##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal year ended December 31, 2006.
 or
 o
    
    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
  Delaware
    
    52-2056410(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)2000 Pennsylvania Avenue, N.W.
    
    20006Suite 6000
    
    (Zip Code)Washington, D.C.(Address of principal executive offices)
 (202) 777-5000
  Title of each classCommon Stock, par value $0.01 per share
    
    Name of each exchange on which
registeredNASDAQ
 Not
applicable
 þ o
 o þ
 þ o
 o
  þ o þ
 o þ




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##### 



DOCUMENTS INCORPORATED BY REFERENCE
   
 *
    
    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
   2




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##### 



PART I
 Item 1. Business.
     
    
    best practices research studies,
    
    executive education seminars,
    
    customized research briefs,
    
    Web-based access to the programs digital content database, and
    
    decision support tools.
   
    
    human resources,
    
    strategy and research and development,
    
    information technology,
    
    sales and marketing,
    
    corporate finance,
    
    legal and compliance,
    
    operations and procurement,
    
    financial services,
    
    communications, and
    
    general management.
 3




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##### 



Available Information
 http://www.executiveboard.com
 Industry Background
    4




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##### 



Business Strategy
  
    
    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 research programs.
    
    Focus on Best Practices Research and Analysis.The focus of our work is on researching best
demonstrated business and management practices that drive corporate
performance. 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 shared business challenges. We believe that there
will be a continuing desire on the part of large 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, studying, evaluating and
communicating these evolving solutions and that our library of best practices and network of
member companies serve as a formidable barrier to entry for potential competitors.
    
    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. 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 are
constantly expanding our network of executive contacts at 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 substantial portion of our costs of delivering our products and
services in each research program are fixed and do not vary directly with the number of
members. The leverage in our economic model is further evidenced by the increasing
utilization via the Internet of each research programs digital research library and
decision support tools. Each research programs proprietary database, including digital
content and on-line tools, assists our member executives in solving their own challenges on
a real-time basis. We expect to increase revenues and improve program operating margins as
we add new members to our research programs.
 Growth Strategy
  
    
    Cross-Sell Additional Subscriptions to Existing Members.On average, individual members
currently participate in 3.80 research programs. We actively cross-sell additional
membership subscriptions and believe that most members are potential participants in up to
18 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 continue to increase as we develop new research programs.
    
    Add New Members.We have targeted approximately 10,500 additional institutions globally,
excluding Asia, as potential new members, including companies with revenues greater than
$100 million and financial institutions with assets in excess of $1 billion. Our middle
market program initiative is focused on companies with annual revenue between $100 million
and $750 million.
    
    Develop New Research Programs.We currently offer research programs covering 43 executive
constituencies. We have added
eleven net new research programs during the past two years. We also have identified more than
50 additional program offerings. This list includes opportunities to serve executive functions
beyond the 43 we serve today. We believe that each of these opportunities has the potential to
support a tailored research agenda and a suite of educational and other services.
 5




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##### 



The Membership Network
    December 31,2002
    
    2003
    
    2004
    
    2005
    
    2006Membership programs (1)
    
    
    22
    
    
    
    26
    
    
    
    31
    
    
    
    37
    
    
    
    42Member institutions
    
    
    1,930
    
    
    
    2,143
    
    
    
    2,368
    
    
    
    2,831
    
    
    
    3,739Total membership subscriptions
    
    
    5,257
    
    
    
    6,414
    
    
    
    8,202
    
    
    
    10,825
    
    
    
    14,190Average subscriptions per member
institution (cross-sell ratio)
(2)
    
    
    2.72
    
    
    
    2.99
    
    
    
    3.46
    
    
    
    3.82
    
    
    
    3.80Client renewal rate (3)
    
    
    90
    %
    
    
    90
    %
    
    
    91
    %
    
    
    92
    %
    
    
    92
    %Contract value (in thousands) (4)
    
    $
    176,533
    
    
    $
    227,913
    
    
    $
    294,949
    
    
    $
    381,366
    
    
    $
    475,653
 
 (1)
    
    In February 2007, we launched the Data Center Operations Council, bringing the current number
of membership programs to 43.(2)
    
    Excluding the impact of the middle market cross-sell ratio of 1.0 and 1.1 in 2005 and 2006,
respectively, the traditional large company market cross-sell ratio was 3.91 and 4.15 in 2005 and
2006, respectively.(3)
    
    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.(4)
    
    For the year then ended. Contract value is defined as the 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
  6




---



##### 



Best Practices Research Studies
   Executive Education
  Research Briefs
  7




---



##### 



Web-Based Proprietary Databases
   Pricing
   Sales and Marketing
   Competition
   8




---



##### 



Employees
   Item 1A. Risk Factors.
  We depend on renewals of our membership-based services.
  We cannot know in advance whether new products will be successful.
  We may experience difficulties in anticipating market trends.
  9




---



##### 



We must attract and retain a significant number of highly skilled employees.
  Continued consolidation in the financial institution industry may adversely impact our business.
  We may experience fluctuations in operating results.
  We may be unable to protect our intellectual property rights.
  We may be exposed to litigation related to content.
  We may be exposed to loss of revenue resulting from our unconditional service guarantee.
  10




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##### 



Changes in estimates or interpretations under financial accounting standards related to share-based
payments could have a material adverse impact on our reported results of operations.
   Item 1B. Unresolved Staff Comments.
  Item 2. Properties.
   Item 3. Legal Proceedings.
  Item 4. Submission of Matters to a Vote of Security Holders.
  11




---



##### 



PART II
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
  High
    
    Low
    
    Dividends2005:First quarter
    
    $
    68.83
    
    
    $
    61.55
    
    
    $
    0.10Second quarter
    
    
    79.45
    
    
    
    62.72
    
    
    
    0.10Third quarter
    
    
    82.42
    
    
    
    75.00
    
    
    
    0.10Fourth quarter
    
    
    91.84
    
    
    
    75.14
    
    
    
    0.102006:First quarter
    
    $
    103.18
    
    
    $
    80.77
    
    
    $
    0.30Second quarter
    
    
    112.97
    
    
    
    97.58
    
    
    
    0.30Third quarter
    
    
    101.25
    
    
    
    83.62
    
    
    
    0.30Fourth quarter
    
    
    97.10
    
    
    
    86.25
    
    
    
    0.30
  Recent Sales of Unregistered Securities
  Issuer Purchases of Equity Securities
 Total Number ofShares
    
    
    Approximate $Average
    
    
    Purchased as
    
    
    Value of SharesTotal
    
    
    Price
    
    
    Part of a
    
    
    That May Yet BeNumber of
    
    
    Paid Per
    
    
    Publicly
    
    
    PurchasedShares Purchased
    
    
    Share
    
    
    Announced Plan
    
    
    Under the PlansOctober 1, 2006 to October 31, 2006
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    51,396,143November 1, 2006 to November 30, 2006
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    51,396,143December 1, 2006 to December 31, 2006
    
    
    103,306
    
    
    $
    88.85
    
    
    
