net cash flows from financing activities of $5.5 million and $14.5
million during the years ended December 31, 2000 and 2001, respectively. Net
cash flows used in financing activities during 1999 were primarily

15



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attributable to a distribution to our previous sole stockholder of $4.0 million
to pay income taxes on our S corporation earnings and to distribute our
estimated undistributed taxed or taxable earnings. During 1999, we also paid
$1.7 million in expenses related to our initial public offering, which is
treated for accounting purposes as a distribution to our previous sole
stockholder. For the years ended December 31, 2000 and 2001, cash flows were
generated within the periods by the receipt of cash for the exercise of stock
options associated with the sale of our common stock.

We lease
office facilities in the United States and the United Kingdom
expiring on various dates over the next eleven years. Certain lease
agreements include provisions for rental escalations based on the
Consumer Price Index and require us to pay for executory
costs such as taxes and insurance. Future minimum rental payments
under non-cancelable operating leases, excluding executory costs,
are $50.7 million. We have entered into a $10.0 million, unsecured
loan agreement, expiring May 2002, with a commercial bank that provides for a revolving line of credit
facility under which we may from time to time borrow, repay and re-borrow
funds. There have been no borrowings under the loan agreement. In addition, we
have entered into a $1.3 million letter of credit agreement, expiring September
2003, with a commercial bank to provide a security deposit for our headquarters
office lease. We pledged certain assets as collateral under the letter of
credit agreement.

At December 31, 2000 and 2001, we have no off-balance sheet
financing or other arrangements with unconsolidated entities or financial partnerships (such as
entities often referred to as structured finance or special purpose entities) established for purposes
of facilitating off-balance sheet financing or other debt arrangements or for other contractually narrow
or limited purposes.

16



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##### 



Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to interest rate risk primarily through our portfolio of
cash, cash equivalents and marketable securities, which is designed for safety
of principal and liquidity. Cash and cash equivalents consist of highly liquid
U.S. government and U.S. Treasury obligations with maturities of less than
three months. Marketable securities consist primarily of United States Treasury
notes and bonds and Washington, D.C. tax exempt notes and bonds. We perform
periodic evaluations of the relative credit ratings related to the cash, cash
equivalents and marketable securities. This portfolio is subject to inherent
interest rate risk as investments mature and are re-invested at current market
interest rates. We currently do not use derivative financial instruments to
adjust our portfolio risk or income profile.

17



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##### 



Item 8. Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of The Corporate Executive Board Company:

We have audited the accompanying balance sheets of The Corporate
Executive Board Company as of December 31, 2000 and 2001, and the
related statements of income, stockholders equity (deficit) and cash
flows for each of the three years in the period ended December 31, 2001.
These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of The
Corporate Executive Board Company as of December 31, 2000 and 2001, and
the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States.

|                                    |                           
|----------------------------------- | --------------------------
|                                    | /s/    Arthur Andersen LLP
|                                   
|Washington, DC
    January 31, 2002

18



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THE CORPORATE EXECUTIVE BOARD COMPANY

BALANCE SHEETS
(In thousands, except share amounts)

|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |        |         |  |  | 
|--------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------------------------ | ------ | ------- | ------------ | ------ | ------ | ------- |  |  | 
|                            |                                                                                                                                                                         |                                            |                                      |        |         | December 31,
|                            |                                                                                                                                                                         |                                            |                                      |        |         |             
|                            |                                                                                                                                                                         |                                            |                                      |        |         | 2000         |        | 2001  
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|                            |                                                                                                                                                                         |                                            |                                      | ASSETS |         |              |        |        |         |  |  | 
|CURRENT ASSETS:             |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|                            | Cash and cash equivalents                                                                                                                                               |                                            | $                                    | 19,493 |         |              | $      | 48,271 |        
|                            | Marketable securities                                                                                                                                                   |                                            |                                      | 5,765  |         |              |        | 35,735 |        
|                            | Membership fees receivable, net                                                                                                                                         |                                            |                                      | 29,519 |         |              |        | 42,011 |        
|                            | Deferred income taxes, net                                                                                                                                              |                                            |                                      | 14,742 |         |              |        | 19,881 |        
|                            | Deferred incentive compensation                                                                                                                                         |                                            |                                      | 2,827  |         |              |        | 4,216  |        
|                            | Prepaid expenses and other current assets                                                                                                                               |                                            |                                      | 3,015  |         |              |        | 3,042  |        
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|                            |                                                                                                                                                                         | Total current assets                       |                                      |        | 75,361  |              |        |        | 153,156 | 
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|DEFERRED INCOME TAXES, NET  |                                                                                                                                                                         |                                            | 16,606                               |        |         |              | 38,639 |       
|MARKETABLE SECURITIES       |                                                                                                                                                                         |                                            | 44,115                               |        |         |              | 48,463 |       
|PROPERTY AND EQUIPMENT, NET |                                                                                                                                                                         |                                            | 16,412                               |        |         |              | 17,260 |       
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|                            |                                                                                                                                                                         | Total assets                               |                                      | $      | 152,494 |              |        | $      | 257,518 | 
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|                            |                                                                                                                                                                         |                                            | LIABILITIES AND STOCKHOLDERS EQUITY |        |         |              |        |        |         |  | 
|CURRENT LIABILITIES:        |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|                            | Accounts payable and accrued liabilities                                                                                                                                |                                            | $                                    | 8,102  |         |              | $      | 10,683 |        
|                            | Accrued incentive compensation                                                                                                                                          |                                            |                                      | 3,013  |         |              |        | 6,387  |        
|                            | Stock option repurchase liability                                                                                                                                       |                                            |                                      | 3,140  |         |              |        |       |        
|                            | Deferred revenues                                                                                                                                                       |                                            |                                      | 71,281 |         |              |        | 94,683 |        
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|                            |                                                                                                                                                                         | Total current liabilities                  |                                      |        | 85,536  |              |        |        | 111,753 | 
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|OTHER LIABILITIES           |                                                                                                                                                                         |                                            | 1,397                                |        |         |              | 1,781  |       
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|                            |                                                                                                                                                                         | Total liabilities                          |                                      |        | 86,933  |              |        |        | 113,534 | 
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|STOCKHOLDERS EQUITY:       |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|                            | Preferred stock, par value $0.01; 5,000,000 shares authorized, no shares issued and
outstanding                                                                         |                                            |                                      |       |         |              |        |       |        
|                            | Common stock, par value $0.01; 100,000,000 shares authorized and 31,144,069
and 34,898,060 shares issued and outstanding as of December 31, 2000 and
2001, respectively |                                            |                                      | 311    |         |              |        | 349    |        
|                            | Additional paid-in-capital                                                                                                                                              |                                            |                                      | 38,579 |         |              |        | 94,221 |        
|                            | Deferred compensation                                                                                                                                                   |                                            |                                      | (186   | )       |              |        |       |        
|                            | Retained earnings                                                                                                                                                       |                                            |                                      | 26,611 |         |              |        | 48,243 |        
|                            | Accumulated elements of comprehensive income                                                                                                                            |                                            |                                      | 246    |         |              |        | 1,171  |        
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|                            |                                                                                                                                                                         | Total stockholders equity                 |                                      |        | 65,561  |              |        |        | 143,984 | 
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       
|                            |                                                                                                                                                                         | Total liabilities and stockholders equity |                                      | $      | 152,494 |              |        | $      | 257,518 | 
|                            |                                                                                                                                                                         |                                            |                                      |        |         |              |        |       

See accompanying notes to financial statements.

19



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##### 



THE CORPORATE EXECUTIVE BOARD COMPANY

STATEMENTS OF INCOME
(In thousands, except per share amounts)

|                                                   |                     |                                   |                          |   |                         |        |        |   |        |        |         |   |        |        | 
|-------------------------------------------------- | ------------------- | --------------------------------- | ------------------------ | - | ----------------------- | ------ | ------ | - | ------ | ------ | ------- | - | ------ | ------ | 
|                                                   |                     |                                   |                          |   | Year ended December 31,
|                                                   |                     |                                   |                          |   |                        
|                                                   |                     |                                   |                          |   | 1999                    |        | 2000   |   | 2001  
|                                                   |                     |                                   |                          |   |                         |        |        |   |       
|REVENUES                                           |                     | $                                 | 70,767                   |   |                         | $      | 95,491 |   |        | $      | 128,112 |  
|                                                   |                     | Cost of services                  |                          |   | 28,602                  |        |        |   | 36,094 |        |         |   | 45,738 |       
|                                                   |                     |                                   |                          |   |                         |        |        |   |        |        |         |  
|GROSS PROFIT                                       |                     |                                   | 42,165                   |   |                         |        | 59,397 |   |        |        | 82,374  |  
|                                                   |                     |                                   |                          |   |                         |        |        |   |        |        |         |  
|COSTS AND EXPENSES:                                |                     |                                   |                          |   |                         |        |        |   |        |        |         |  
|                                                   |                     | Member relations and marketing    |                          |   | 15,525                  |        |        |   | 21,236 |        |         |   | 30,219 |       
|                                                   |                     | General and administrative        |                          |   | 8,485                   |        |        |   | 12,021 |        |         |   | 15,877 |       
|                                                   |                     | Depreciation                      |                          |   | 1,318                   |        |        |   | 2,573  |        |         |   | 4,412  |       
|                                                   |                     | Stock option and related expenses |                          |   | 383                     |        |        |   | 1,371  |        |         |   | 1,260  |       
|                                                   |                     |                                   |                          |   |                         |        |        |   |        |        |         |  
|                                                   |                     |                                   | Total costs and expenses |   |                         | 25,711 |        |   |        | 37,201 |         |   |        | 51,768 | 
|                                                   |                     |                                   |                          |   |                         |        |        |   |        |        |         |  
|INCOME FROM OPERATIONS                             |                     |                                   | 16,454                   |   |                         |        | 22,196 |   |        |        | 30,606  |  
|OTHER INCOME, NET                                  |                     |                                   | 1,114                    |   |                         |        | 2,263  |   |        |        | 4,283   |  
|                                                   |                     |                                   |                          |   |                         |        |        |   |        |        |         |  
|INCOME BEFORE PROVISION FOR INCOME TAXES           |                     |                                   | 17,568                   |   |                         |        | 24,459 |   |        |        | 34,889  |  
|PROVISION FOR INCOME TAXES                         |                     |                                   | 4,322                    |   |                         |        | 9,539  |   |        |        | 13,257  |  
|                                                   |                     |                                   |                          |   |                         |        |        |   |        |        |         |  
|NET INCOME                                         |                     | $                                 | 13,246                   |   |                         | $      | 14,920 |   |        | $      | 21,632  |  
|                                                   |                     |                                   |                          |   |                         |        |        |   |        |        |         |  
|EARNINGS PER SHARE:                                |                     |                                   |                          |   |                         |        |        |   |        |        |         |  
|                                                   |                     | Basic                             |                          | $ | 0.50                    |        |        | $ | 0.49   |        |         | $ | 0.64   |       
|                                                   |                     | Diluted                           |                          | $ | 0.41                    |        |        | $ | 0.43   |        |         | $ | 0.59   |       
|                                                  
|WEIGHTED AVERAGE SHARES USED IN THE CALCULATION OF |                     |                                   |                          |   |                         |        |        |   |        |        |         |  
|                                                   | EARNINGS PER SHARE: |                                   |                          |   |                         |        |        |   |        |        |         |   |       
|                                                   |                     | Basic                             |                          |   | 26,446                  |        |        |   | 30,321 |        |         |   | 34,003 |       
|                                                   |                     | Diluted                           |                          |   | 32,054                  |        |        |   | 34,638 |        |         |   | 36,465 |       

See accompanying notes to financial statements.

