##### 



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





FORM 10-Q


(Mark One)



|[X] |  | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|--- |  | ----------------------------------------------------------------------------------------
|    |  | For the quarterly period ended March 31, 2002.                                          

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                                 |  | 52-2056410            
|(State or other jurisdiction of          |  | (I.R.S. Employer      
|incorporation or organization)           |  | Identification Number)
|                                        
|2000 Pennsylvania Avenue, NW             |  |                       
|Suite 6000                               |  |                       
|Washington, DC                           |  | 20006                 
|(Address of principal executive offices) |  | (Zip Code)            

(202) 777-5000

(Registrants telephone number, including area code)

Not applicable.
(Former name, former address and former fiscal year, if changed, since last report.)

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   [_]

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 May 3, 2002, we had outstanding 36,977,652 shares of Common Stock, par
value $0.01 per share and had outstanding no shares of Preferred Stock, par
value $0.01 per share.





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##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
INDEX TO FORM 10-Q



|                              |                                                                                                |                                                  |                                      |    |   |   | 
|----------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------------------ | -- | - | - | 
|PART I. FINANCIAL INFORMATION |                                                                                                |                                                  |                                      |   
|                              | ITEM 1. Financial Statements.                                                                  |                                                  |                                      |    |  
|                              |                                                                                                | Condensed Balance Sheets at March 31, 2002 and   |                                      |    |   |  
|                              |                                                                                                |                                                  | December 31, 2001                    |    |   | 3 | 
|                              |                                                                                                | Condensed Statements of Income for the Three     |                                      |    |   |  
|                              |                                                                                                |                                                  | Months Ended March 31, 2002 and 2001 |    |   | 4 | 
|                              |                                                                                                | Condensed Statements of Cash Flows for the Three |                                      |    |   |  
|                              |                                                                                                |                                                  | Months Ended March 31, 2002 and 2001 |    |   | 5 | 
|                              |                                                                                                | Notes to Condensed Financial Statements          |                                      |    | 6 |  
|                              | ITEM 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations. |                                                  |                                      | 8  |  
|                              | ITEM 3. Quantitative and Qualitative Disclosures About
Market Risk.                            |                                                  |                                      | 12 |  
|PART II. OTHER INFORMATION    |                                                                                                |                                                  |                                      |   
|                              | ITEM 1. Legal Proceedings.                                                                     |                                                  |                                      | 13 |  
|                              | ITEM 2. Changes in Securities.                                                                 |                                                  |                                      | 13 |  
|                              | ITEM 3. Defaults Upon Senior Securities and Use of Proceeds.                                   |                                                  |                                      | 13 |  
|                              | ITEM 4. Submission of Matters to a Vote of Security Holders.                                   |                                                  |                                      | 13 |  
|                              | ITEM 5. Other Information.                                                                     |                                                  |                                      | 13 |  
|                              | ITEM 6. Exhibits and Reports on Form 8-K.                                                      |                                                  |                                      | 13 |  





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##### 



PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED BALANCE SHEETS
(In thousands, except share amounts)