    103,306
    
    
    $
    42,217,779Total
    
    
    103,306
    
    
    $
    88.85
    
    
    
    103,306
  Item 6. Selected Financial Data.
  12




---



##### 



Yearended December 31,2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006(In thousands, except per-share amounts)Consolidated Statements of Income DataRevenues
    
    $
    162,357
    
    
    $
    210,211
    
    
    $
    280,724
    
    
    $
    362,226
    
    
    $
    460,623Costs and expenses:Cost of services (1)
    
    
    56,490
    
    
    
    71,049
    
    
    
    91,469
    
    
    
    120,944
    
    
    
    164,022Member relations and marketing (1)
    
    
    40,916
    
    
    
    55,306
    
    
    
    75,560
    
    
    
    93,657
    
    
    
    122,177General and administrative (1)
    
    
    17,670
    
    
    
    21,666
    
    
    
    31,254
    
    
    
    40,295
    
    
    
    59,629Depreciation and amortization
    
    
    5,456
    
    
    
    5,764
    
    
    
    6,782
    
    
    
    7,308
    
    
    
    10,381Non-cash lease restructuring costs
    
    
    
    
    
    
    
    
    
    
    5,210
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    120,532
    
    
    
    153,785
    
    
    
    210,275
    
    
    
    262,204
    
    
    
    356,209Income from operations
    
    
    41,825
    
    
    
    56,426
    
    
    
    70,449
    
    
    
    100,022
    
    
    
    104,414Other income, net
    
    
    6,346
    
    
    
    7,569
    
    
    
    9,936
    
    
    
    13,588
    
    
    
    24,318Income before provision for income taxes
    
    
    48,171
    
    
    
    63,995
    
    
    
    80,385
    
    
    
    113,610
    
    
    
    128,732Provision for income taxes
    
    
    18,570
    
    
    
    28,307
    
    
    
    26,729
    
    
    
    38,550
    
    
    
    49,561Net income
    
    $
    29,601
    
    
    $
    35,688
    
    
    $
    53,656
    
    
    $
    75,060
    
    
    $
    79,171Earnings per sharebasic
    
    $
    0.81
    
    
    $
    0.96
    
    
    $
    1.40
    
    
    $
    1.90
    
    
    $
    1.99Weighted average shares outstandingbasic
    
    
    36,722
    
    
    
    37,296
    
    
    
    38,344
    
    
    
    39,572
    
    
    
    39,712Earnings per sharediluted
    
    $
    0.79
    
    
    $
    0.93
    
    
    $
    1.34
    
    
    $
    1.83
    
    
    $
    1.94Weighted average shares outstandingdiluted
    
    
    37,671
    
    
    
    38,577
    
    
    
    39,925
    
    
    
    41,092
    
    
    
    40,721Cash dividends declared per common share
    
    $
    
    
    
    $
    
    
    
    $
    0.30
    
    
    $
    0.40
    
    
    $
    1.20
 December 31,2002
    
    2003
    
    2004
    
    2005
    
    2006(In thousands)Consolidated
Balance Sheet DataCash, cash equivalents and marketable securities
    
    $
    225,941
    
    
    $
    293,919
    
    
    $
    416,977
    
    
    $
    544,636
    
    
    $
    487,287Deferred income taxes
    
    
    59,726
    
    
    
    37,673
    
    
    
    29,587
    
    
    
    14,838
    
    
    
    28,005Total assets
    
    
    359,581
    
    
    
    423,482
    
    
    
    578,451
    
    
    
    726,995
    
    
    
    736,055Deferred revenues
    
    
    121,415
    
    
    
    154,844
    
    
    
    205,494
    
    
    
    261,300
    
    
    
    308,671Total stockholders equity
    
    
    213,357
    
    
    
    241,993
    
    
    
    327,461
    
    
    
    385,414
    
    
    
    317,865
 December 31,2002
    
    2003
    
    2004
    
    2005
    
    2006Other Operating Data (Unaudited)Membership programs (2)
    
    
    22
    
    
    
    26
    
    
    
    31
    
    
    
    37
    
    
    
    42Member institutions
    
    
    1,930
    
    
    
    2,143
    
    
    
    2,368
    
    
    
    2,831
    
    
    
    3,739Total membership subscriptions
    
    
    5,257
    
    
    
    6,414
    
    
    
    8,202
    
    
    
    10,825
    
    
    
    14,190Average subscriptions per member institution (cross-sell ratio)(3)
    
    
    2.72
    
    
    
    2.99
    
    
    
    3.46
    
    
    
    3.82
    
    
    
    3.80Client renewal rate (4)
    
    
    90
    %
    
    
    90
    %
    
    
    91
    %
    
    
    92
    %
    
    
    92
    %Contract
value (in thousands)  (5)
    
    $
    176,533
    
    
    $
    227,913
    
    
    $
    294,949
    
    
    $
    381,366
    
    
    $
    475,653
 
 (1)
    
    In 2002, 2003, 2004, 2005 and 2006, we recognized $0.7 million, $0.1 million, $0.4 million,
$0.5 million and $1.9 million, respectively, in compensation expense reflecting additional
Federal Insurance Corporation Act (FICA) taxes as a result of the taxable income that
employees recognized upon the exercise of nonqualified common stock options, primarily in
conjunction with the registered public offerings in March 2002 and 2003, and May 2004, and the
sales that were exempt from registration in March 2005 and 2006. We have recorded such
expenses in the same expense line items as other compensation paid to the relevant categories
of employees as follows: Cost of services, $0.3 million, $0.1 million, $0.2 million, $0.3
million and $0.8 million, Member relations and marketing, $0.2 million, $0.0 million, $0.1
million, $0.1 million and $0.3 million, and General and administrative, $0.2 million, $0.0
million, $0.1 million, $0.1 million and $0.8 million in 2002, 2003, 2004, 2005 and 2006,
respectively.(2)
    
    In February 2007, we launched the Data Center Operations Council, bringing the current number
of membership programs to 43.(3)
    
    Excluding the impact of the middle market cross-sell ratio of 1.0 and 1.1 in 2005 and 2006,
respectively, the traditional large company cross-sell ratio was 3.91 and 4.15 in 2005 and
2006, respectively.(4)
    
    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.(5)
    
    For the year then ended. Contract value is defined as the aggregate annualized revenue
attributed to all agreements in effect at a given date without regard to the remaining
duration of any such agreement. 13




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##### 



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Business Overview
     14




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##### 



Critical Accounting Policies
  Deferred income taxes
  15




---



##### 



Goodwill
  Revenue recognition
  Reserve for uncollectible revenue
  Incentive compensation
  Share-based compensation
 .
   16




---



##### 



Recent
Accounting Pronouncements
  Results of Operations
  Year
ended December 31,2004
    
    2005
    
    2006Revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of services
    
    
    32.6
    
    
    
    33.4
    
    
    
    35.6Gross profit
    
    
    67.4
    
    
    
    66.6
    
    
    
    64.4Costs and expenses:Member relations and marketing
    
    
    26.9
    
    
    