20



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##### 



THE CORPORATE EXECUTIVE BOARD COMPANY

STATEMENTS OF CASH FLOWS
(In thousands)

|                                                     |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |         |        |         |         |  
|---------------------------------------------------- | --------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ----------------------------------------- | --------------------------------------------------- | ------ | ----------------------- | ------- | ------- | ------ | ------ | ------- | ------- | ------ | ------- | ------- | -
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        | Year ended December 31,
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        |                        
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        | 1999                    |         | 2000    |        | 2001  
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |       
|CASH FLOWS FROM OPERATING ACTIVITIES:                |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |        
|                                                     | Net income                                                      |                                                                                            | $                                         | 13,246                                              |        |                         | $       | 14,920  |        |        | $       | 21,632  |       
|                                                     | Adjustments to reconcile net income to net cash flows from      |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |         |       
|                                                     |                                                                 | operating activities:                                                                      |                                           |                                                     |        |                         |         |         |        |        |         |         |        |        
|                                                     |                                                                 | Depreciation                                                                               |                                           |                                                     | 1,318  |                         |         |         | 2,573  |        |         |         | 4,166  |        
|                                                     |                                                                 | Loss on disposition of property and equipment                                              |                                           |                                                     |       |                         |         |         | 223    |        |         |         | 246    |        
|                                                     |                                                                 | Deferred income taxes and tax benefits resulting from the exercise of
common stock options |                                           |                                                     | 3,927  |                         |         |         | 9,065  |        |         |         | 13,440 |        
|                                                     |                                                                 | Stock option repurchases                                                                   |                                           |                                                     | (3,084 | )                       |         |         | (1,570 | )      |         |         | (3,140 | )      
|                                                     |                                                                 | Stock option and related expenses                                                          |                                           |                                                     | 383    |                         |         |         | 384    |        |         |         | 186    |        
|                                                     |                                                                 | Amortization of marketable securities premiums (discounts), net                            |                                           |                                                     | 61     |                         |         |         | 196    |        |         |         | 478    |        
|                                                     |                                                                 | Changes in operating assets and liabilities:                                               |                                           |                                                     |        |                         |         |         |        |        |         |         |        |        
|                                                     |                                                                 |                                                                                            | Membership fees receivable, net           |                                                     |        | (9,438                  | )       |         |        | (2,916 | )       |         |        | (12,492 | )      
|                                                     |                                                                 |                                                                                            | Deferred incentive compensation           |                                                     |        | (778                    | )       |         |        | (26    | )       |         |        | (1,389  | )      
|                                                     |                                                                 |                                                                                            | Prepaid expenses and other current assets |                                                     |        | (935                    | )       |         |        | (1,697 | )       |         |        | (27     | )      
|                                                     |                                                                 |                                                                                            | Accounts payable and accrued liabilities  |                                                     |        | 1,506                   |         |         |        | 2,023  |         |         |        | 2,581   |        
|                                                     |                                                                 |                                                                                            | Accrued incentive compensation            |                                                     |        | 1,216                   |         |         |        | (864   | )       |         |        | 3,374   |        
|                                                     |                                                                 |                                                                                            | Deferred revenues                         |                                                     |        | 16,375                  |         |         |        | 15,845 |         |         |        | 23,402  |        
|                                                     |                                                                 |                                                                                            | Other liabilities                         |                                                     |        | 813                     |         |         |        | 584    |         |         |        | 384     |        
|                                                     |                                                                 |                                                                                            | Special bonus plan                        |                                                     |        | (960                    | )       |         |        |       |         |         |        |        |        
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |        
|                                                     |                                                                 |                                                                                            |                                           | Net cash flows provided by operating activities     |        |                         | 23,650  |         |        |        | 38,740  |         |        |         | 52,841  |  
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |        
|                                                     | Purchase of property and equipment                              |                                                                                            |                                           | (7,282                                              | )      |                         |         | (9,287  | )      |        |         | (5,260  | )     
|                                                     | Receivable from stockholder                                     |                                                                                            |                                           | 6,500                                               |        |                         |         |        |        |        |         |        |       
|                                                     | Purchase of marketable securities                               |                                                                                            |                                           | (12,074                                             | )      |                         |         | (89,569 | )      |        |         | (61,022 | )     
|                                                     | Sales and maturities of marketable securities                   |                                                                                            |                                           | 1,403                                               |        |                         |         | 54,378  |        |        |         | 27,717  |       
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |        
|                                                     |                                                                 |                                                                                            |                                           | Net cash used in investing activities               |        |                         | (11,453 | )       |        |        | (44,478 | )       |        |         | (38,565 | )
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |        
|                                                     | Distributions to stockholder                                    |                                                                                            |                                           | (4,000                                              | )      |                         |         |        |        |        |         |        |       
|                                                     | Proceeds from the exercise of common stock options              |                                                                                            |                                           | 995                                                 |        |                         |         | 5,355   |        |        |         | 13,798  |       
|                                                     | Proceeds from issuance of common stock under the employee stock |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |         |       
|                                                     |                                                                 | purchase plan                                                                              |                                           |                                                     |       |                         |         |         | 150    |        |         |         | 704    |        
|                                                     | Reimbursement of offering costs                                 |                                                                                            |                                           |                                                    |        |                         |         | 650     |        |        |         | 375     |       
|                                                     | Payment of offering costs                                       |                                                                                            |                                           | (1,698                                              | )      |                         |         | (650    | )      |        |         | (375    | )     
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |        
|                                                     |                                                                 |                                                                                            |                                           | Net cash provided by (used in) financing activities |        |                         | (4,703  | )       |        |        | 5,505   |         |        |         | 14,502  |  
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |        
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                 |                                                                                            | 7,494                                     |                                                     |        |                         | (233    | )       |        |        | 28,778  |        
|Cash and cash equivalents, beginning of period       |                                                                 |                                                                                            | 12,232                                    |                                                     |        |                         | 19,726  |         |        |        | 19,493  |        
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |        
|Cash and cash equivalents, end of period             |                                                                 | $                                                                                          | 19,726                                    |                                                     |        | $                       | 19,493  |         |        | $      | 48,271  |        
|                                                     |                                                                 |                                                                                            |                                           |                                                     |        |                         |         |         |        |        |         |        

See accompanying notes to financial statements.

21



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##### 



THE CORPORATE EXECUTIVE BOARD COMPANY

STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)

For the years ended December 31, 1999, 2000, and 2001
(In thousands, except share amounts)