|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                   |         |  |  | 
|------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------ | ------- | ------- | -------------- | ------- | ----------------- | ------- |  |  | 
|                                           |                                                                                                                                                                                    |                            |                                      |         |         | March 31, 2002 |         | December 31, 2001
|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|                                           |                                                                                                                                                                                    |                            |                                      |         |         | (Unaudited)    |         |                   |         | 
|                                           |                                                                                                                                                                                    |                            |                                      | Assets  |         |                |         |                   |         |  |  | 
|Current assets:                            |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|                                           | Cash and cash equivalents                                                                                                                                                          |                            | $                                    | 78,502  |         |                | $       | 48,271            |        
|                                           | Marketable securities                                                                                                                                                              |                            |                                      | 44,998  |         |                |         | 35,735            |        
|                                           | Membership fees receivable, net                                                                                                                                                    |                            |                                      | 19,097  |         |                |         | 42,011            |        
|                                           | Deferred income taxes, net                                                                                                                                                         |                            |                                      | 20,485  |         |                |         | 19,881            |        
|                                           | Deferred incentive compensation                                                                                                                                                    |                            |                                      | 3,474   |         |                |         | 4,216             |        
|                                           | Prepaid expenses and other current assets                                                                                                                                          |                            |                                      | 3,643   |         |                |         | 3,042             |        
|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|                                           |                                                                                                                                                                                    | Total current assets       |                                      |         | 170,199 |                |         |                   | 153,156 | 
|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|Deferred income taxes, net                 |                                                                                                                                                                                    |                            | 55,462                               |         |         |                | 38,639  |                  
|Marketable securities                      |                                                                                                                                                                                    |                            | 38,977                               |         |         |                | 48,463  |                  
|Property and equipment, net                |                                                                                                                                                                                    |                            | 17,161                               |         |         |                | 17,260  |                  
|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|                                           |                                                                                                                                                                                    | Total assets               |                                      | $       | 281,799 |                |         | $                 | 257,518 | 
|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|                                           |                                                                                                                                                                                    |                            | Liabilities and Stockholders equity |         |         |                |         |                   |         |  | 
|Current liabilities:                       |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|                                           | Accounts payable and accrued liabilities                                                                                                                                           |                            | $                                    | 7,890   |         |                | $       | 10,683            |        
|                                           | Accrued incentive compensation                                                                                                                                                     |                            |                                      | 4,067   |         |                |         | 6,387             |        
|                                           | Deferred revenues                                                                                                                                                                  |                            |                                      | 86,819  |         |                |         | 94,683            |        
|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|                                           |                                                                                                                                                                                    | Total current liabilities  |                                      |         | 98,776  |                |         |                   | 111,753 | 
|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|Other liabilities                          |                                                                                                                                                                                    |                            | 1,959                                |         |         |                | 1,781   |                  
|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|                                           |                                                                                                                                                                                    | Total liabilities          |                                      |         | 100,735 |                |         |                   | 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 36,965,040 and 34,898,060 shares
issued and outstanding as of March 31, 2002, and
December 31, 2001, respectively |                            |                                      | 370     |         |                |         | 349               |        
|                                           | Additional paid-in capital                                                                                                                                                         |                            |                                      | 126,015 |         |                |         | 94,221            |        
|                                           | Retained earnings                                                                                                                                                                  |                            |                                      | 54,174  |         |                |         | 48,243            |        
|                                           | Accumulated elements of comprehensive income                                                                                                                                       |                            |                                      | 505     |         |                |         | 1,171             |        
|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|                                           |                                                                                                                                                                                    | Total stockholders equity |                                      |         | 181,064 |                |         |                   | 143,984 | 
|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  
|Total liabilities and stockholders equity |                                                                                                                                                                                    | $                          | 281,799                              |         |         | $              | 257,518 |                  
|                                           |                                                                                                                                                                                    |                            |                                      |         |         |                |         |                  

See accompanying notes to condensed
financial statements.

3





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##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)