    25.9
    
    
    
    26.5General and administrative
    
    
    11.1
    
    
    
    11.1
    
    
    
    12.9Depreciation and amortization
    
    
    2.4
    
    
    
    2.0
    
    
    
    2.3Non-cash lease restructuring costs
    
    
    1.9
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    42.3
    
    
    
    39.0
    
    
    
    41.7Income from operations
    
    
    25.1
    
    
    
    27.6
    
    
    
    22.7Other income, net
    
    
    3.5
    
    
    
    3.8
    
    
    
    5.3Income before provision for income taxes
    
    
    28.6
    
    
    
    31.4
    
    
    
    27.9Provision for income taxes
    
    
    9.5
    
    
    
    10.6
    
    
    
    10.8Net income
    
    
    19.1
    %
    
    
    20.7
    %
    
    
    17.2
    %
 Years e nded December 31, 2004, 2005 and 2006
 Revenues.
 Cost of services.
 17




---



##### 



Gross profit.
 Member relations and marketing.
 General and administrative.
 18




---



##### 



Depreciation and amortization.
 Non-cash lease restructuring costs.
 Other income, net.
 Provision for income taxes.
 Impact of acquisition.
 Liquidity and Capital Resources
  19




---



##### 



Cash flows from operating activities.
 Cash flows from investing activities.
 Cash flows from financing activities.
  Contractual obligations
  20




---



##### 



Payments Due by Period (in thousands)Total
    
    <1 Year
    

1
- 3 Years
    

4
- 5 Years
    
    >5 YearsOperating
lease obligations (1)
    
    $
    596,333
    
    
    $
    21,186
    
    
    $
    59,340
    
    
    $
    63,399
    
    
    $
    452,408Other
liabilities (2)
    
    $
    7,882
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7,882
 
 (1)
    
    Pursuant to the terms of the Rosslyn, Virginia lease, we have the option to accelerate
the date at which we obtain control of a portion of the leased property, which would
increase the rental payments discussed above.(2)
    
    Other liabilities includes elective deferrals and earnings
under the deferred compensation plan. Off-Balance Sheet Arrangements
  21




---



##### 



Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
  Interest rate risk
   FairValue2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter
    
    Total
    
    12/31/06Marketable securities
    
    $
    119,800
    
    
    $
    124,040
    
    
    $
    26,000
    
    
    $
    21,290
    
    
    $
    9,845
    
    
    $
    14,855
    
    
    $
    315,830
    
    
    $
    315,920Average effective interest rate
    
    
    4.61
    %
    
    
    4.54
    %
    
    
    3.67
    %
    
    
    4.33
    %
    
    
    5.49
    %
    
    
    4.91
    %
 Foreign currency exchange rate risk
  22




---



##### 



Item 8. Financial Statements and Supplementary Data.
 Report of Managements Assessment of Internal Control Over Financial Reporting
     Internal Control  Integrated
Framework
   /s/ Thomas L. Monahan III

Thomas L. Monahan IIIChief Executive OfficerMarch 1, 2007
 /s/ Timothy R. Yost

Timothy R. Yost
Chief Financial OfficerMarch 1, 2007
 23




---



##### 



Report of Independent Registered Public Accounting Firm
 
        
  24




---



##### 



Report of Independent Registered Public Accounting Firm
 
       
  25




---



##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
 December 31,2005
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    424,276
    
    
    $
    171,367Marketable securities
    
    
    2,264
    
    
    
    119,534Membership fees receivable, net
    
    
    120,242
    
    
    
    153,107Deferred income taxes, net
    
    
    11,880
    
    
    
    15,109Deferred incentive compensation
    
    
    11,489
    
    
    
    13,160Prepaid expenses and other current assets
    
    
    7,671
    
    
    
    9,881Total current assets
    
    
    577,822
    
    
    
    482,158Deferred income taxes, net
    
    
    2,958
    
    
    
    12,896Marketable securities
    
    
    118,096
    
    
    
    196,386Goodwill and other intangibles
    
    
    8,445
    
    
    
    7,826Other non-current assets
    
    
    1,273
    
    
    
    9,801Property and equipment, net
    
    
    18,401
    
    
    
    26,988Total assets
    
    $
    726,995
    
    
    $
    736,055LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    42,429
    
    
    $
    66,773Accrued incentive compensation
    
    
    27,045
    
    
    
    25,062Deferred revenues
    
    
    261,300
    
    
    
    308,671Total current liabilities
    
    
    330,774
    
    
    
    400,506Other liabilities
    
    
    10,807
    
    
    
    17,684Total liabilities
    
    
    341,581
    
    
    
    418,190Commitments and contingenciesStockholders equity:Common stock, par value $0.01; 100,000,000 shares authorized; 41,399,533
and 42,805,325 shares
issued at December 31, 2005 and
2006, respectively;  39,482,727
and 38,947,908 shares outstanding at
December 31, 2005 and 2006, respectively
    
    
    414
    
    
    
    428Additional paid-in-capital
    
    
    277,028
    
    
    
    353,990Retained earnings
    
    
    214,892
    
    
    
    246,668Accumulated elements of other comprehensive loss
    
    
    (124
    )
    
    
    (440
    )Treasury stock, at cost, 1,916,806 and 3,857,417 shares at December 31, 2005 and 2006, respectively
    
    
    (106,796
    )
    
    
    (282,781
    )Total stockholders equity
    
    
    385,414
    
    
    
    317,865Total liabilities and stockholders equity
    
    $
    726,995
    
    
    $
    736,055
  26




---



##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per-share amounts)
 Year ended December 31,2004
    
    
    2005
    
    
    2006Revenues
    
    $
    280,724
    
    
    $
    362,226
    
    
    $
    460,623Cost of services (1)
    
    
    91,469
    
    
    
    120,944
    
    
    
    164,022Gross profit
    
    
    189,255
    
    
    
    241,282
    
    
    
    296,601Costs and expenses:Member relations and marketing (1)
    
    
    75,560
    
    
    
    93,657
    
    
    
    122,177General and administrative (1)
    
    
    31,254
    
    
    
    40,295
    
    
    
    59,629Depreciation and amortization
    
    
    6,782
    
    
    
    7,308
    
    
    
    10,381Non-cash lease restructuring costs
    
    
    5,210
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    118,806
    
    
    
    141,260
    
    
    
    192,187Income from operations
    
    
    70,449
    
    
    
    100,022
    
    
    
    104,414Other income, net
    
    
    9,936
    
    
    
    13,588
    
    
    
    24,318Income before provision for income taxes
    
    
    80,385
    
    
    
    113,610
    
    
    
    128,732Provision for income taxes
    
    
    26,729
    
    
    
    38,550
    
    
    
    49,561Net income
    
    $
    53,656
    
    
    $
    75,060
    
    
    $
    79,171Earnings per share:Basic
    
    $
    1.40
    
    
    $
    1.90
    
    
    $
    1.99Diluted
    
    $
    1.34
    
    
    $
    1.83
    
    
    $
    1.94Dividends per share
    
    $
    0.30
    
    
    $
    0.40
    
    
    $
    1.20Weighted average shares used in the calculation of earnings per share:Basic
    