|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        |            |   |          |      |          |  |         |        |        |   |   |       |              |   |   |         |        |   |        |        |        |   | 
|---------------------------- | ------------------------------------------------------------------------- |  | - | --------------- |  | ------------ | - | ------- |  | ------ | ---------- | --------- |  | ------ | --- | ----- |  | ------ | ------ | ---------- | - | -------- | ---- | -------- |  | ------- | ------ | ------ | - | - | ----- | ------------ | - | - | ------- | ------ | - | ------ | ------ | ------ | - | 
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        |            |   |          |      |          |  |         |        |        |   |   |       | Accumu-lated |   |   |         |        |   |        |        |       
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        |            |   |          |      |          |  |         |        |        |   |   |       | elements of  |   |   |         |        |   | Annual
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        | Additional |   | Deferred |      | Retained |  | compre- |        |        |   |   |       | Compre-     
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        | paid-in-   |   | compen-  |      | earnings |  | hensive |        |        |   |   |       | hensive     
|                             |                                                                           |  |   | Preferred stock |  | Common stock |   | capital |  | sation |            | (deficit) |  | income |     | Total |  | income
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |       
|                             |                                                                           |  |   | Shares          |  | Amount       |   | Shares  |  | Amount |            |           |  |        |     |       |  |        |        |            |   |          |      |          |  |         |        |        |   |   |       |              |   |  
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        |            |   |          |      |          |  |         |        |        |   |   |       |              |   |  
|Balance at December 31, 1998 |                                                                           |  |  |                 |  | $            |  |         |  |        | 25,008,800 |           |  | $      | 250 |       |  | $      | 2,521  |            |   | $        | (953 | )        |  | $       | (9,965 | )      |   | $ |      |              |   | $ | (8,147  | )      |   |        |        |       
|                             | Distributions to stockholder, net                                         |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        |           |   |          |      |         |  |         |        | (6,519 | ) |   |       |             |   |   |         | (6,519 | ) |        | $      |       |  
|                             | Net incomepre-termination of S
corporation status                        |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        |           |   |          |      |         |  |         |        | 1,555  |   |   |       |             |   |   |         | 1,555  |   |        |        | 1,555  |  
|                             | Termination of S corporation status                                       |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        | (14,929    | ) |          |      |         |  |         |        | 14,929 |   |   |       |             |   |   |         |       |   |        |        |       |  
|                             | Issuance of common stock under special
bonus plan                         |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        | 1,440      |   |          |      |         |  |         |        |       |   |   |       |             |   |   |         | 1,440  |   |        |        |       |  
|                             | Issuance of common stock upon the
exercise of common stock options        |  |   |                |  |              |   |        |  |        |            | 2,131,120 |  |        |     | 21    |  |        |        | 974        |   |          |      |         |  |         |        |       |   |   |       |             |   |   |         | 995    |   |        |        |       |  
|                             | Tax benefits related to the exercise of
stock options                     |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        | 10,128     |   |          |      |         |  |         |        |       |   |   |       |             |   |   |         | 10,128 |   |        |        |       |  
|                             | Amortization of deferred
compensation                                     |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        |           |   |          |      | 383      |  |         |        |       |   |   |       |             |   |   |         | 383    |   |        |        |       |  
|                             | Unrealized losses on available-for-sale
marketable securities, net of tax |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        |           |   |          |      |         |  |         |        |       |   |   |       | (680         | ) |   |         | (680   | ) |        |        | (680   | )
|                             | Net incomepost-termination of S
corporation status                       |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        |           |   |          |      |         |  |         |        | 11,691 |   |   |       |             |   |   |         | 11,691 |   |        |        | 11,691 |  
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        |            |   |          |      |          |  |         |        |        |   |   |       |              |   |   |         |        |   |        |        |       
|Balance at December 31, 1999 |                                                                           |  |  |                 |  | $            |  |         |  |        | 27,139,920 |           |  | $      | 271 |       |  | $      | 134    |            |   | $        | (570 | )        |  | $       | 11,691 |        |   | $ | (680  | )            |   | $ | 10,846  |        |   | $      | 12,566 |       
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        |            |   |          |      |          |  |         |        |        |   |   |       |              |   |   |         |        |   |        |        |       
|                             | Issuance of common stock upon the
exercise of common stock options        |  |   |                |  |              |   |        |  |        |            | 3,998,470 |  |        |     | 40    |  |        |        | 5,315      |   |          |      |         |  |         |        |       |   |   |       |             |   |   |         | 5,355  |   |        |        |       |  
|                             | Issuance of common stock under the
employee stock purchase plan           |  |   |                |  |              |   |        |  |        |            | 5,679     |  |        |     |      |  |        |        | 150        |   |          |      |         |  |         |        |       |   |   |       |             |   |   |         | 150    |   |        |        |       |  
|                             | Tax benefits related to the exercise of
stock options                     |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        | 32,980     |   |          |      |         |  |         |        |       |   |   |       |             |   |   |         | 32,980 |   |        |        |       |  
|                             | Amortization of deferred
compensation                                     |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        |           |   |          |      | 384      |  |         |        |       |   |   |       |             |   |   |         | 384    |   |        |        |       |  
|                             | Unrealized gains on available-for-sale
marketable securities, net of tax  |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        |           |   |          |      |         |  |         |        |       |   |   |       | 926          |   |   |         | 926    |   |        |        | 926    |  
|                             | Net income                                                                |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        |           |   |          |      |         |  |         |        | 14,920 |   |   |       |             |   |   |         | 14,920 |   |        |        | 14,920 |  
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        |            |   |          |      |          |  |         |        |        |   |   |       |              |   |   |         |        |   |        |        |       
|Balance at December 31, 2000 |                                                                           |  |  |                 |  | $            |  |         |  |        | 31,144,069 |           |  | $      | 311 |       |  | $      | 38,579 |            |   | $        | (186 | )        |  | $       | 26,611 |        |   | $ | 246   |              |   | $ | 65,561  |        |   | $      | 15,846 |       
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        |            |   |          |      |          |  |         |        |        |   |   |       |              |   |   |         |        |   |        |        |       
|                             | Issuance of common stock upon the
exercise of common stock options        |  |   |                |  |              |   |        |  |        |            | 3,727,682 |  |        |     | 38    |  |        |        | 13,760     |   |          |      |         |  |         |        |       |   |   |       |             |   |   |         | 13,798 |   |        |        |       |  
|                             | Issuance of common stock under the
employee stock purchase plan           |  |   |                |  |              |   |        |  |        |            | 26,309    |  |        |     |      |  |        |        | 704        |   |          |      |         |  |         |        |       |   |   |       |             |   |   |         | 704    |   |        |        |       |  
|                             | Tax benefits related to the exercise of
stock options                     |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        | 41,178     |   |          |      |         |  |         |        |       |   |   |       |             |   |   |         | 41,178 |   |        |        |       |  
|                             | Amortization of deferred
compensation                                     |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        |           |   |          |      | 186      |  |         |        |       |   |   |       |             |   |   |         | 186    |   |        |        |       |  
|                             | Unrealized gains on available-for-sale
marketable securities, net of tax  |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        |           |   |          |      |         |  |         |        |       |   |   |       | 925          |   |   |         | 925    |   |        |        | 925    |  
|                             | Net income                                                                |  |   |                |  |              |   |        |  |        |            |          |  |        |     |      |  |        |        |           |   |          |      |         |  |         |        | 21,632 |   |   |       |             |   |   |         | 21,632 |   |        |        | 21,632 |  
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        |            |   |          |      |          |  |         |        |        |   |   |       |              |   |   |         |        |   |        |        |       
|Balance at December 31, 2001 |                                                                           |  |  |                 |  | $            |  |         |  |        | 34,898,060 |           |  | $      | 349 |       |  | $      | 94,221 |            |   | $        |     |          |  | $       | 48,243 |        |   | $ | 1,171 |              |   | $ | 143,984 |        |   | $      | 22,557 |       
|                             |                                                                           |  |   |                 |  |              |   |         |  |        |            |           |  |        |     |       |  |        |        |            |   |          |      |          |  |         |        |        |   |   |       |              |   |   |         |        |   |        |        |       

See accompanying notes to financial statements.

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THE CORPORATE EXECUTIVE BOARD COMPANY

NOTES TO FINANCIAL STATEMENTS

1. Description of operations

The Corporate
Executive Board Company (the Company) provides
best practices research and quantitative analysis focusing on corporate strategy,
operations and general management issues. Best practices research supports senior executive decision
making by identifying and analyzing specific management initiatives, processes and strategies that
have been determined to produce the best results in solving common business
problems or challenges. For a fixed, annual fee, members of each of
our research
programs have access to an integrated set of services, including best practices
research studies, executive education seminars, customized research briefs and
web-based access to the programs content database and decision support tools.

2. Spin-off and public offerings of common stock

The Company was incorporated on September 11, 1997, under the laws of the
State of Delaware. The Companys business was operated as a division of The
Advisory Board Company, a Maryland corporation, until October 31, 1997 when the
business was contributed to the Company and spun-off to The Advisory Board
Companys sole stockholder (the ''Spin-off). In February 1999, 18,830,560
shares of our common stock were sold in an initial public offering
(the Initial Public Offering). In February 2000 and in March and April 2001, 11,023,030 shares
and 3,035,000 shares, respectively,
of our common
stock were sold in secondary public offerings. The Company did not directly receive any proceeds
from the sale of our common stock. All of the shares sold in the
foregoing offerings were sold by stockholders and option holders. However, the Company did receive cash from
the exercise of common stock options in conjunction with the sale of
our common stock. Subsequent to the sale of common stock in the secondary offering in February 2000, the former sole
stockholder owns no shares of the Companys common stock.

3. Stock split

In August 2000, the Companys Board of Directors declared a two-for-one
stock split in the form of a common stock dividend on the Companys common
stock, payable September 15, 2000, to stockholders of record September 1, 2000.
The effect of the stock split is presented retroactively within the statements
of changes in stockholders equity (deficit) at December 31, 1998, 1999 and
2000, by transferring the par value for the additional common shares issued
from the additional paid-in-capital account to the common stock account. All
references to share and per share amounts in the accompanying financial
statements included herein have been adjusted retroactively to reflect the
two-for-one stock split.

4. Summary of significant accounting policies

Cash equivalents and marketable securities

Short-term investments and marketable securities that mature within three
months of purchase are classified as cash equivalents. Short-term investments
and marketable securities with maturities of more than three months are
classified as marketable securities. As of December 31, 2000 and 2001, the
Companys marketable securities consisted primarily of United States Treasury
notes and bonds and Washington, DC tax exempt notes and bonds. The Company
classifies its marketable securities as available-for-sale securities, which
are carried at fair value based on quoted market prices. The net unrealized
gains and losses on available-for-sale marketable securities are excluded from
net income and are included within accumulated elements of comprehensive
income. The specific identification method is used to compute the realized
gains and losses on the sale of marketable securities. The Company may not hold
these marketable securities to maturity and may elect to sell these securities
at any time.

Property and equipment

Property and equipment consists of furniture, fixtures and equipment,
capitalized software and web site development costs, and leasehold
improvements. Property and equipment are stated at cost, less accumulated
depreciation expense. Furniture, fixtures and equipment are depreciated using
the straight-line method over the estimated useful lives of the assets, which
range from three to seven years. Capitalized software and web site development
costs are depreciated using the straight-line method over the estimated useful
lives of the assets, which range from three to five years. Leasehold
improvements are depreciated using the straight-line method over the shorter of
the estimated useful lives of the assets or the lease term. Replacements and
major

23



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##### 



improvements are capitalized. Maintenance and repairs are charged to expense as
incurred.

Recovery of long-lived assets

Long-lived assets and identifiable assets to be held and used are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company recognizes an
impairment loss when the sum of the expected undiscounted future cash flows is
less than the carrying amount of the asset. The Company believes that no such
impairment existed as of December 31, 2000 and 2001.

Revenue recognition

Membership fees are recognized ratably over the term of the related
membership, which is generally twelve months. Members may request a refund of
their membership fee, which is provided on a pro rata basis relative to the
remaining term of the membership. Membership fees are generally billable when
the member agrees to the terms of the membership, although certain membership fees are
billed on an installment basis. In all cases, the  Companys policy is to record the full
amount of membership fees receivable as an asset and related deferred revenue as
a liability when a member
agrees to the terms of the membership. As of December 31, 2000 and 2001,
approximately $1.2 million and $2.5 million, respectively, of deferred revenues
were to be recognized beyond the following twelve months.

Commission expense recognition

Commission expenses related to the negotiation of new memberships and the
renewal of existing memberships are deferred and amortized over the term of the
related memberships.

Earnings per share

Basic earnings per share is computed by dividing net income by the number
of basic weighted average common shares outstanding during the period. Diluted
earnings per share is computed by dividing net income by the number of diluted
weighted average common shares outstanding during the period. The number of
weighted average common share equivalents outstanding is determined in
accordance with the treasury-stock method. Common share equivalents consist of
common shares issuable upon the exercise of outstanding common stock options. A
reconciliation of basic to diluted weighted average common shares outstanding
is as follows (in thousands):

|                                                      |  |                         |        |      |  |      |        |  |  |  |        | 
|----------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                                      |  | Year Ended December 31,
|                                                      |  |                        
|                                                      |  | 1999                    |        | 2000 |  | 2001
|                                                      |  |                         |        |      |  |     
|Basic weighted average common shares outstanding      |  |                         | 26,446 |      |  |      | 30,321 |  |  |  | 34,003 | 
|Weighted average common share equivalents outstanding |  |                         | 5,608  |      |  |      | 4,317  |  |  |  | 2,462  | 
|                                                      |  |                         |        |      |  |      |        |  |  |  |        | 
|Diluted weighted average common shares outstanding    |  |                         | 32,054 |      |  |      | 34,638 |  |  |  | 36,465 | 
|                                                      |  |                         |        |      |  |      |        |  |  |  |        | 

Concentrations of credit risk

Financial instruments, which potentially expose the Company to
concentration of credit risk, consist primarily of membership fees receivable
and of cash, cash equivalents and marketable securities. Concentrations of
credit risk with respect to membership fees receivable are limited due to the
large number of members and their dispersion across many different industries
and countries worldwide. However, the Company may be exposed to a declining
membership base in periods of unforeseen market downturns, severe competition
or international developments. The Company performs periodic evaluations of the
membership base and related membership fees receivable and establishes
allowances for potential credit losses.