|                                                                       |                                   |                          |        |                              |        |      |        |        |        | 
|---------------------------------------------------------------------- | --------------------------------- | ------------------------ | ------ | ---------------------------- | ------ | ---- | ------ | ------ | ------ | 
|                                                                       |                                   |                          |        | Three months ended March 31,
|                                                                       |                                   |                          |        |                             
|                                                                       |                                   |                          |        | 2002                         |        | 2001
|                                                                       |                                   |                          |        |                              |        |     
|Revenues                                                               |                                   | $                        | 37,023 |                              |        | $    | 29,215 |       
|                                                                       | Cost of services                  |                          |        | 13,517                       |        |      |        | 11,243 |       
|                                                                       |                                   |                          |        |                              |        |      |        |       
|Gross profit                                                           |                                   |                          | 23,506 |                              |        |      | 17,972 |       
|                                                                       |                                   |                          |        |                              |        |      |        |       
|Costs and expenses:                                                    |                                   |                          |        |                              |        |      |        |       
|                                                                       | Member relations and marketing    |                          |        | 9,108                        |        |      |        | 6,490  |       
|                                                                       | General and administrative        |                          |        | 4,221                        |        |      |        | 3,881  |       
|                                                                       | Depreciation                      |                          |        | 1,204                        |        |      |        | 921    |       
|                                                                       | Stock option and related expenses |                          |        | 623                          |        |      |        | 1,098  |       
|                                                                       |                                   |                          |        |                              |        |      |        |       
|                                                                       |                                   | Total costs and expenses |        |                              | 15,156 |      |        |        | 12,390 | 
|                                                                       |                                   |                          |        |                              |        |      |        |       
|Income from operations                                                 |                                   |                          | 8,350  |                              |        |      | 5,582  |       
|Other income, net                                                      |                                   |                          | 1,217  |                              |        |      | 978    |       
|                                                                       |                                   |                          |        |                              |        |      |        |       
|Income before provision for income taxes                               |                                   |                          | 9,567  |                              |        |      | 6,560  |       
|Provision for income taxes                                             |                                   |                          | 3,636  |                              |        |      | 2,493  |       
|                                                                       |                                   |                          |        |                              |        |      |        |       
|Net income                                                             |                                   | $                        | 5,931  |                              |        | $    | 4,067  |       
|                                                                       |                                   |                          |        |                              |        |      |        |       
|Earnings per share:                                                    |                                   |                          |        |                              |        |      |        |       
|                                                                       | Basic                             |                          | $      | 0.17                         |        |      | $      | 0.13   |       
|                                                                       | Diluted                           |                          | $      | 0.16                         |        |      | $      | 0.11   |       
|Weighted average shares used in the
calculation of earnings per share: |                                   |                          |        |                              |        |      |        |       
|                                                                       | Basic                             |                          |        | 35,538                       |        |      |        | 31,796 |       
|                                                                       | Diluted                           |                          |        | 37,130                       |        |      |        | 35,408 |       

See accompanying notes to condensed financial statements.

4





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THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