    
    38,344
    
    
    
    39,572
    
    
    
    39,712Diluted
    
    
    39,925
    
    
    
    41,092
    
    
    
    40,721
 
 (1)
    
    The following table summarizes the share-based compensation recognized in accordance with
Statement of Financial Accounting Standards 123(R) included in the consolidated statements of
income above: Cost of services
    
    $
    
    

    

    $

    
    

    
    $
    
    12,236Member relations and marketing
    
    
    
    

    
    
    
    

    
    
    
    5,644General and administrative
    
    
    
    

    
    
    
    

    
    
    
    7,426
  27




---



##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Year ended December 31,2004
    
    
    2005
    
    
    2006Cash flows from operating activities:Net income
    
    $
    53,656
    
    
    $
    75,060
    
    
    $
    79,171Adjustments to reconcile net income to net cash flows provided by operating activities:Depreciation and amortization
    
    
    6,182
    
    
    
    7,305
    
    
    
    10,381Loss on disposition of property and equipment
    
    
    1,162
    
    
    
    
    
    
    
    (Gain)/loss on sale of investments
    
    
    (746
    )
    
    
    2,320
    
    
    
    Deferred income taxes
    
    
    24,373
    
    
    
    30,801
    
    
    
    34,139Share-based compensation
    
    
    
    
    
    
    
    
    
    
    25,306Excess tax benefits from share-based compensation arrangements
    
    
    
    
    
    
    
    
    
    
    (41,225
    )Non-cash lease restructuring costs
    
    
    5,210
    
    
    
    
    
    
    
    Amortization of marketable securities premiums (discounts), net
    
    
    2,777
    
    
    
    1,865
    
    
    
    (2,389
    )Changes in operating assets and liabilities:Membership fees receivable, net
    
    
    (33,946
    )
    
    
    (23,055
    )
    
    
    (32,865
    )Deferred incentive compensation
    
    
    (1,945
    )
    
    
    (2,212
    )
    
    
    (1,671
    )Prepaid expenses and other current assets
    
    
    (1,865
    )
    
    
    327
    
    
    
    (2,210
    )Other non-current assets
    
    
    
    
    
    
    (1,238
    )
    
    
    (8,564
    )Accounts payable and accrued liabilities
    
    
    4,896
    
    
    
    25,041
    
    
    
    23,933Accrued incentive compensation
    
    
    7,116
    
    
    
    8,894
    
    
    
    (1,983
    )Deferred revenues
    
    
    50,650
    
    
    
    55,252
    
    
    
    47,371Other liabilities
    
    
    1,178
    
    
    
    1,109
    
    
    
    6,877Net cash flows provided by operating activities
    
    
    118,698
    
    
    
    181,469
    
    
    
    136,271Cash flows from investing activities:Purchases of
property and equipment
    
    
    (9,002
    )
    
    
    (8,703
    )
    
    
    (17,743
    )Acquisition of business, net of cash acquired
    
    
    
    
    
    
    (8,136
    )
    
    
    Purchases of marketable securities
    
    
    (197,049
    )
    
    
    
    
    
    
    (196,920
    )Sales and maturities of marketable securities
    
    
    63,611
    
    
    
    176,384
    
    
    
    2,635Net cash flows (used in) provided by investing activities
    
    
    (142,440
    )
    
    
    159,545
    
    
    
    (212,028
    )Cash flows from financing activities:Proceeds from the exercise of common stock options
    
    
    55,495
    
    
    
    45,135
    
    
    
    2,979Proceeds from issuance of common stock under the employee stock purchase plan
    
    
    931
    
    
    
    1,407
    
    
    
    2,024Excess tax benefits from share-based compensation arrangements
    
    
    
    
    
    
    
    
    
    
    41,225Purchase of treasury shares
    
    
    (25,687
    )
    
    
    (61,489
    )
    
    
    (175,985
    )Payment of dividends
    
    
    (11,569
    )
    
    
    (15,787
    )
    
    
    (47,395
    )Reimbursement of common stock offering costs
    
    
    225
    
    
    
    35
    
    
    
    70Payment of common stock offering costs
    
    
    (225
    )
    
    
    (35
    )
    
    
    (70
    )Net cash flows provided by (used in) financing activities
    
    
    19,170
    
    
    
    (30,734
    )
    
    
    (177,152
    )Net (decrease) increase in cash and cash equivalents
    
    
    (4,572
    )
    
    
    310,280
    
    
    
    (252,909
    )Cash and cash equivalents, beginning of year
    
    
    118,568
    
    
    
    113,996
    
    
    
    424,276Cash and cash equivalents, end of year
    
    $
    113,996
    
    
    $
    424,276
    
    
    $
    171,367
  28




---



##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY  Y ears ended December 31, 2004, 2005, and 2006
(In thousands, except share amounts)
 Accumulatedelements of other
    
    
    
    
    
    
    
    
    
    
    AnnualCommon stock
    
    
    Additional
    
    
    Retained
    
    
    comprehensive
    
    
    Treasury
    
    
    
    
    
    
    comprehensiveShares
    
    
    Amount
    
    
    paid-in-capital
    
    
    earnings
    
    
    income
    
    
    stock
    
    
    Total
    
    
    incomeBalance at December 31, 2003
    
    
    37,283,068
    
    
    $
    378
    
    
    $
    143,426
    
    
    $
    113,532
    
    
    $
    4,277
    
    
    $
    (19,620
    )
    
    $
    241,993
    
    
   $
    Issuance of common stock upon the
exercise of common stock options
    
    
    2,134,530
    
    
    
    21
    
    
    
    55,474
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,495
    
    
    
    Issuance of common stock under
the employee stock purchase plan
    
    
    22,144
    
    
    
    
    
    
    
    931
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    931
    
    
    
    Tax benefits related to the
exercise of common stock options
    
    
    
    
    
    
    
    
    
    
    15,156
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,156
    
    
    
    Purchase of treasury stock at cost
    
    
    (509,094
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,687
    )
    
    
    (25,687
    )
    
    
    Unrealized losses on
available-for-sale marketable
securities, net of tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,645
    )
    
    
    
    
    
    
    (2,645
    )
    
    
    (2,645
    )Foreign currency translation, net
of tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131
    
    
    
    
    
    
    
    131
    
    
    
    131Payment of dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,569
    )
    
    
    
    
    
    
    
    
    
    
    (11,569
    )
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,656
    
    
    
    
    
    
    
    
    
    
    
    53,656
    
    
    
    53,656Balance at December 31, 2004
    
    
    38,930,648
    
    
    $
    399
    
    
    $
    214,987
    
    
    $
    155,619
    
    
    $
    1,763
    
    
    $
    (45,307
    )
    
    $
    327,461
    
    
    $
    51,142Issuance of common stock upon the
exercise of common stock options
    
    
    1,382,828
    
    
    