The Company generates revenues from members located outside the United
States. For the years ended December 31, 1999, 2000 and 2001, approximately
31%, 29% and 30% of total revenues, respectively, were generated from members
located outside the United States. Revenues from customers in European
countries were approximately 15%, 15% and 16% for the years ended December 31,
1999, 2000 and 2001, respectively, with no other geographic area representing
more than 10% of total revenues in any period. No individual member accounted
for more than 2% of revenues for any period presented.

The Company maintains a portfolio of cash, cash equivalents and marketable
securities, which is designed for safety of principal and liquidity, with
financial institutions. Cash and cash equivalents consist of highly liquid U.S.
government and U.S.

24



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##### 



Treasury obligations with maturities of less than three months. Marketable
securities consist primarily of United States Treasury notes and bonds and
Washington, DC tax exempt notes and bonds. The Company performs periodic
evaluations of the relative credit ratings related to the cash, cash
equivalents and marketable securities.

Fair value of financial instruments

The fair value of current assets and current liabilities approximates
their carrying value due to their short maturity.

Income taxes

Deferred income taxes are determined on the asset and liability method.
Under this method, temporary differences arise as a result of the difference
between the reported amounts of assets and liabilities and their tax basis.
Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion or the entire
deferred tax asset will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax law and tax rates on the date of
the enactment of the change.

Research and development costs

Costs related to the research and development of new company programs are
expensed in the year incurred.

Reclassification of prior-years balances

Prior-years balances have been reclassified to conform to the
current-year presentation.

Use of estimates in preparation of financial statements

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and costs and
expenses during the reporting period. Actual results could differ from those
estimates.

5. Marketable securities

The aggregate market value, amortized cost, gross unrealized gains and
gross unrealized losses on available-for-sale marketable securities are as
follows (in thousands):

|                                          |  |                         |        |           |  |            |        |            |  |       |     |       |  |   |    | 
|----------------------------------------- |  | ----------------------- | ------ | --------- |  | ---------- | ------ | ---------- |  | ----- | --- | ----- |  | - | -- | 
|                                          |  | As of December 31, 2000
|                                          |  |                        
|                                          |  |                         |        |           |  |            |        |            |  | Gross |     | Gross
|                                          |  | Market                  |        | Amortized |  | Unrealized |        | Unrealized
|                                          |  | Value                   |        | Cost      |  | Gains      |        | Losses    
|                                          |  |                         |        |           |  |            |        |           
|United States Treasury notes and bonds    |  | $                       | 38,812 |           |  | $          | 38,637 |            |  | $     | 236 |       |  | $ | 61 | 
|Washington, DC tax exempt notes and bonds |  |                         | 11,068 |           |  |            | 10,840 |            |  |       | 228 |       |  |   |   | 
|                                          |  |                         |        |           |  |            |        |            |  |       |     |       |  |   |    | 
|                                          |  | $                       | 49,880 |           |  | $          | 49,477 |            |  | $     | 464 |       |  | $ | 61 | 
|                                          |  |                         |        |           |  |            |        |            |  |       |     |       |  |   |    | 

|                                          |  |                         |        |           |  |            |        |            |  |       |       |       |  |   |    | 
|----------------------------------------- |  | ----------------------- | ------ | --------- |  | ---------- | ------ | ---------- |  | ----- | ----- | ----- |  | - | -- | 
|                                          |  | As of December 31, 2001
|                                          |  |                        
|                                          |  |                         |        |           |  |            |        |            |  | Gross |       | Gross
|                                          |  | Market                  |        | Amortized |  | Unrealized |        | Unrealized
|                                          |  | Value                   |        | Cost      |  | Gains      |        | Losses    
|                                          |  |                         |        |           |  |            |        |           
|United States Treasury notes and bonds    |  | $                       | 70,567 |           |  | $          | 69,067 |            |  | $     | 1,500 |       |  | $ |   | 
|Washington, DC tax exempt notes and bonds |  |                         | 13,631 |           |  |            | 13,243 |            |  |       | 398   |       |  |   | 10 | 
|                                          |  |                         |        |           |  |            |        |            |  |       |       |       |  |   |    | 
|                                          |  | $                       | 84,198 |           |  | $          | 82,310 |            |  | $     | 1,898 |       |  | $ | 10 | 
|                                          |  |                         |        |           |  |            |        |            |  |       |       |       |  |   |    | 

25



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The following table summarizes marketable securities maturities (in
thousands):

|                         |  |                         |        |           |  |   |        | 
|------------------------ |  | ----------------------- | ------ | --------- |  | - | ------ | 
|                         |  | As of December 31, 2001
|                         |  |                        
|                         |  | Fair Market             |        | Amortized
|                         |  | Value                   |        | Cost     
|                         |  |                         |        |          
|Less than one year       |  | $                       | 35,735 |           |  | $ | 35,457 | 
|Matures in 1 to 5 years  |  |                         | 42,836 |           |  |   | 41,282 | 
|Matures in 6 to 10 years |  |                         | 4,524  |           |  |   | 4,497  | 
|Matures after 10 years   |  |                         | 1,103  |           |  |   | 1,074  | 
|                         |  |                         |        |           |  |   |        | 
|                         |  | $                       | 84,198 |           |  | $ | 82,310 | 
|                         |  |                         |        |           |  |   |        | 

The Company may not hold these marketable securities to maturity and may
elect to sell these securities at any time.

6. Membership fees receivable

Membership fees receivable consist of the following (in thousands):

|                                    |  |                    |        |      |  |   |        |  
|----------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                                    |  | As of December 31,
|                                    |  |                   
|                                    |  | 2000               |        | 2001
|                                    |  |                    |        |     
|Billed membership fees receivable   |  | $                  | 23,561 |      |  | $ | 36,431 |  
|Unbilled membership fees receivable |  |                    | 7,586  |      |  |   | 7,513  |  
|                                    |  |                    |        |      |  |   |        |  
|                                    |  |                    | 31,147 |      |  |   | 43,944 |  
|Reserve for uncollectible revenue   |  |                    | (1,628 | )    |  |   | (1,933 | )
|                                    |  |                    |        |      |  |   |        |  
|Membership fees receivable, net     |  | $                  | 29,519 |      |  | $ | 42,011 |  
|                                    |  |                    |        |      |  |   |        |  

7. Receivable from stockholder

The Company held a promissory note in the amount of $6.5 million from its
then sole stockholder prior to the Initial Public Offering that was due and
payable on October 31, 2007. Interest of 7.0% on the outstanding promissory
note balance was payable semiannually on each May 1 and November 1. The
stockholder repaid the note in 1999 using proceeds from the Initial Public
Offering.

8. Property and equipment

Property and equipment consist of the following (in thousands):

|                                        |  |                    |        |      |  |   |        |  
|--------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                                        |  | As of December 31,
|                                        |  |                   
|                                        |  | 2000               |        | 2001
|                                        |  |                    |        |     
|Furniture, fixtures, and equipment      |  | $                  | 10,944 |      |  | $ | 10,399 |  
|Software and web site development costs |  |                    | 5,377  |      |  |   | 7,839  |  
|Leasehold improvements                  |  |                    | 5,613  |      |  |   | 7,554  |  
|                                        |  |                    |        |      |  |   |        |  
|                                        |  |                    | 21,934 |      |  |   | 25,792 |  
|Accumulated depreciation                |  |                    | (5,522 | )    |  |   | (8,532 | )
|                                        |  |                    |        |      |  |   |        |  
|Property and equipment, net             |  | $                  | 16,412 |      |  | $ | 17,260 |  
|                                        |  |                    |        |      |  |   |        |  

9. Income taxes

The Company was an S corporation for Federal income tax purposes until
immediately prior to the Initial Public Offering. As an S corporation, the
taxable income of the Company was passed through to the sole stockholder and
was reported on the sole stockholders Federal income tax return. However, as
the District of Columbia does not recognize S corporation status, income taxes
related to the District of Columbia were provided for within the Companys
financial statements prior to the Initial Public Offering. Just prior to the
Initial Public Offering, the Company terminated its S corporation status and is
now subject to Federal and state income taxes at prevailing corporate rates. As
a result, the Company recorded a one-time deferred income tax benefit of $2.7
million due to the change in tax status. The one-time deferred income tax
benefit is reflected in net income for the year ended December 31, 1999, as a
reduction of the provision for income taxes. If the Company had been a C
corporation for U.S. Federal and state income tax purposes since January 1,
1999 and recorded income taxes using an annual effective rate of 41.0%, pro
forma net income and basic and diluted earnings per share would have been $10.4
million (unaudited), $0.39 (unaudited) and $0.32 (unaudited) for the year ended
December 31, 1999.

The provision for income taxes consists of the following (in thousands):

|                           |  |                         |        |      |  |      |       |  |  |   |        |  
|-------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ----- |  |  | - | ------ | -
|                           |  | Year Ended December 31,
|                           |  |                        
|                           |  | 1999                    |        | 2000 |  | 2001
|                           |  |                         |        |      |  |     
|Current                    |  | $                       | 5,780  |      |  | $    | 8,582 |  |  | $ | 18,621 |  
|Deferred                   |  |                         | (1,458 | )    |  |      | 957   |  |  |   | (5,364 | )
|                           |  |                         |        |      |  |      |       |  |  |   |        |  
|Provision for income taxes |  | $                       | 4,322  |      |  | $    | 9,539 |  |  | $ | 13,257 |  
|                           |  |                         |        |      |  |      |       |  |  |   |        |  

26



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The provision for income taxes differs from the amount of income taxes
determined by applying the U.S. Federal income tax statutory rates to income
before provision for income taxes as follows:

|                                                         |                    |  |                         |      |      |  |      |      |   |  |      |      |  
|-------------------------------------------------------- | ------------------ |  | ----------------------- | ---- | ---- |  | ---- | ---- | - |  | ---- | ---- | -
|                                                         |                    |  | Year Ended December 31,
|                                                         |                    |  |                        
|                                                         |                    |  | 1999                    |      | 2000 |  | 2001
|                                                         |                    |  |                         |      |      |  |     
|Statutory U.S. Federal income tax rate                   |                    |  | 35.0                    | %    |      |  | 35.0 | %    |   |  | 35.0 | %   
|State income tax, net of U.S. Federal income tax benefit |                    |  | 6.5                     |      |      |  | 6.5  |      |   |  | 6.5  |     
|Termination of S corporation status                      |                    |  | (15.6                   | )    |      |  |     |      |   |  |     |     
|Phase-in rate differential                               |                    |  | (4.0                    | )    |      |  |     |      |   |  |     |     
|Other permanent differences, net                         |                    |  | 2.7                     |      |      |  | (2.5 | )    |   |  | (3.5 | )   
|                                                         |                    |  |                         |      |      |  |      |      |   |  |      |     
|                                                         | Effective tax rate |  |                         | 24.6 | %    |  |      | 39.0 | % |  |      | 38.0 | %
|                                                         |                    |  |                         |      |      |  |      |      |   |  |      |     