|                                                                                        |                                                                                   |                                                                 |                                                 |        |                              |        |        |         |        |         |  
|--------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------------------------------- | ----------------------------------------------- | ------ | ---------------------------- | ------ | ------ | ------- | ------ | ------- | -
|                                                                                        |                                                                                   |                                                                 |                                                 |        | Three months ended March 31,
|                                                                                        |                                                                                   |                                                                 |                                                 |        |                             
|                                                                                        |                                                                                   |                                                                 |                                                 |        | 2002                         |        | 2001  
|                                                                                        |                                                                                   |                                                                 |                                                 |        |                              |        |       
|Cash flows from operating activities:                                                   |                                                                                   |                                                                 |                                                 |        |                              |        |        |        
|Net income                                                                              |                                                                                   | $                                                               | 5,931                                           |        |                              | $      | 4,067  |        
|Adjustments to reconcile net income to net cash
flows provided by operating activities: |                                                                                   |                                                                 |                                                 |        |                              |        |        |        
|                                                                                        |                                                                                   | Depreciation                                                    |                                                 |        | 1,204                        |        |        |         | 921    |        
|                                                                                        |                                                                                   | Deferred income taxes                                           |                                                 |        | 3,636                        |        |        |         | 2,493  |        
|                                                                                        |                                                                                   | Stock option repurchases                                        |                                                 |        |                             |        |        |         | (3,140 | )      
|                                                                                        |                                                                                   | Stock option and related expenses                               |                                                 |        |                             |        |        |         | 93     |        
|                                                                                        |                                                                                   | Amortization of marketable securities premiums
(discounts), net |                                                 |        | 251                          |        |        |         | 198    |        
|                                                                                        |                                                                                   | Changes in operating assets and liabilities:                    |                                                 |        |                              |        |        |         |        |        
|                                                                                        |                                                                                   |                                                                 | Membership fees receivable, net                 |        |                              | 22,914 |        |         |        | 15,852  |  
|                                                                                        |                                                                                   |                                                                 | Deferred incentive compensation                 |        |                              | 742    |        |         |        | 218     |  
|                                                                                        |                                                                                   |                                                                 | Prepaid expenses and other current assets       |        |                              | (601   | )      |         |        | (562    | )
|                                                                                        |                                                                                   |                                                                 | Accounts payable and accrued liabilities        |        |                              | (3,152 | )      |         |        | (319    | )
|                                                                                        |                                                                                   |                                                                 | Accrued incentive compensation                  |        |                              | (2,320 | )      |         |        | (624    | )
|                                                                                        |                                                                                   |                                                                 | Deferred revenues                               |        |                              | (7,864 | )      |         |        | (3,731  | )
|                                                                                        |                                                                                   |                                                                 | Other liabilities                               |        |                              | 178    |        |         |        | 54      |  
|                                                                                        |                                                                                   |                                                                 |                                                 |        |                              |        |        |        
|                                                                                        |                                                                                   |                                                                 | Net cash flows provided by operating activities |        |                              | 20,919 |        |         |        | 15,520  |  
|                                                                                        |                                                                                   |                                                                 |                                                 |        |                              |        |        |        
|Cash flows from investing activities:                                                   |                                                                                   |                                                                 |                                                 |        |                              |        |        |        
|                                                                                        | Purchases of property and equipment                                               |                                                                 |                                                 | (1,105 | )                            |        |        | (2,640  | )     
|                                                                                        | Purchases of marketable securities, net                                           |                                                                 |                                                 | (1,100 | )                            |        |        | (14,999 | )     
|                                                                                        |                                                                                   |                                                                 |                                                 |        |                              |        |        |        
|                                                                                        |                                                                                   |                                                                 | Net cash flows used in investing activities     |        |                              | (2,205 | )      |         |        | (17,639 | )
|                                                                                        |                                                                                   |                                                                 |                                                 |        |                              |        |        |        
|Cash flows from financing activities:                                                   |                                                                                   |                                                                 |                                                 |        |                              |        |        |        
|                                                                                        | Proceeds from the exercise of common stock options                                |                                                                 |                                                 | 11,158 |                              |        |        | 10,849  |       
|                                                                                        | Proceeds from the issuance of common stock under the
employee stock purchase plan |                                                                 |                                                 | 157    |                              |        |        | 189     |       
|                                                                                        | Withholding of selling shareholder income tax liabilities                         |                                                                 |                                                 |       |                              |        |        | 1,223   |       
|                                                                                        | Reimbursement of common stock offering costs                                      |                                                                 |                                                 | 300    |                              |        |        | 375     |       
|                                                                                        | Payment of common stock offering costs                                            |                                                                 |                                                 | (98    | )                            |        |        | (205    | )     
|                                                                                        |                                                                                   |                                                                 |                                                 |        |                              |        |        |        
|                                                                                        |                                                                                   |                                                                 | Net cash flows provided by financing activities |        |                              | 11,517 |        |         |        | 12,431  |  
|                                                                                        |                                                                                   |                                                                 |                                                 |        |                              |        |        |        
|Net increase in cash and cash equivalents                                               |                                                                                   |                                                                 | 30,231                                          |        |                              |        | 10,312 |        
|Cash and cash equivalents, beginning of period                                          |                                                                                   |                                                                 | 48,271                                          |        |                              |        | 19,493 |        
|                                                                                        |                                                                                   |                                                                 |                                                 |        |                              |        |        |        
|Cash and cash equivalents, end of period                                                |                                                                                   | $                                                               | 78,502                                          |        |                              | $      | 29,805 |        
|                                                                                        |                                                                                   |                                                                 |                                                 |        |                              |        |        |        

See accompanying notes to condensed financial statements.

5





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THE CORPORATE EXECUTIVE BOARD COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1  Description of operations

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. 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.