    15
    
    
    
    45,120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,135
    
    
    
    Issuance of common stock under
the employee stock purchase plan
    
    
    24,956
    
    
    
    
    
    
    
    1,407
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,407
    
    
    
    Tax benefits related to the
exercise of common stock options
    
    
    
    
    
    
    
    
    
    
    15,514
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,514
    
    
    
    Purchase of treasury stock at cost
    
    
    (855,705
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (61,489
    )
    
    
    (61,489
    )
    
    
    Unrealized losses on
available-for-sale marketable
securities, net of tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,349
    )
    
    
    
    
    
    
    (1,349
    )
    
    
    (1,349
    )Foreign currency translation, net
of tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (538
    )
    
    
    
    
    
    
    (538
    )
    
    
    (538
    )Payment of dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,787
    )
    
    
    
    
    
    
    
    
    
    
    (15,787
    )
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,060
    
    
    
    
    
    
    
    
    
    
    
    75,060
    
    
    
    75,060Balance at December 31, 2005
    
    
    39,482,727
    
    
    $
    414
    
    
    $
    277,028
    
    
    $
    214,892
    
    
    $
    (124
    )
    
    $
    (106,796
    )
    
    $
    385,414
    
    
    $
    73,173Issuance of common stock upon the
exercise of common stock options
    
    
    1,378,917
    
    
    
    14
    
    
    
    2,965
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,979
    
    
    
    Issuance of common stock under
the employee stock purchase plan
    
    
    26,875
    
    
    
    
    
    
    
    2,024
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,024
    
    
    
    Share-based compensation
    
    
    
    
    
    
    
    
    
    
    25,465
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,465
    
    
    
    Tax benefits related to the
exercise of common stock options
    
    
    
    
    
    
    
    
    
    
    46,508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,508
    
    
    
    Purchase of treasury stock at cost
    
    
    (1,940,611
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (175,985
    )
    
    
    (175,985
    )
    
    
    Unrealized losses on
available-for-sale marketable
securities, net of tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (316
    )
    
    
    
    
    
    
    (316
    )
    
    
    (316
    )Payment of dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47,395
    )
    
    
    
    
    
    
    
    
    
    
    (47,395
    )
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,171
    
    
    
    
    
    
    
    
    
    
    
    79,171
    
    
    
    79,171Balance at December 31, 2006
    
    
    38,947,908
    
    
    $
    428
    
    
    $
    353,990
    
    
    $
    246,668
    
    
    $
    (440
    )
    
    $
    (282,781
    )
    
    $
    317,865
    
    
    $
    78,855
  29




---



##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Description of operations
  2. Principles of consolidation
  3. Summary of significant accounting policies
 Cash equivalents and marketable securities
  Allowance for doubtful accounts
  Goodwill and other intangible assets
  Property and equipment
  30




---



##### 



Recovery of long-lived assets
  Revenue recognition
  Commission expense recognition
  Earnings per share
  Year
ended December 31,2004
    
    2005
    
    2006Basic weighted average common shares outstanding
    
    
    38,344
    
    
    
    39,572
    
    
    
    39,712Effect of dilutive
common shares outstanding
    
    
    1,581
    
    
    
    1,520
    
    
    
    1,009Diluted weighted average common shares outstanding
    
    
    39,925
    
    
    
    41,092
    
    
    
    40,721
 Concentration of credit risk and sources of revenues
   31




---



##### 



Foreign currency
  Fair value of financial instruments
  Income taxes
  Research and development costs
  Preferred stock
  Share-based compensation
  32




---



##### 



Use of estimates in preparation of financial statements
   Reclassifications
  4. Recent accounting pronouncements
  33




---



##### 



Note 5. Share-based compensation
    34




---



##### 



Equity incentive plans
  Valuation assumptions
   Year ended December 31,2004
    
    2005
    
    2006Risk-free interest rate
    
    
    3.05
    %
    
    
    4.29
    %
    
    
    4.80
    %Dividend yield
    
    
    0.6
    %
    
    
    0.6
    %
    
    
    1.29
    %Expected life of option (in years)
    
    
    5.0
    
    
    
    4.4
    
    
    
    4.5Expected volatility
    
    
    40
    %
    
    
    30
    %
    
    
    30
    %Weighted-average fair value of share-based compensation awards granted
    
    $
    18.19
    
    
    $
    19.80
    
    
    $
    26.14
  35




---



##### 



Pro-forma information for periods prior to the adoption of FAS 123(R)
  Year
ended December 31,2004
    
    
    2005(In thousands, exceptper share amounts)Net income, as reported
    
    $
    53,656
    
    
    $
    75,060Deduct: Total share-based
compensation expense determined
under fair value based methods
for all awards, net of related
tax effects
    
    
    (16,773
    )
    
    
    (16,759
    )Pro forma net income
    
    $
    36,883
    
    
    $
    58,301Earnings per share:Basic  as reported
    
    $
    1.40
    
    
    $
    1.90Basic  pro forma
    
    $
    0.96
    
    
    $
    1.47Diluted  as reported
    
    $
    1.34
    
    
    $
    1.83Diluted  pro forma
    
    $
    0.93
    
    
    $
    1.43
 Equity-based award activity
  WeightedWeighted
    
    Average
    
    AggregateNumber
    
    Average
    
    Remaining
    
    Intrinsic Valueof Options
    
    Exercise Price
    
    Contractual Term
    
    (in millions)Options outstanding, December 31, 2005
    
    
    5,271,183
    
    
    $
    44.96
    
    
    
    6.14Options granted
    
    
    
    
    
    
    Options cancelled
    
    
    (152,262
    )
    
    
    54.62Options exercised
    
    
    (2,176,789
    )
    
    
    36.71Options outstanding, December 31, 2006
    
    
    2,942,132
    
    
    $
    50.63
    
    
    
    5.13
    
    
    $
    109.1Options vested and expected to vest at December 31, 2006
    
    
    2,849,979
    
    
    $
    50.39
    
    
    
    5.13
    
    
    $
    106.3Options exercisable, December 31, 2006
    
    
    881,508
    
    
    $
    44.15
    
    
    
    5.17
    
    
    $
    38.4
   2004
    
    2005Weighted
    
    
    
    
    
    WeightedNumber of
    
    Average
    
    Number of
    
    AverageOptions
    
    Exercise Price
    
    Options
    
    Exercise PriceOptions outstanding, beginning of year
    
    
    6,177,339
    
    
    $
    29.89
    
    
    
    5,411,706
    
    
    $
    36.20Options granted
    
    
    1,585,500
    
    
    
    46.26
    
    
    
    1,417,500
    
    
    
    66.85Options cancelled
    
    
    (216,603
    )
    
    
    31.44
    
    
    
    (171,625
    )
    
    
    49.03Options exercised
    
    
    (2,134,530
    )
    
    
    26.01
    
    
    
    (1,386,398
    )
    
    
    32.70Options outstanding, end of year
    
    
    5,411,706
    
    
    $
    36.20
    
    
    