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities consist of the
following (in thousands):

| |                           |                                                   |                                |   |                    |        |      |   |        |        | 
| | ------------------------- | ------------------------------------------------- | ------------------------------ | - | ------------------ | ------ | ---- | - | ------ | ------ | 
| |                           |                                                   |                                |   | As of December 31,
| |                           |                                                   |                                |   |                   
| |                           |                                                   |                                |   | 2000               |        | 2001
| |                           |                                                   |                                |   |                    |        |     
| | Deferred tax assets:      |                                                   |                                |   |                    |        |      |   |       
| |                           | Deferred compensation agreements                  |                                | $ | 1,250              |        |      | $ | 2,649  |       
| |                           | Net operating loss carryforward                   |                                |   | 29,865             |        |      |   | 52,431 |       
| |                           | Deferred revenue                                  |                                |   |                   |        |      |   | 4,445  |       
| |                           | Financial reporting reserves                      |                                |   | 702                |        |      |   | 802    |       
| |                           | Employee benefits                                 |                                |   | 400                |        |      |   |       |       
| |                           | Other                                             |                                |   | 579                |        |      |   | 737    |       
| |                           |                                                   |                                |   |                    |        |      |  
| |                           |                                                   | Total deferred tax assets      |   |                    | 32,796 |      |   |        | 61,064 | 
| |                           |                                                   |                                |   |                    |        |      |  
| | Deferred tax liabilities: |                                                   |                                |   |                    |        |      |   |       
| |                           | Unrealized gains on available-for-sale securities |                                |   | 157                |        |      |   | 717    |       
| |                           | Employee benefits                                 |                                |   | 41                 |        |      |   | 78     |       
| |                           | Deferred incentive compensation                   |                                |   | 1,173              |        |      |   | 1,749  |       
| |                           | Other                                             |                                |   | 77                 |        |      |   |       |       
| |                           |                                                   |                                |   |                    |        |      |  
| |                           |                                                   | Total deferred tax liabilities |   |                    | 1,448  |      |   |        | 2,544  | 
| |                           |                                                   |                                |   |                    |        |      |  
| |                           |                                                   | Deferred tax assets, net       |   | $                  | 31,348 |      |   | $      | 58,520 | 
| |                           |                                                   |                                |   |                    |        |      |  

The Company has net operating losses which resulted in a deferred tax
asset of $29.9 million and $52.4 million at December 31, 2000 and 2001,
respectively. The net operating losses expire in the years 2019 through 2021
The Company believes that its future taxable income will be sufficient for the
full realization of the deferred tax assets. The Company has realized tax
benefits (reductions of taxes payable) resulting from the exercise of common
stock options of $8.1 million and $18.6 million in the years ended December 31,
2000 and 2001, respectively.

10. Comprehensive income (loss)

Comprehensive income (loss) is defined as net income (loss) plus the
net-of-tax impact of foreign currency items, minimum pension liability
adjustments, and unrealized gains and losses on certain investments in debt and
equity securities. Comprehensive income for the year ended December 31, 1999,
2000 and 2001, was $12.6 million, $15.8 million and $22.6 million,
respectively. The accumulated elements of comprehensive income, net of tax,
included within stockholders equity on the balance sheets are comprised solely
of the change in unrealized gains (losses) on available-for-sale marketable
securities. Unrealized losses, net of tax, on available-for-sale marketable
securities amounted to $0.7 million during the year ended December 31, 1999.
Unrealized gains, net of tax, on available-for-sale marketable securities
amounted to $0.9 million during each of the years ended December 31, 2000 and
2001.

11. Transactions with affiliates

Administrative support and vendor agreements

The Advisory Board Company provided the Company with limited administrative support
services from the date of the Spin-off until December 31, 2000. Subsequent to the Spin-off, fees were charged to the Company for
these services in accordance with an Administrative Services Agreement (the
ASA). The ASA provided for fees based on either direct costs, costs per
certain transaction, headcount, or a fixed cost per month. The ASA expired
December 31, 2000.

The Company also has
received services under certain vendor contracts entered
into by The Advisory Board Company for the provision of certain services, such
as telecommunications, travel, mailing and general office services. A Vendor
Contracts Agreement specified that the Company will pay the vendor directly if
costs can be segregated and billed separately, or the Company will reimburse
The Advisory Board Company for its reasonably allocated share of commonly
billed costs. The Vendor

27



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Contracts Agreement expired on December 31, 2000. However, the Company
continues to participate in limited vendor contracts entered into by The
Advisory Board Company for the provision of certain services and
continues to pay for such services on a basis consistent with that
followed under the Vendor Contracts Agreement.

Due from (due to)
affiliate

Activity due from (due to) affiliate is as follows (in thousands):

|                                                                                           |  |   |                         |   |      |   |      |   |  |   |      |   | 
|------------------------------------------------------------------------------------------ |  | - | ----------------------- | - | ---- | - | ---- | - |  | - | ---- | - | 
|                                                                                           |  |   | Year Ended December 31,
|                                                                                           |  |   |                        
|                                                                                           |  |   | 1999                    |   | 2000 |   | 2001
|                                                                                           |  |   |                         |   |      |   |     
|Balance at beginning of period                                                             |  | $ | 350                     |   |      | $ | (41  | ) |  | $ | (193 | )
|Administrative support from, and vendor agreements shared with,
The Advisory Board Company |  |   | (1,595                  | ) |      |   | (22  | ) |  |   | (26  | )
|Cash transfers from the Company to The Advisory Board Company                              |  |   | 3,169                   |   |      |   | 220  |   |  |   | 518  |  
|Cash transfers to the Company from The Advisory Board Company                              |  |   | (1,965                  | ) |      |   | (350 | ) |  |   | (308 | )
|                                                                                           |  |   |                         |   |      |   |      |   |  |   |      |  
|Balance at end of period                                                                   |  | $ | (41                     | ) |      | $ | (193 | ) |  | $ | (9   | )
|                                                                                           |  |   |                         |   |      |   |      |   |  |   |      |  

12. Employee benefit plans

Defined contribution 401(k) plan

The Company sponsors a defined
contribution 401(k) Plan (the Plan) in which the Companys employees
participate. Pursuant to the Plan, all employees who have reached the age of
twenty-one are eligible to participate. The employer provides contributions
equal to 25% of an employees contribution up to a maximum of 4% of base
salary. Contributions to the Plan for the participants were $0.2
million, $0.2 million and $0.3 million during the years ended December 31,
1999, 2000 and 2001, respectively.

Employee stock purchase plan

In June 2000, the Company established an employee stock purchase plan (the
ESPP). Under the ESPP, employees authorize payroll deductions from 1% to
10% of their eligible compensation to purchase shares of the Companys common stock. The ESPP is authorized to
issue up to 1,050,000 shares of the Companys common stock. During the years
ended December 31, 2000 and 2001, 5,679 and 26,309 shares of common stock,
respectively, were issued under the ESPP.

13. Stock option plans

Background

On March 1, 1994, The Advisory Board Company adopted the Stock-Based
Incentive Compensation Plan (the Original Plan) to provide for granting
incentive stock options (Original Options). The Original Plan entitled
certain employees to purchase shares of The Advisory Board Companys Class B
Nonvoting Common Stock at a price equal to at least the fair market value of
The Advisory Board Companys stock on the date of grant. The Original Options
were exercisable on the date ten years after the date of grant, subject to
acceleration upon the occurrence of certain events that would alter the current
ownership of The Advisory Board Company, including an initial public offering
or private sale.

Liquid Markets Agreements

On March 31, 1995, The Advisory Board Company and existing optionees
adopted the Liquid Markets Agreements (''Liquid Markets Agreements) to
provide the optionees an opportunity to (i) sell all or a portion of their
Original Options to The Advisory Board Company immediately and/or (ii) modify
all or a portion of their Original Options in accordance with the terms and
conditions of the Continuing Stock-Based Incentive Compensation Plan, which is
described below (the Continuing Option Plan).

The Liquid Markets Agreements provided for the designation of Original
Options as described above and governed the payments to be made to the
optionees for options sold. For the options elected to be sold, The Advisory
Board Company was committed to make a payment in two installments (25% no later
than December 31, 1995, and 75% no later than December 31, 1996). The Advisory
Board Company was also obligated to pay the optionee an additional payment (the
Earn Out Payment) based on The Advisory Board Companys income from
operations for the fiscal year ending March 31, 1998.

28



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In March 1997, The Advisory Board Company amended the Liquid Markets
Agreements to provide for (1) guaranteed versus variable Earn Out Payments, (2)
revised payment schedules, (3) revised employment requirements, and (4) in
limited instances, the ability to put current options retroactively into the
Liquid Markets Agreements.

In December 1998, the Company amended the Liquid Markets Agreements
relating to its employees by eliminating the future employment requirements.
The Company recognized $2.4 million in compensation expense related to the
Liquid Markets Agreements in the year ended December 31, 1998. There are no
earnings charges subsequent to December 31, 1998, related to these agreements.
In January 2001, the Company paid $3.1 million in accordance with the Liquid
Markets Agreements, the final cash commitment related to the Liquid Markets
Agreements. At December 31, 2001, there are no future cash commitments related
to the Liquid Markets Agreements.

Stock-Based Incentive Compensation Plan

The Continuing
Option Plan, adopted on March 31, 1995, amended and restated
the Original Plan and formalized the terms and conditions of the remaining
modified options (the Continuing Options). In conjunction with the
Spin-off, The Advisory Board Company executed a Substitution Agreement (the
Substitution Agreement) with each of the employees of the Company
participating in the Continuing Option Plan. The Substitution Agreement
provided for the exchange of The Advisory Board Company Continuing Options for
options in the Company (the Options) granted under the Companys
Stock-Based Incentive Compensation Plan (the Current Plan), which was
adopted at the time of the Spin-off. The Current Plan provides for the issuance
of options to purchase up to 11,008,000 shares of common stock. Any
shares of common stock which, for any reason, are not issued under the Current
Plan are reserved for issuance pursuant to the 1999 Stock Option Plan (the
1999 Plan). As of December 31, 2001, 10,569,400 options, net of
cancellations, to purchase common stock had been granted under the Current Plan
and 438,600 options, net of cancellations, to purchase common stock had been
granted under the 1999 Plan. The Options granted under the Current Plan
generally become exercisable 50% in February 2000, 30% in February 2001 and 20%
in February 2002 and expire between April 2001 and April 2004.