Note 2  Condensed financial statements

The accompanying condensed unaudited financial statements included herein
have been prepared by us in accordance with accounting principles generally
accepted in the United States for interim financial information and pursuant to
the rules and regulations of the Securities and Exchange Commission (SEC) for
reporting on Form 10-Q. Accordingly, certain information and footnote
disclosures required for complete financial statements are not included herein.
It is recommended that these condensed financial statements be read in
conjunction with the financial statements and related notes as reported on our
Form 10-K filed with the SEC in February 2002.

In the opinion of management, all adjustments, consisting of normal
recurring adjustments, considered necessary for a fair presentation of the
condensed financial position, results of operations, and cash flows at the
dates and for the periods presented have been included. The condensed balance
sheet presented as of December 31, 2001, has been derived from the financial
statements that have been audited by our independent public accountants. The
results of operations for the three months ended March 31, 2002, may not be
indicative of the results that may be expected for the year ending December 31,
2002, or any other period within calendar year 2002.

Note 3  Public offerings of common stock

In March 2002 and in March and April 2001, certain of our shareholders sold
2,100,000 and 3,035,000 shares, respectively, of our common stock in registered public
offerings. We did not directly receive any proceeds from the sale of our
common stock pursuant to these registered public offerings. However, we did
receive cash from the exercise of common stock options in conjunction with the
registered public offerings. In addition, we recognized $623,000 and
$1.0 million 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 non-qualified common stock options in
conjunction with the registered public offerings in March 2002 and in March and
April 2001, respectively. The additional FICA taxes are included within Stock
option and related expenses on the condensed statements of income.

Note 4  Earnings per share

Basic earnings per share was computed by dividing net income by the number
of basic weighted average common shares outstanding during the period. Diluted
earnings per share was 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 has been 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:

|                                                      |  |                              |            |      |  |  |            | 
|----------------------------------------------------- |  | ---------------------------- | ---------- | ---- |  |  | ---------- | 
|                                                      |  | Three months ended March 31,
|                                                      |  |                             
|                                                      |  | 2002                         |            | 2001
|                                                      |  |                              |            |     
|Basic weighted average common shares outstanding      |  |                              | 35,537,587 |      |  |  | 31,795,705 | 
|Weighted average common share equivalents outstanding |  |                              | 1,592,117  |      |  |  | 3,611,903  | 
|                                                      |  |                              |            |      |  |  |            | 
|Diluted weighted average shares outstanding           |  |                              | 37,129,704 |      |  |  | 35,407,608 | 
|                                                      |  |                              |            |      |  |  |            | 

6





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##### 



Note 5  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 three months ended March 31,
2002 and 2001, was $5.3 million and $4.6 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 gains,
net of tax, on available-for-sale marketable securities amounted to $505,000
and $768,000 at March 31, 2002 and 2001, respectively.

Note 6  Supplemental cash flow disclosures

For the three months ended March 31, 2002 and 2001, we recognized $20.7
million and $33.3 million, respectively, in stockholders equity for tax
deductions associated with the exercise of non-qualified common stock options.
Estimated current income tax payments for the three months ended March 31, 2002
and 2001, have been reduced by the consideration of the tax deductions
associated with the exercise of non-qualified common stock options.

Note 7  Condensed financial statement reclassifications

Certain amounts in the condensed financial statements as of and for the
three-month period ended March 31, 2001, have been reclassified to conform to
the presentation in the condensed financial statements as of and for the
three-month period ended March 31, 2002.

7





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##### 



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q of The Corporate Executive Board
Company contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are based on our
current plans and expectations and involve risks and uncertainties that could
cause actual future activities and results of operations to be materially
different from those set forth in the forward-looking statements. Factors that
could cause actual results to differ materially from those indicated by
forward-looking statements include, among others, our dependence on renewals of
our membership-based services, our inability to know in advance if new products
will be successful, difficulties we may experience in anticipating market
trends, our need to attract and retain a significant number of highly skilled
employees, restrictions on selling our products and services to the health care
industry, continued consolidation in the financial institution industry which
may adversely impact our business, fluctuations in operating results, our
potential inability to protect our intellectual property rights, our potential
exposure to litigation related content, our potential exposure to loss of
revenue resulting from our unconditional service guarantee, various factors
that could affect the estimated income tax rate, our ability to use our
existing deferred tax assets, and possible volatility of stock price. We
undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events, or otherwise.