    5,271,183
    
    
    $
    44.96Options exercisable, end of year
    
    
    1,413,331
    
    
    $
    31.85
    
    
    
    1,557,684
    
    
    $
    35.05
  Options Outstanding
    
    
    Options ExercisableWeightedWeighted
    
    
    Average
    
    
    
    
    
    
    WeightedNumber Outstanding
    
    
    Average
    
    
    Remaining
    
    
    Number Exercisable
    
    
    Averageas of
    
    
    Exercise
    
    
    Contractual
    
    
    as of
    
    
    ExerciseRange of
Exercise Prices
    
    December 31, 2006
    
    
    Price
    
    
    Life-Years
    
    
    December 31, 2006
    
    
    Price$  7.12  $ 32.30
    
    
    663,725
    
    
    $
    31.20
    
    
    
    5.87
    
    
    
    268,225
    
    
    $
    29.7332.41      45.10
    
    
    964,416
    
    
    
    43.53
    
    
    
    4.36
    
    
    
    330,667
    
    
    
    40.8346.45      64.88
    
    
    1,175,616
    
    
    
    63.40
    
    
    
    5.26
    
    
    
    260,616
    
    
    
    60.0065.26      89.70
    
    
    138,375
    
    
    
    84.78
    
    
    
    5.85
    
    
    
    22,000
    
    
    
    82.17$  7.12  $ 89.70
    
    
    2,942,132
    
    
    $
    50.63
    
    
    
    5.13
    
    
    
    881,508
    
    
    $
    44.15
 36




---



##### 



Number ofStock
    
    
    Weighted
    
    
    Weighted Average
    
    
    AggregateAppreciation
    
    
    Average
    
    
    Remaining
    
    
    Intrinsic ValueRights
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    (in millions)Stock appreciation rights outstanding, beginning of year
    
    
    
    
    
    $
    Stock appreciation rights granted
    
    
    628,150
    
    
    
    97.36
    
    
    
    6.20Stock appreciation rights cancelled
    
    
    (14,005
    )
    
    
    97.56Stock appreciation rights exercised
    
    
    
    
    
    
    Stock appreciation rights outstanding, December 31, 2006
    
    
    614,145
    
    
    $
    97.36
    
    
    
    6.20
    
    
    $
    Stock appreciation rights vested and expected to vest at
December 31, 2006
    
    
    579,386
    
    
    $
    97.36
    
    
    
    6.20
    
    
    $
    Stock appreciation rights exercisable, December 31, 2006
    
    
    
    
    
    $
    
   Number
    
    Weighted
    
    Weighted Averageof Restricted
    
    Average
    
    RemainingStock Units
    
    Exercise Price
    
    TermRestricted stock units outstanding, beginning of year
    
    
    
    
    
    $
    Restricted stock units granted
    
    
    60,661
    
    
    
    0.00
    
    
    
    3.20Restricted stock units cancelled
    
    
    (538
    )
    
    
    Restricted stock units exercised
    
    
    
    
    
    
    Restricted stock units outstanding, December 31, 2006
    
    
    60,123
    
    
    $
    0.00
    
    
    
    3.20Restricted stock units vested and expected to vest at December 31, 2006
    
    
    55,952
    
    
    $
    0.00
    
    
    
    3.20Restricted stock units exercisable, December 31, 2006
    
    
    
    
    
    $
    
   6. Acquisitions
  37




---



##### 



7. Marketable securities
  December 31, 2005Gross
    
    
    GrossMarket
    
    
    Amortized
    
    
    Unrealized
    
    
    UnrealizedValue
    
    
    Cost
    
    
    Gains
    
    
    LossesU.S. Treasury notes and bonds
    
    $
    75,106
    
    
    $
    76,107
    
    
    $
    146
    
    
    $
    1,147Washington, D.C. tax exempt notes and bonds
    
    
    45,254
    
    
    
    43,860
    
    
    
    1,394
    
    
    
    Total
marketable securities
    
    $
    120,360
    
    
    $
    119,967
    
    
    $
    1,540
    
    
    $
    1,147
 December 31, 2006Gross
    
    
    GrossMarket
    
    
    Amortized
    
    
    Unrealized
    
    
    UnrealizedValue
    
    
    Cost
    
    
    Gains
    
    
    LossesU.S. Treasury notes and bonds
    
    $
    272,160
    
    
    $
    273,853
    
    
    $
    1
    
    
    $
    1,694Washington, D.C. tax exempt notes and bonds
    
    
    43,760
    
    
    
    42,788
    
    
    
    973
    
    
    
    1Total
marketable securities
    
    $
    315,920
    
    
    $
    316,641
    
    
    $
    974
    
    
    $
    1,695
  December 31, 2006Fair Market
    
    
    AmortizedValue
    
    
    CostLess than one year
    
    $
    119,534
    
    
    $
    119,609Matures in 1 to 5 years
    
    
    180,332
    
    
    
    181,511Matures in 6 to 10 years
    
    
    14,008
    
    
    
    13,521Matures after 10 years
    
    
    2,046
    
    
    
    2,000Total
marketable securities
    
    $
    315,920
    
    
    $
    316,641
  8. Membership fees receivable
  December 31,2005
    
    
    2006Billed
    
    $
    81,316
    
    
    $
    119,022Unbilled
    
    
    39,961
    
    
    
    35,240121,277
    
    
    
    154,262Reserve for uncollectible revenue
    
    
    (1,035
    )
    
    
    (1,155
    )Membership fees receivable, net
    
    $
    120,242
    
    
    $
    153,107
 38




---



##### 



9. Property and equipment
  December 31,2005
    
    
    2006Furniture, fixtures, and equipment
    
    $
    13,349
    
    
    $
    14,574Software and Web site development costs
    
    
    5,471
    
    
    
    13,710Leasehold improvements
    
    
    12,442
    
    
    
    16,45931,262
    
    
    
    44,743Accumulated depreciation
    
    
    (12,861
    )
    
    
    (17,755
    )Property and equipment, net
    
    $
    18,401
    
    
    $
    26,988
  10. Accounts payable and accrued liabilities
  December 31,2005
    
    
    2006Accounts payable
    
    $
    3,149
    
    
    $
    8,021Advanced membership payments received
    
    
    12,023
    
    
    
    21,976Other accrued liabilities
    
    
    27,257
    
    
    
    36,776Accounts payable and accrued liabilities
    
    $
    42,429
    
    
    $
    66,773
 11. Lease restructuring costs
    39




---



##### 



12. Income taxes
  Yearended December 31,2004
    
    
    2005
    
    
    2006Current tax expense
    
    $
    18,643
    
    
    $
    23,801
    
    
    $
    36,394Deferred tax expense
    
    
    8,086
    
    
    
    14,749
    
    
    
    13,167Provision for income taxes
    
    $
    26,729
    
    
    $
    38,550
    
    
    $
    49,561
  Yearended December 31,2004
    
    
    2005
    
    
    2006Statutory U.S. federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income tax, net of U.S. federal income tax benefit
    