The terms of the Substitution Agreement resulted in a new measurement date
for 3,711,760 options held by employees of the Company, resulting in the
recognition of compensation expense over the options vesting period. The compensation expense is
reflected in stock option and related expenses in the accompanying statements
of income and was $0.4 million, $0.4 million and $0.2 million for the years
ending December 31, 1999, 2000 and 2001, respectively. The recognition of
compensation expense was not required for the remaining 2,843,986 options
outstanding at the time of the Spin-off. There are no earnings charges
subsequent to December 31, 2001, related to these options or
Substitution Agreements.

1999 Stock Option Plan

In February 1999, the Company adopted the 1999 Plan, which provides for
the issuance of options to purchase up to 3,784,000 shares of common stock plus
any options to purchase shares of common stock which, for any reason, are not
issued under the Current Plan. During 1999, the Company granted 1,491,000
options to purchase common stock under the 1999 Plan at a weighted average
exercise price of $9.80 per share. During 2000, the Company granted 1,613,000
options to purchase common stock under the 1999 Plan at a weighted average
exercise price of $21.78 per share. During 2001, the Company granted 1,358,000
options to purchase common stock under the 1999 Plan at a weighted average
exercise price of $31.05 per share. As of December 31, 2001, 4,222,600 options,
net of cancellations and including 438,600 shares of common stock
carried over from the Current Plan, had been granted under the 1999 Plan. The common stock
options granted under the 1999 Plan generally become exercisable 25% per year
beginning one year from the date of grant and expire between February 2009 and
July 2011.

2001 Stock Option Plan

In June 2001, the Company adopted the 2001 Stock Option Plan (the ''2001
Plan), which provides for the issuance of options to purchase up to 2,700,000
shares of common stock. During 2001, the Company granted no options to purchase
common stock under the 2001 Plan.

Directors Stock Option Plan

In December 1998, the Company adopted the Directors Stock Plan (the
''Directors Plan), which provides for the issuance of options to purchase up
to 860,000 shares of common stock. During 1998, the Company granted 288,960
options to purchase common stock under the Directors Plan at a weighted
average exercise price of $7.12 per share. During 1999, the Company granted
72,240 options to purchase common stock under the Directors Plan at a weighted
average exercise price of $7.12 per share. During 2000, the Company granted
70,000 options to purchase common stock under the Directors Plan at a weighted
average exercise price of $21.19 per share. During 2001, the Company granted
142,240 options to purchase common stock under

29



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##### 



the Directors Plan at a weighted average exercise price of
$31.46 per share. As of December 31, 2001, 533,440 options, net of cancellations,
to purchase common stock had been granted under the Directors Plan. The common
stock options granted under the Directors Plan generally become 100%
exercisable one year from the date of grant and expire ten years after the date
of grant.

Transactions

The following table summarizes the changes in common stock options for the
common stock option plans described above:

|                                 |                   |  |            |            |                |   |                |             |  |   |          |       | 
|-------------------------------- | ----------------- |  | ---------- | ---------- | -------------- | - | -------------- | ----------- |  | - | -------- | ----- | 
|                                 |                   |  |            |            |                |   |                |             |  |   | Weighted
|                                 |                   |  | Number     |            | Exercise Price |   | Average       
|                                 |                   |  | of Options |            | per Share      |   | Exercise Price
|                                 |                   |  |            |            |                |   |               
|Outstanding at December 31, 1998 |                   |  | 10,966,720 |            |                | $ | 0.03-7.12      |             |  | $ | 1.23     |      
|                                 | Options granted   |  |            | 1,563,240  |                |   |                | 7.12-19.07  |  |   |          | 9.67  | 
|                                 | Options cancelled |  |            | (14,000    | )              |   |                | 9.50        |  |   |          | 9.50  | 
|                                 | Options exercised |  |            | (2,131,120 | )              |   |                | 0.47        |  |   |          | 0.47  | 
|                                 |                   |  |            |            |                |   |                |             |  |   |          |      
|Outstanding at December 31, 1999 |                   |  | 10,384,840 |            |                |   | 0.03-19.07     |             |  |   | 2.64     |      
|                                 | Options granted   |  |            | 1,683,000  |                |   |                | 21.19-33.11 |  |   |          | 21.75 | 
|                                 | Options cancelled |  |            | (228,234   | )              |   |                | 0.29-21.19  |  |   |          | 8.05  | 
|                                 | Options exercised |  |            | (3,998,470 | )              |   |                | 0.03-13.52  |  |   |          | 1.34  | 
|                                 |                   |  |            |            |                |   |                |             |  |   |          |      
|Outstanding at December 31, 2000 |                   |  | 7,841,136  |            |                |   | 0.03-33.11     |             |  |   | 7.25     |      
|                                 | Options granted   |  |            | 1,514,214  |                |   |                | 26.01-43.10 |  |   |          | 31.09 | 
|                                 | Options cancelled |  |            | (159,500   | )              |   |                | 9.50-41.38  |  |   |          | 22.16 | 
|                                 | Options exercised |  |            | (3,727,882 | )              |   |                | 0.03-30.19  |  |   |          | 3.71  | 
|                                 |                   |  |            |            |                |   |                |             |  |   |          |      
|Outstanding at December 31, 2001 |                   |  | 5,467,968  |            |                | $ | 0.03-43.10     |             |  | $ | 15.78    |      
|                                 |                   |  |            |            |                |   |                |             |  |   |          |      

Information with respect to the common stock option plans outstanding at
December 31, 2001, is as follows:

|                         |  |                    |           |          |  |             |       |         |  |          |      |  | 
|------------------------ |  | ------------------ | --------- | -------- |  | ----------- | ----- | ------- |  | -------- | ---- |  | 
|                         |  |                    |           |          |  |             |       |         |  | Weighted
|                         |  |                    |           |          |  | Weighted    |       | Average
|                         |  | Number Outstanding |           | Average  |  | Remaining  
|                         |  | as of              |           | Exercise |  | Contractual
|Range of Exercise Prices |  | December 31, 2001  |           | Price    |  | Life-Years 
|                         |  |                    |           |          |  |            
|$ 0.03  1.37            |  |                    | 1,282,936 |          |  | $           | 0.64  |         |  |          | 1.33 | 
|3.49  7.12              |  |                    | 433,840   |          |  |             | 5.59  |         |  |          | 2.76 | 
|9.50  13.52             |  |                    | 994,012   |          |  |             | 9.55  |         |  |          | 7.15 | 
|19.07  21.19            |  |                    | 1,206,966 |          |  |             | 21.18 |         |  |          | 8.15 | 
|26.01  43.10            |  |                    | 1,550,214 |          |  |             | 30.94 |         |  |          | 9.19 | 
|                         |  |                    |           |          |  |             |       |         |  |          |      | 
|$0.03  $43.10           |  |                    | 5,467,968 |          |  | $           | 15.78 |         |  |          | 6.24 | 
|                         |  |                    |           |          |  |             |       |         |  |          |      | 

As of December 31, 2001, 840,678 common stock options with a weighted
average exercise price of $9.82 are exercisable.

Accounting for stock based compensation

The Company has elected to account for stock and stock rights in
accordance with Accounting Principles Board Opinion Number 25, Accounting for
Stock Issued to Employees (APB No. 25). However, pro forma information
regarding net income is required by Statement of Financial Accounting Standards
Number 123, Accounting for Stock Based Compensation (SFAS No. 123) if the
provisions of SFAS No. 123 are not elected to be adopted.

Under the SFAS No. 123 pro forma disclosure provisions, the fair value of
options granted subsequent to December 15, 1995, has been estimated using the
Black-Scholes option valuation model. The Black-Scholes option valuation model
was developed for use in estimating the fair value of traded options that have
no vesting restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions, including
the expected stock price characteristics that are significantly different from
those of traded options. Because changes in the subjective input assumptions
can materially affect the fair value estimate, in managements opinion, the
existing models do not necessarily provide a reliable single measure of the
fair value of the Companys stock rights.

The fair value of options granted during the years ended December 31,
1999, 2000 and 2001 was estimated using the Black-Scholes option valuation
model with the following weighted-average assumptions: risk free interest rate
of 6.5%, 5.0% and 4.4%, respectively; no dividend yield for any year;
weighted-average expected lives of the option of five years, four years and
five years, respectively; and expected volatility of 60%, 92% and 69%,
respectively.

The weighted average fair value of Company options granted during the
years ended December 31, 1999, 2000 and 2001

30



---



##### 



was $5.01 per share, $14.73 per share and $18.85 per share, respectively. For
purposes of pro forma disclosures, the estimated fair value of options is
amortized to expense over the estimated service period. Under the SFAS No. 123
pro forma disclosure provisions, pro forma net income for 1999 would have been
$9.8 million or $0.37 per share (pro forma basic) and $0.31 per share (pro
forma diluted), pro forma net income for 2000 would have been $8.3 million or
$0.27 per share (pro forma basic) and $0.24 per share (pro forma diluted), and
pro forma net income for 2001 would have been $12.8 million or $0.38 per share
(pro forma basic) and $0.35 per share (pro forma diluted). The provisions of
SFAS No. 123 may not necessarily be indicative of future results.

14. Special bonus plan

In December 1998, the Company and its previous sole stockholder agreed to
pay a special bonus to selected employees in an amount totaling $2.4 million.
The Company paid the special bonus at the Initial Public Offering60% in stock
owned by the previous sole stockholder and 40% in cash. The Company recognized
$2.4 million in expense related to this plan in 1998. The Company paid the $1.0
million cash component in 1999, representing 40% of the special bonus plan
amount, which is reflected in the special bonus plan in the accompanying
statements of cash flows.

15. Supplemental cash flows disclosures

Income taxes paid during the year ended December 31, 1999, amounted to
$260,000. The Company paid no income taxes during the years ended December 31,
2000 and 2001. For the years ended December 31, 1999, 2000 and 2001, the
Company recognized $10.1 million, $33.0 million and $41.2 million,
respectively, in stockholders equity (deficit) for tax deductions associated
with the exercise of non-qualified stock options. Estimated current income tax
payments for the years ended December 31, 1999, 2000 and 2001, have been
reduced by the consideration of the tax deductions associated with the exercise
of non-qualified stock options.

16. Loan Agreement

In May 2000, the Company entered into a $10.0 million, unsecured loan
agreement with a commercial bank that provides for a revolving line of credit
facility under which the Company may from time to time borrow, repay and
re-borrow funds. The interest rate on any outstanding borrowings under the loan
agreement is the Eurodollar Daily Floating Rate plus .75% per annum. The
maturity date of the loan agreement is May 25, 2002. There have been no
borrowings under the loan agreement.