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. 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.

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.

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 increased 27.5% to $143.4 million at March 31, 2002, from $112.5
million at March 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
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.

Other income, net
consists primarily of interest income earned on a portfolio of cash,
cash equivalents and marketable securities, which consists primarily
of highly liquid U.S. Treasury notes and bonds and Washington, D.C.
tax exempt notes and bonds.

Results of operations

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

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|                                         |                                   |                          |       |                              |      |      |       |      |      | 
|---------------------------------------- | --------------------------------- | ------------------------ | ----- | ---------------------------- | ---- | ---- | ----- | ---- | ---- | 
|                                         |                                   |                          |       | Three months ended March 31,
|                                         |                                   |                          |       | 2002                         |      | 2001
|                                         |                                   |                          |       |                              |      |     
|Revenues                                 |                                   |                          | 100.0 | %                            |      |      | 100.0 | %   
|                                         | Cost of services                  |                          |       | 36.5                         |      |      |       | 38.5 |     
|                                         |                                   |                          |       |                              |      |      |       |     
|Gross profit                             |                                   |                          | 63.5  |                              |      |      | 61.5  |     
|                                         |                                   |                          |       |                              |      |      |       |     
|Costs and expenses:                      |                                   |                          |       |                              |      |      |       |     
|                                         | Member relations and marketing    |                          |       | 24.6                         |      |      |       | 22.2 |     
|                                         | General and administrative        |                          |       | 11.4                         |      |      |       | 13.3 |     
|                                         | Depreciation                      |                          |       | 3.3                          |      |      |       | 3.2  |     
|                                         | Stock option and related expenses |                          |       | 1.7                          |      |      |       | 3.8  |     
|                                         |                                   |                          |       |                              |      |      |       |     
|                                         |                                   | Total costs and expenses |       |                              | 40.9 |      |       |      | 42.4 | 
|                                         |                                   |                          |       |                              |      |      |       |     
|Income from operations                   |                                   |                          | 22.6  |                              |      |      | 19.1  |     
|Other income, net                        |                                   |                          | 3.3   |                              |      |      | 3.3   |     
|                                         |                                   |                          |       |                              |      |      |       |     
|Income before provision for
income taxes |                                   |                          | 25.8  |                              |      |      | 22.5  |     
|Provision for income taxes               |                                   |                          | 9.8   |                              |      |      | 8.5   |     
|                                         |                                   |                          |       |                              |      |      |       |     
|Net income                               |                                   |                          | 16.0  | %                            |      |      | 13.9  | %   
|                                         |                                   |                          |       |                              |      |      |       |     

Revenues.Total revenues increased 26.7% to $37.0 million for the three
months ended March 31, 2002, from $29.2 million for the three months ended
March 31, 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.

Cost of services.Cost of services increased 20.2% to $13.5 million for
the three months ended March 31, 2002, from $11.2 million for the three months
ended March 31, 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 to 36.5% for
the three months ended March 31, 2002, from 38.5% from March 31, 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 profit margin for
the three months ended March 31, 2002, may not be indicative of future results.

Member relations and marketing.Member relations and marketing costs
increased 40.3% to $9.1 million for the three months ended March 31, 2002 from
$6.5 million for the three months ended March 31, 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 has increased to 24.6% for the three months ended
March 31, 2002, from 22.2% for the three months ended March 31, 2001 with the
addition of additional member relations and marketing resources to serve the
expanding membership base.

General and administrative.General and administrative expenses increased
8.8% to $4.2 million for the three months ended March 31, 2002, from $3.9
million for the three months ended March 31, 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, new business development and facilities management to support our growth.