    
    0.4
    
    
    
    
    
    
    
    3.9Foreign income tax
    
    
    0.3
    
    
    
    (0.1
    )
    
    
    Permanent differences and credits, net
    
    
    (2.4
    )
    
    
    (1.0
    )
    
    
    (0.4
    )Effective tax rate
    
    
    33.3
    %
    
    
    33.9
    %
    
    
    38.5
    %
  December 31,2005
    
    
    2006Deferred tax assets:Tax credit carry forwards
    
    $
    8,455
    
    
    $
    9,317Share-based compensation
    
    
    
    
    
    
    8,493Accrued incentive compensation
    
    
    4,451
    
    
    
    7,533Deferred revenue
    
    
    2,652
    
    
    
    3,514Depreciation
    
    
    1,407
    
    
    
    3,178Deferred compensation plan
    
    
    534
    
    
    
    3,066Non-cash lease incentive
    
    
    2,465
    
    
    
    2,417Operating leases
    
    
    1,489
    
    
    
    650Other
    
    
    1,384
    
    
    
    1,382Total deferred tax assets
    
    
    22,837
    
    
    
    39,550Deferred tax liabilities:Deferred incentive compensation
    
    
    4,469
    
    
    
    5,119Other
    
    
    386
    
    
    
    605Total deferred tax liabilities
    
    
    4,855
    
    
    
    5,724Valuation allowance
    
    
    (3,144
    )
    
    
    (5,821
    )Deferred tax assets, net
    
    $
    14,838
    
    
    $
    28,005
 40




---



##### 



Washington, D.C. income tax incentives
  13. Comprehensive income (loss)
  41




---



##### 



14. Employee benefit plans
 Defined contribution 401(k) plan
  Employee stock purchase plan
  Deferred compensation plan
  15. Public offerings and sales of common stock
  16. Share-based compensation plans
 Stock-Based Incentive Compensation Plan
  42




---



##### 



1999 Stock Option Plan
  2001 Stock Option Plan
  2002 Non-Executive Stock Incentive Plan
  43




---



##### 



2004 Stock Incentive Plan
    Directors Stock Option Plan
  17. Supplemental cash flow disclosures
  44




---



##### 



18. Commitments and contingencies
 Operating leases
  Yearended December 31,2007
    
    $
    21,1862008
    
    
    27,3442009
    
    
    31,9962010
    
    
    31,8072011
    
    
    31,592Thereafter
    
    
    452,408Total
    
    $
    596,333
     45




---



##### 



19. Quarterly financial data (unaudited)
  2005 Quarter EndedMarch 31
    
    June 30
    
    September 30
    
    December 31Revenues
    
    $
    81,608
    
    
    $
    87,351
    
    
    $
    93,432
    
    
    $
    99,835Gross profit
    
    
    55,214
    
    
    
    57,263
    
    
    
    62,357
    
    
    
    66,448Income before provision for income taxes
    
    
    25,777
    
    
    
    25,633
    
    
    
    29,469
    
    
    
    32,731Net income
    
    $
    17,142
    
    
    $
    17,046
    
    
    $
    19,597
    
    
    $
    21,275Earnings per share:Basic
    
    $
    0.44
    
    
    $
    0.43
    
    
    $
    0.49
    
    
    $
    0.54Diluted
    
    $
    0.42
    
    
    $
    0.41
    
    
    $
    0.47
    
    
    $
    0.52
 2006 Quarter EndedMarch 31
    
    June 30
    
    September 30
    
    December 31Revenues
    
    $
    105,069
    
    
    $
    111,662
    
    
    $
    118,390
    
    
    $
    125,502Gross profit
    
    
    67,609
    
    
    
    72,603
    
    
    
    75,633
    
    
    
    80,756Income before provision for income taxes
    
    
    27,835
    
    
    
    28,883
    
    
    
    34,328
    
    
    
    37,686Net income
    
    $
    17,119
    
    
    $
    17,763
    
    
    $
    21,112
    
    
    $
    23,177Earnings per share:Basic
    
    $
    0.43
    
    
    $
    0.44
    
    
    $
    0.53
    
    
    $
    0.59Diluted
    
    $
    0.42
    
    
    $
    0.43
    
    
    $
    0.52
    
    
    $
    0.58
 2 0. Subsequent events
   Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  Item 9A. Controls and Procedures.
    46




---



##### 



Item 9B. Other Information.
  PART III
 Item 10. Directors, Executive Officers and Corporate Governance.
  47




---



##### 



Item 11. Executive Compensation.
  Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  Item 13. Certain Relationships and Related Transactions, and Director Independence.
  Item 14. Principal Accounting Fees and Services.
  48




---



##### 



PART IV
 Item 15. Exhibits, Financial Statement Schedules.
 (1)
    
    The following financial statements of the registrant and reports of Independent Registered
Public Accounting Firm are included in Item 8 hereof:Report of Managements Assessment of Internal Control over Financial Reporting,Reports of Independent Registered Public Accounting Firm,Consolidated Balance Sheets at  December 31, 2005 and 2006,Consolidated Statements of Income for the years ended December 31, 2004, 2005 and 2006,Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2005 and 2006,Consolidated Statements of Changes in Stockholders Equity for the years ended December 31, 2004,
2005 and 2006, andNotes to Consolidated Financial Statements.(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 consolidated 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.(3)
    
    The exhibits listed below are filed or incorporated by reference as part of this Form 10-K.
 ExhibitNo.
    
    Description of Exhibit3.1
    
    Second Amended and Restated Certificate of Incorporation.*3.2
    
    Amended and Restated Bylaws.*4.1
    
    Specimen Common Stock Certificate.*10.1
    
    Employment Agreement, dated January 21, 1999, between The Corporate Executive Board Company and James J.
McGonigle.*10.2
    
    Stock Option Agreement Pursuant to The Corporate Advisory Board Company Stock-Based Incentive Compensation Plan,
effective as of October 31, 1997, between The Corporate Executive Board Company and James J. McGonigle, as
amended on January 21, 1999.*10.3
    
    Agreement Concerning Exclusive Services, Confidential Information, Business Opportunities, Non-Competition,
Non-Solicitation and Work Product, dated January 21, 1999, between The Corporate Executive Board Company and
James J. McGonigle.*10.4
    
    Form of Agreement Concerning Exclusive Services, Confidential Information, Business Opportunities,
Non-Competition, Non-Solicitation and Work Product.*
 49




---



##### 



ExhibitNo.
    