17. Commitments and contingencies

Operating Leases

The Company leases office facilities in the United States and the United
Kingdom expiring on various dates over the next eleven years. Certain lease
agreements include provisions for rental escalations based on the Consumer
Price Index and require the Company to pay for executory costs such as taxes
and insurance. Future minimum rental payments under non-cancelable operating
leases, excluding executory costs are as follows (in thousands):

|                         |            |       |   |        |  | 
|------------------------ | ---------- | ----- | - | ------ |  | 
|Year Ending December 31, |            |       |   |       
|                         | 2002       |       | $ | 5,892  | 
|                         | 2003       |       |   | 6,497  | 
|                         | 2004       |       |   | 6,166  | 
|                         | 2005       |       |   | 6,200  | 
|                         | 2006       |       |   | 6,398  | 
|                         | Thereafter |       |   | 19,522 | 
|                         |            |       |   |       
|                         |            | Total | $ | 50,675 | 
|                         |            |       |   |       

Rent expense charged to operations during the fiscal years ended December
31, 1999, 2000 and 2001, was $3.6 million, $3.8 million and $5.7 million,
respectively. The Company obtained a $1.3 million letter of credit with a
commercial bank, expiring September 2003, to provide a security deposit for its
headquarters office lease. The Companys cash, accounts receivable and property
and equipment collateralize the Letter of Credit Agreement.

31



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##### 



18. Quarterly financial data (unaudited)

Unaudited summarized financial data by quarter for the years ended
December 31, 2000 and 2001 is as follows (in thousands, except per share
amounts):

|                                         |         |   |                    |      |         |   |              |      |             |   |        |      |  |   |        |      | 
|---------------------------------------- | ------- | - | ------------------ | ---- | ------- | - | ------------ | ---- | ----------- | - | ------ | ---- |  | - | ------ | ---- | 
|                                         |         |   | 2000 Quarter Ended
|                                         |         |   |                   
|                                         |         |   | March 31           |      | June 30 |   | September 30 |      | December 31
|                                         |         |   |                    |      |         |   |              |      |            
|Revenues                                 |         | $ | 20,784             |      |         | $ | 22,612       |      |             | $ | 25,084 |      |  | $ | 27,011 |     
|Gross profit                             |         |   | 12,307             |      |         |   | 14,240       |      |             |   | 16,035 |      |  |   | 16,815 |     
|Income before provision for income taxes |         |   | 4,406              |      |         |   | 5,936        |      |             |   | 6,705  |      |  |   | 7,412  |     
|Net income                               |         | $ | 2,688              |      |         | $ | 3,620        |      |             | $ | 4,090  |      |  | $ | 4,522  |     
|Earnings per share:                      |         |   |                    |      |         |   |              |      |             |   |        |      |  |   |        |     
|                                         | Basic   |   | $                  | 0.09 |         |   | $            | 0.12 |             |   | $      | 0.13 |  |   | $      | 0.15 | 
|                                         | Diluted |   | $                  | 0.08 |         |   | $            | 0.10 |             |   | $      | 0.12 |  |   | $      | 0.13 | 

|                                         |         |   |                    |      |         |   |              |      |             |   |        |      |  |   |        |      | 
|---------------------------------------- | ------- | - | ------------------ | ---- | ------- | - | ------------ | ---- | ----------- | - | ------ | ---- |  | - | ------ | ---- | 
|                                         |         |   | 2001 Quarter Ended
|                                         |         |   |                   
|                                         |         |   | March 31           |      | June 30 |   | September 30 |      | December 31
|                                         |         |   |                    |      |         |   |              |      |            
|Revenues                                 |         | $ | 29,215             |      |         | $ | 31,124       |      |             | $ | 32,625 |      |  | $ | 35,148 |     
|Gross profit                             |         |   | 17,972             |      |         |   | 20,215       |      |             |   | 21,613 |      |  |   | 22,574 |     
|Income before provision for income taxes |         |   | 6,560              |      |         |   | 8,730        |      |             |   | 9,395  |      |  |   | 10,204 |     
|Net income                               |         | $ | 4,067              |      |         | $ | 5,413        |      |             | $ | 5,825  |      |  | $ | 6,327  |     
|Earnings per share:                      |         |   |                    |      |         |   |              |      |             |   |        |      |  |   |        |     
|                                         | Basic   |   | $                  | 0.13 |         |   | $            | 0.16 |             |   | $      | 0.17 |  |   | $      | 0.18 | 
|                                         | Diluted |   | $                  | 0.11 |         |   | $            | 0.15 |             |   | $      | 0.16 |  |   | $      | 0.17 | 

32



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##### 



Item 9. Changes in and disagreements with Accountants on Accounting and Financial Disclosures.

None.

33



---



##### 



PART III

Item 10. Directors and Executive Officers of the Registrant.

Reference is made to the information set forth under the captions Election of Directors
and Executive Officers appearing in the Proxy Statement to be filed within 120 days after the end of the Companys fiscal year, which
information is incorporated herein by reference.

Item 11. Executive Compensation.

Reference is made to the information set forth under the caption Executive Compensation
appearing in the Proxy Statement to be filed within 120 days after the end of the Companys fiscal year, which
information is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

Reference is made to the information set forth under the caption
Security Ownership of Certain Beneficial Owners and Management appearing in the Proxy Statement to be filed within 120
days after the end of the Companys fiscal year, which
information is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions.

Reference is made to the information set forth under the caption
Compensation Committee Report on Executive Compensation and Certain Relationships and Related Transactions
appearing in the Proxy Statement to be filed within 120 days after the end of the Companys fiscal year, which
information is incorporated herein by reference.

34



---



##### 



PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

|       |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)(1) |  | The following financial statements of the registrant and report of
independent Public Accountants are included in Item 8 hereof.                                                                                                                                                                                                                                                                         
|       |  | Report of Independent Public Accountants, Balance Sheets as of December 31,
2000 and 2001, Statements of Income for the years ended December 31, 1999,
2000 and 2001, Statements of Cash Flows for the years ended December 31,
1999, 2000 and 2001, and Statements of Changes in Stockholders Equity
(Deficit) for the years ended December 31, 1999, 2000 and 2001, and Notes
to Financial Statements.
|(a)(2) |  | Except as provided below, all schedules for which provision is made in
the applicable accounting regulations of the Securities and Exchange
Commission either have been included in the Financial Statements or are
not required under the related instructions, or are not applicable and
therefore have been omitted.                                                                                  
|       |  | Schedule IIValuation and Qualifying Accounts                                                                                                                                                                                                                                                                                                                                                            
|(a)(3) |  | The following exhibits are either provided with this Form 10-K or are
incorporated herein by reference:                                                                                                                                                                                                                                                                                                  

|        |  |                                                                                                                                                                                                                                  |  |  |  | 
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit |  |                                                                                                                                                                                                                                  |  |  |  | 
|        |  |                                                                                                                                                                                                                                  |  |  |  | 
|No.     |  | Description of Exhibit                                                                                                                                                                                                           |  |  |  | 
|        |  |                                                                                                                                                                                                                                  |  |  |  | 
|1.1     |  | [Omitted]                                                                                                                                                                                                                       
|3.1     |  | Second Amended and Restated Certificate of Incorporation.*                                                                                                                                                                      
|3.2     |  | Amended and Restated Bylaws.*                                                                                                                                                                                                   
|4.1     |  | Specimen Common Stock Certificate.*                                                                                                                                                                                             
|5.1     |  | [Omitted]                                                                                                                                                                                                                       
|10.1    |  | Employment Agreement, dated January 21, 1999, between the Company and James J. McGonigle.*                                                                                                                                     
|10.2    |  | [Omitted]                                                                                                                                                                                                                       
|10.3    |  | Employment Agreement, dated November 1, 1998, between the Company and Clay M. Whitson.*                                                                                                                                        
|10.4    |  | Stock Option Agreement Pursuant to The Corporate Advisory Board Company Stock-Based Incentive
Compensation Plan, effective as of October 31, 1997, between the Company and James J. McGonigle,
as amended on January 21, 1999.*
|10.5    |  | Stock Option Agreement Pursuant to The Corporate Executive Board Company Stock-Based Incentive
Compensation Plan, effective as of April 15, 1998, between the Company and Harold L. Siebert.*                                  
|10.6    |  | [Omitted]                                                                                                                                                                                                                       
|10.7    |  | Stock Option Agreement Pursuant to The Corporate Executive Board Company Stock-Based Incentive
Compensation Plan, dated as of November 1, 1998, between the Company and Clay M. Whitson.*                                      
|10.8    |  | Stock Option Agreement #1 Pursuant to The Corporate Executive Board Company Stock-Based
Incentive Compensation Plan, effective as of October 31, 1997, between the Company and Michael A.                                       
|        |  | DAmato.*                                                                                                                                                                                                                      
|10.9    |  | Stock Option Agreement #2 Pursuant to The Corporate Executive Board Company Stock-Based
Incentive Compensation Plan, effective as of October 31, 1997, between the Company and Michael A.
DAmato.*                            
|10.10   |  | Stock Option Agreement #1 Pursuant to The Corporate Executive Board Company Stock-Based
Incentive Compensation Plan, effective as of October 31, 1997, between the Company and Jeffrey D.
Zients.*                             
|10.11   |  | Stock Option Agreement #2 Pursuant to The Corporate Executive Board Company Stock-Based
Incentive Compensation Plan, effective as of October 31, 1997, between the Company and Jeffrey D.
Zients*                              
|10.12   |  | Stock Option Agreement Pursuant to The Corporate Executive Board Company Stock-Based Incentive
Compensation Plan, effective as of June 1, 1998, between the Company and Sally Chang.*                                          