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These increases were offset by a decrease in consulting and training
expenses associated with prior year investments in management information
software and a decrease in costs associated with our reduced use of external
personnel search firms. Although general and administrative expenses increased
during the period since 2001, general and administrative expenses decreased as
a percentage of revenue in 2002 due to the fixed nature of a portion of these
costs, which are not significantly affected by growth in revenues.

Depreciation.Depreciation expense increased 30.7% to $1.2 million for the
three months ended March 31, 2002, from $921,000 for the three months ended
March 31, 2001. The increase in depreciation expense was principally due to the
additional investment in leasehold 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 $623,000 and $1.0 million
in compensation expense during the three months ended March 31, 2002 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 non-qualified common stock options, primarily in conjunction with
the sale of our common stock in the registered public offerings in March 2002
and March and April 2001.

In addition, we recognized $93,000 for the three months ended March 31,
2001 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.

Other income, net.Other income, net consists primarily of interest income
earned on a portfolio of cash equivalents and marketable securities. Other
income, net increased 24.4% to $1.2 million for the three months ended March
31, 2001, from $978,000 for the three months ended March 31, 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
$3.6 million and $2.5 million for the three months ended March 31, 2002 and
2001, respectively. Although our effective income tax rate has remained at 38.0% for each of the three months ended March 31, 2002
and 2001, our provision for income taxes increased due to the continued growth in income before provision for income taxes.

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 $20.9
million and $15.5 million for the three months ended March 31, 2002 and 2001,
respectively. For the three months ended March 31, 2002 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 collection of membership fees receivable, partially offset by the
decrease in deferred revenues. As of March 31, 2002, we had cash, cash
equivalents and marketable securities of $162.5 million. 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 $2.2 million and $17.6 million during the three months ended
March 31, 2002 and 2001, respectively. During the three months ended March 31,
2002 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.

Cash flows from financing activities.We generated net cash flows from
financing activities of $11.5 million and $12.4 million during the three months
ended March 31, 2002 and 2001, respectively. Net cash provided by financing
activities during the three months ended March 31, 2002 and 2001, was primarily
attributed to the receipt of cash from the exercise of common stock options in
conjunction with the sale of 2,100,000 and 3,035,000 shares of our common stock
in March 2002 and March and April 2001, respectively.

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At March 31, 2002 and December 31, 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.

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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. Treasury obligations with maturities of less than three months. Marketable
securities consist primarily of U.S. 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.

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|         |  |                                                                                                                                                                                                                                                                        
|-------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|PART II. |  | OTHER INFORMATION                                                                                                                                                                                                                                                      
|        
|ITEM 1.  |  | Legal Proceedings.
We are not currently a party to any material legal proceedings.                                                                                                                                                                                     
|        
|ITEM 2.  |  | Change in Securities.
Not applicable.                                                                                                                                                                                                                                  
|        
|ITEM 3.  |  | Defaults Upon Senior Securities and Use of Proceeds.
Not applicable.                                                                                                                                                                                                   
|        
|ITEM 4.  |  | Submission of Matters to a Vote of Security Holders.
Not applicable.                                                                                                                                                                                                   
|        
|ITEM 5.  |  | Other Information.
Not applicable.                                                                                                                                                                                                                                     
|        
|ITEM 6.  |  | Exhibits and Reports on Form 8-K.                                                                                                                                                                                                                                      
|        
|         |  | (a) Exhibits: None.                                                                                                                                                                                                                                                    
|        
|         |  | (b) Reports on Form 8-K: On February 28, 2002, we filed a Current
Report on Form 8-K which included an underwriting agreement,
dated February 27, 2002, among The Corporate Executive Board
Company, Deutsche Banc Alex Brown Inc. and the stockholders
listed therein.

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SIGNATURES

Pursuant to the requirements 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.

The Corporate Executive Board Company

By: /s/ Clay M. Whitson

Clay M. Whitson
Chief Financial Officer

Date: May 13, 2002

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