    Description of Exhibit10.5
    
    The Corporate Executive Board Company Stock-Based Incentive Compensation Plan, adopted on October 31, 1997, as
amended and restated in February 1999.*** 10.6
    
    Amended Directors Stock Plan and Standard Terms and Conditions for Director Non-qualified Stock Options.*** 10.7
    
    1999 Stock Option Plan and Standard Terms and Conditions for 1999 Stock Option Plan Incentive Stock Options.*** 10.8
    
    Employee Stock Purchase Plan dated June 23, 2000.**10.9
    
    2001 Stock Option Plan. ## 10.10
    
    2002 Non-Executive Stock Incentive Plan.ì 10.11
    
    2004 Stock Incentive Plan, as amended July 18, 2005. *****10.12
    
    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. * #10.13
    
    Agreement of Lease, dated June 25, 1998, between The Corporate Executive Board Company and The George Washington
University.*10.14
    
    License Agreement, effective as of October 31, 1997, between The Corporate Executive Board Company and The
Advisory Board Company.*10.15
    
    Form of term sheet for director non-qualified stock options.### 10.16
    
    Employment Agreement, dated March 20, 2002, between The Corporate Executive Board Company and Michael A.
Archer.±10.17
    
    The Corporate Executive Board Deferred Compensation Plan, as amended January 1, 2006. ****10.18
    
    Standard Terms and Conditions for Restricted Stock Units under the 2004 Stock Incentive Plan and form of Term
Sheet for Restricted Stock Units. ####10.19
    
    Standard Terms and Conditions for Non-Qualified Stock Options and Stock Appreciation Rights under the 1999 Stock
Option Plan, 2001 Stock Option Plan, 2002 Non-Executive Stock Incentive Plan and the 2004 Stock Incentive Plan
and form of Term Sheet for Stock Appreciation Rights. #####10.20
    
    Employment Agreement, dated May 19, 2006, between The Corporate Executive Board Company and Thomas L. Monahan
III.+10.21
    
    Agreement Concerning Exclusive Services, Confidential Information, Business Opportunities, Non-Competition,
Non-Solicitation and Work Product, dated August 20, 1997, between the Companys predecessor and Thomas L.
Monahan III. ++10.22
    
    Employment Agreement, dated July 25, 2006, between The Corporate Executive Board Company and James J. McGonigle
relating to employment, board service, non-competition and related matters.+++10.23
    
    Amendments to the 2004 Stock Incentive Plan, 2002 Non-Executive Stock Incentive Plan, 2001 Stock Option Plan,
1999 Stock Option Plan, Employee Stock Purchase Plan and Directors Stock Plan, adopted December 22, 2006.14.1
    
    Code of Ethics For Directors, Executives and Employees.21.1
    
    List of the Subsidiaries of The Corporate Executive Board Company.23.1
    
    Consent of Ernst and Young LLP, Independent Registered Public Accounting Firm.31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of
1934, as amended.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of
1934, as amended.32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 USC Section 1350.
 50




---



##### 



*
    
    Incorporated by reference 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 the registrants registration statement on Form S-8, filed with the Securities and
Exchange Commission on March 9, 1999 (Registration No. 333-74145).****
    
    Incorporated by reference to Exhibit 10.3 from the Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended March 31, 2006.*****
    
    Incorporated by reference to Exhibit 10.1 from the Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 filed with the Securities and Exchange Commission on August 24, 2005.#
    
    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.##
    
    Incorporated by reference to Exhibit 10.1 to the registrants registration statement on Form S-8 filed with the
Securities and Exchange Commission on August 10, 2001 (Registration No. 333-67238).###
    
    Incorporated by reference to Exhibit 10.43 from the Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the year ended December 31, 2001.####
    
    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 March 31, 2006.#####
    
    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 March 31, 2006.+
    
    Incorporated by reference to Exhibit 10.1 from the Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 filed with the Securities and Exchange Commission on July 26, 2006.++
    
    Incorporated by reference to Exhibit 10.2 from the Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 filed with the Securities and Exchange Commission on July 26, 2006.+++
    
    Incorporated by reference to Exhibit 10.3 from the Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 filed with the Securities and Exchange Commission on July 26, 2006.
    
    Compensation arrangement.±
    
    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 September 30, 2002.ì
    
    Incorporated by reference to Exhibit 10.21.3 from the Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the year ended December 31, 2002. 51




---



##### 



Report of Independent Registered Public Accounting Firm
    
 52




---



##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
 Schedule IIValuation and Qualifying Accounts
(In thousands)
 AdditionsCharged toBalance at
    
    
    Additions
    
    
    Provision
    
    
    DeductionsBeginning
    
    
    Charged to
    
    
    for Income
    
    
    from
    
    
    Balance atof Year
    
    
    Revenue
    
    
    Taxes
    
    
    Reserve
    
    
    End of YearYear ended December 31, 2004Reserve for uncollectible revenue
    
    $
    2,875
    
    
    $
    3,439
    
    
    $
    
    
    
    $
    4,349
    
    
    $
    1,965$
    2,875
    
    
    $
    3,439
    
    
    $
    
    
    
    $
    4,349
    
    
    $
    1,965Year ended December 31, 2005Reserve for uncollectible revenue
    
    $
    1,965
    
    
    $
    2,960
    
    
    $
    
    
    
    $
    3,890
    
    
    $
    1,035Valuation allowance on deferred tax assets
    
    
    
    
    
    
    
    
    
    
    3,144
    
    
    
    
    
    
    
    3,144$
    1,965
    
    
    $
    2,960
    
    
    $
    3,144
    
    
    $
    3,890
    
    
    $
    4,179Year ended December 31, 2006Reserve for uncollectible revenue
    
    $
    1,035
    
    
    $
    5,695
    
    
    $
    
    
    
    $
    5,575
    
    
    $
    1,155Valuation allowance on deferred tax assets
    
    
    3,144
    
    
    
    
    
    
    
    2,677
    
    
    
    
    
    
    
    5,821$
    4,179
    
    
    $
    5,695
    
    
    $
    2,677
    
    
    $
    5,575
    
    
    $
    6,976
 53




---



##### 



Signatures
  The Corporate Executive Board CompanyBy:
    
    /s/ Thomas L. Monahan IIIThomas L. Monahan IIIChief Executive Officer and Director
  Signature
    
    Title/s/ Thomas L. Monahan III

Thomas L. Monahan III
    
    Chief Executive Officer and Director
(Principal Executive Officer)/s/ Timothy R. Yost

Timothy R. Yost
    
    Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)/s/ James J. McGonigle

James J. McGonigle
    
    Non-Executive Chairman
of the Board of Directors/s/ Robert C. Hall

Robert C. Hall
    
    Director/s/ Nancy J. Karch

Nancy J. Karch
    
    Director/s/ David W. Kenny

David W. Kenny
    
    Director/s/ Daniel O. Leemon

Daniel O. Leemon
    
    Director
 54




---



##### 



EXHIBIT INDEX
 ExhibitNo.
    
    Description of Exhibit10.23
    
    Amendments, adopted December 22, 2006, to the 2004 Stock Incentive Plan, 2002 Non-Executive Stock
Incentive Plan, 2001 Stock Option Plan, 1999 Stock Option Plan, Employee Stock Purchase Plan and
Directors Stock Plan.21.1
    
    List of the Subsidiaries of The Corporate Executive Board Company.23.1
    
    Consent of Ernst and Young LLP, Independent Registered Public Accounting Firm.31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities
Exchange Act of 1934, as amended.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities
Exchange Act of 1934, as amended.32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 USC Section 1350.
 55