35



---



##### 



|        |  |                                                                                                                                                                                                                               
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                               
|No.     |  | Description of Exhibit                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                               
|10.13   |  | Stock Option Agreement Pursuant to The Corporate Executive Board Company Stock-Based Incentive
Compensation Plan, effective as of October 31, 1997, between the Company and Derek C. van Bever,
as amended on July 21, 1998.*
|10.14   |  | Form of Stock Option Agreement Pursuant to The Corporate Advisory Board Company Stock-Based
Incentive Compensation Plan, including form of amendment.*                                                                        
|10.15   |  | Agreement Concerning Exclusive Services, Confidential Information, Business Opportunities, Non-
Competition, Non- Solicitation and Work Product, dated January 21, 1999, between the Company and
James J. McGonigle.*         
|10.16   |  | Agreement Concerning Exclusive Services, Confidential Information, Business Opportunities, Non-
Competition, Non- Solicitation and Work Product, effective as of April 15, 1998, between the
Company and Harold L. Siebert.*  
|10.17   |  | Agreement Concerning Exclusive Services, Confidential Information, Business Opportunities, Non-
Competition, Non- Solicitation and Work Product, dated November 1, 1998, between the Company and
Clay M. Whitson.*            
|10.18   |  | Agreement Concerning Exclusive Services, Confidential Information, Business Opportunities, Non-
Competition, Non- Solicitation and Work Product, dated October 30, 1997, between the Company and
Michael A. DAmato.*         
|10.19   |  | Agreement Concerning Exclusive Services, Confidential Information, Business Opportunities, Non-
Competition, Non-Solicitation and Work Product, dated October 30, 1997, between the Company and
Jeffrey D. Zients.*           
|10.20   |  | Form of Agreement Concerning Exclusive Services, Confidential Information, Business Opportunities,
Non-Competition, Non-Solicitation and Work Product.*                                                                       
|10.21   |  | The Corporate Executive Board Company Stock-Based Incentive Compensation Plan, adopted on
October 31, 1997, as amended and restated.*                                                                                         
|10.21.1 |  | The Corporate Executive Board Company Stock-Based Incentive Compensation Plan, adopted on
October 31, 1997, as amended and restated in February 1999.*                                                                        
|10.22   |  | Directors Stock Plan.*                                                                                                                                                                                                       
|10.22.1 |  | Amended Directors Stock Plan and Standard Terms and Conditions for Director Non-Qualified Stock
Options.*                                                                                                                    
|10.23   |  | 1998 Stock Option Plan.*                                                                                                                                                                                                      
|10.23.1 |  | 1999 Stock Option Plan and Standard Terms and Conditions for 1999 Stock Option Plan Incentive
Stock Options.*                                                                                                                 
|10.24   |  | Cross-Indemnification Agreement, dated as of January 21, 1999, between David G. Bradley and The
Corporate Executive Board Company.*                                                                                           
|10.25   |  | [Omitted]                                                                                                                                                                                                                     
|10.26   |  | [Omitted]                                                                                                                                                                                                                     
|10.27   |  | [Omitted]                                                                                                                                                                                                                     
|10.28   |  | Administrative Services Agreement, dated as of October 31, 1997, as amended and restated on July
21, 1998, between The Advisory Board Company and The Corporate Executive Board Company.*                                     
|10.29   |  | Member Contracts Agreement, dated as of October 31, 1997, between The Advisory Board Company
and The Corporate Executive Board Company.*                                                                                      
|10.30   |  | Vendor Contracts Agreement, dated as of October 31, 1997, as amended and restated on July 21, 1998,
between The Advisory Board Company and The Corporate Executive Board Company.*                                            
|10.31   |  | Non-Competition Agreement, effective as of January 1, 1999, as amended effective October 25, 2001, among The Advisory Board Company,
The Corporate Executive Board Company and David G. Bradley. * #                          
|10.32   |  | [Omitted]                                                                                                                                                                                                                     

36



---



##### 



|        |  |                                                                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                   
|        |  |                                                                                                                                                                                   
|No.     |  | Description of Exhibit                                                                                                                                                            
|        |  |                                                                                                                                                                                   
|10.33   |  | Distribution Agreement, dated as of October 31, 1997, between The Corporate Executive Board
Company and The Advisory Board Company.*                                              
|10.34   |  | Agreement of Lease, dated June 25, 1998, between The Corporate Executive Board Company and The
George Washington University.*                                                     
|10.35   |  | [Omitted]                                                                                                                                                                         
|10.36   |  | License Agreement, effective as of October 31, 1997, between The Corporate Executive Board
Company and The Advisory Board Company.*                                               
|10.37   |  | Letter agreement regarding the special bonus plan.*                                                                                                                              
|10.38   |  | Amended and Restated ''Liquid Markets Agreement, dated August 20, 1997, between The Corporate
Executive Board Company and Derek C. van Bever, as amended on December 28, 1998.*
|10.39   |  | Letter to Michael A. DAmato from the Chairman of The Corporate Executive Board Company re
Accelerated Vesting of Options.*                                                      
|10.40   |  | Clarification Letter to Michael A. DAmato from The Corporate Executive Board Company re Stock
Option Agreements.*                                                               
|10.41   |  | Letter to Jeffrey Zients from David Bradley re Accelerated Vesting of Options.*                                                                                                  
|10.42   |  | Clarification Letter to Jeffrey Zients from The Corporate Executive Board Company re Stock Option
Agreements.*                                                                   
|10.43   |  | Form of term sheet for director non-qualified stock options.                                                                                                                      
|10.44   |  | [Omitted]                                                                                                                                                                         
|10.45   |  | [Omitted]                                                                                                                                                                         
|10.46   |  | [Omitted]                                                                                                                                                                         
|10.47   |  | [Omitted]                                                                                                                                                                         
|10.48   |  | Employee Stock Purchase Plan dated June 23, 2000.**                                                                                                                              
|10.49   |  | Loan Agreement by and between Bank of America, N.A. and the Corporate Executive Board dated
May 25, 2000.***                                                                      
|21.1    |  | List of the Subsidiaries of The Corporate Executive Board Company: None.                                                                                                          
|23.1    |  | Consent of Arthur Andersen LLP                                                                                                                                                    
|23.2    |  | [Omitted.]                                                                                                                                                                        
|24.1    |  | [Omitted.]                                                                                                                                                                        
|27      |  | [Omitted.]                                                                                                                                                                        



|*   |  | Incorporated by reference to the same exhibit to the registrants
registration statement on Form S-1, declared effective by the Securities
and Exchange Commission on February 22, 1999 (Registration No. 333-5983).                                                                                                                                                           
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|**  |  | Incorporated by reference to exhibit 10.1 from the Quarterly Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for
the quarterly period ended June 30, 2000.                                                                                                                                                                                       
|   
|*** |  | Incorporated by reference to exhibit 10.2 from the Quarterly Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for
the quarterly period ended June 30, 2000.                                                                                                                                                                                       
|   
|#   |  | Amendments incorporated by reference to exhibit 10.1 and 10.2 from the
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30,
2001.                                                                                                                                                              
|   
|   |  | Compensation arrangement.                                                                                                                                                                                                                                                                                                                                                      
|   
|(b) |  | Reports on Form 8-K.                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | None.                                                                                                                                                                                                                                                                                                                                                                          
|   
|(c) |  | Exhibits: The exhibits listed in the accompanying index to exhibits are
filed or incorporated by reference as part of this annual report.                                                                                                                                                                                                                                      
|   
|(d) |  | Financial statements schedules: The financial statement schedules for
which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission are either not required under the
related instructions or are inapplicable, and therefore have been Omitted,
except for Schedule IIValuation and Qualifying Accounts
which is provided below.

37



---



##### 



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of The Corporate Executive Board Company:

We have audited in accordance with auditing standards generally accepted
in the United States, the financial statements of The Corporate Executive Board
Company included in this Form 10-K and have issued our report thereon dated
January 31, 2002. Our audits were made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The Schedule IIValuation and
Qualifying Accounts is the responsibility of the Companys management and is
presented for purposes of complying with the Securities and Exchange
Commissions rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

| |  |  |                        
| |  |  | -----------------------
| |  |  | /s/ Arthur Andersen LLP

Washington, DC
January 31, 2002

38



---



##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
Schedule IIValuation and Qualifying Accounts
(In thousands)

|                                                                    |  |            |       |            |  |            |       |            |  |             |   |  |  |   |       |  |  |   |       | 
|------------------------------------------------------------------- |  | ---------- | ----- | ---------- |  | ---------- | ----- | ---------- |  | ----------- | - |  |  | - | ----- |  |  | - | ----- | 
|                                                                    |  |            |       |            |  |            |       |            |  | Additions   |   |  |  |   |       |  |  |  
|                                                                    |  | Balance at |       | Additions  |  | Charged to |       | Deductions |  |             |   | 
|                                                                    |  | Beginning  |       | Charged to |  | Other      |       | from       |  | Balance at 
|                                                                    |  | of Year    |       | Revenue    |  | Accounts   |       | Reserve    |  | End of Year
|                                                                    |  |            |       |            |  |            |       |            |  |            
|Year ending December 31, 1999
    Reserve for uncollectible revenue |  | $          | 1,233 |            |  | $          | 1,851 |            |  | $           |  |  |  | $ | 1,743 |  |  | $ | 1,341 | 
|                                                                    |  |            |       |            |  |            |       |            |  |             |   |  |  |   |       |  |  |   |       | 
|                                                                    |  | $          | 1,233 |            |  | $          | 1,851 |            |  | $           |  |  |  | $ | 1,743 |  |  | $ | 1,341 | 
|                                                                    |  |            |       |            |  |            |       |            |  |             |   |  |  |   |       |  |  |   |       | 
|Year ending December 31, 2000
    Reserve for uncollectible revenue |  | $          | 1,341 |            |  | $          | 3,590 |            |  | $           |  |  |  | $ | 3,303 |  |  | $ | 1,628 | 
|                                                                    |  |            |       |            |  |            |       |            |  |             |   |  |  |   |       |  |  |   |       | 
|                                                                    |  | $          | 1,341 |            |  | $          | 3,590 |            |  | $           |  |  |  | $ | 3,303 |  |  | $ | 1,628 | 
|                                                                    |  |            |       |            |  |            |       |            |  |             |   |  |  |   |       |  |  |   |       | 
|Year ending December 31, 2001
    Reserve for uncollectible revenue |  | $          | 1,628 |            |  | $          | 4,725 |            |  | $           |  |  |  | $ | 4,420 |  |  | $ | 1,933 | 
|                                                                    |  |            |       |            |  |            |       |            |  |             |   |  |  |   |       |  |  |   |       | 
|                                                                    |  | $          | 1,628 |            |  | $          | 4,725 |            |  | $           |  |  |  | $ | 4,420 |  |  | $ | 1,933 | 
|                                                                    |  |            |       |            |  |            |       |            |  |             |   |  |  |   |       |  |  |   |       | 

39



---



##### 



Signatures

Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized dated as of
February 18, 2002.

| |                                                                         
| | ------------------------------------------------------------------------
| | The Corporate Executive Board Company                                   
|
| | By: /s/   James J. McGonigleJames J. McGonigle
  Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons in the capacities indicated on
the dates indicated.

|                                                    |  |                                                                                                |  |                      
|--------------------------------------------------- |  | ---------------------------------------------------------------------------------------------- |  | ---------------------
|Signature/s/   James J. McGonigleJames J. McGonigle |  | TitleChief Executive Officer and
Director, Chairman of the Board
(Principal Executive Officer) |  | DateFebruary 18, 2002
|                                                   
|/s/   Clay M. WhitsonClay M. Whitson                |  | Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)         |  | February  18, 2002   
|                                                   
|/s/   Robert C. HallRobert C. Hall                  |  | Director                                                                                       |  | February 18, 2002    
|                                                   
|/s/   Nancy J. KarchNancy J. Karch                  |  | Director                                                                                       |  | February 18, 2002    
|                                                   
|/s/   David W. KennyDavid W. Kenny                  |  | Director                                                                                       |  | February 18, 2002    
|                                                   
|/s/   Thomas L. Monahan IIIThomas L. Monahan III    |  | Director                                                                                       |  | February 18, 2002    
|                                                   
|/s/   Harold L. SiebertHarold L. Siebert            |  | Director                                                                                       |  | February 18, 2002    

40