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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 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, NWSuite 6000Washington, D.C.
    
    20006(Address of principal executive offices)
    
    (Zip Code)
 (202) 777-5000
 Not applicable.
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
 o þ




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THE CORPORATE EXECUTIVE BOARD COMPANY
INDEX TO FORM 10-Q
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements.Condensed Consolidated Balance Sheets as of March 31, 2006 and December 31, 2005.
    
    
    3Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2006 and 2005.
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2006 and 2005.
    
    
    5Notes to Condensed Consolidated Financial Statements.
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk.
    
    
    15Item 4. Controls and Procedures.
    
    
    16PART II. OTHER INFORMATIONItem 1. Legal Proceedings.
    
    
    16Item 1A. Risk Factors.
    
    
    16Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    17Item 3. Defaults Upon Senior Securities.
    
    
    17Item 4. Submission of Matters to a Vote of Security Holders.
    
    
    17Item 5. Other Information.
    
    
    17Item 6. Exhibits.
    
    
    17
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
 THE CORPORATE EXECUTIVE BOARD COMPANY
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
 March 31,
    
    
    December 31,2006
    
    
    2005(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    238,634
    
    
    $
    424,276Marketable securities
    
    
    106,595
    
    
    
    2,264Membership fees receivable, net
    
    
    74,177
    
    
    
    120,242Deferred income taxes, net
    
    
    47,585
    
    
    
    11,880Deferred incentive compensation
    
    
    10,817
    
    
    
    11,489Prepaid expenses and other current assets
    
    
    11,803
    
    
    
    8,944Total current assets
    
    
    489,611
    
    
    
    579,095Deferred income taxes, net
    
    
    3,105
    
    
    
    2,958Marketable securities
    
    
    207,263
    
    
    
    118,096Goodwill and other intangibles
    
    
    8,281
    
    
    
    8,445Property and equipment, net
    
    
    21,559
    
    
    
    18,401Total assets
    
    $
    729,819
    
    
    $
    726,995Liabilities and stockholders equityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    33,245
    
    
    $
    43,667Accrued incentive compensation
    
    
    15,923
    
    
    
    27,045Deferred revenues
    
    
    266,910
    
    
    
    261,300Total current liabilities
    
    
    316,078
    
    
    
    332,012Other liabilities
    
    
    8,626
    
    
    
    9,569Total liabilities
    
    
    324,704
    
    
    
    341,581Stockholders equity:Common stock, par value $0.01; 100,000,000
shares authorized and 42,336,527 and 41,399,533
shares issued, and 40,014,134 and 39,482,727
shares outstanding as of March 31, 2006 and
December 31, 2005, respectively
    
    
    423
    
    
    
    414Additional paid-in capital
    
    
    331,454
    
    
    
    277,028Retained earnings
    
    
    220,160
    
    
    
    214,892Accumulated elements of other comprehensive loss
    
    
    (1,166
    )
    
    
    (124
    )Treasury stock, 2,322,393 and 1,916,806 shares,
at cost, at March 31, 2006 and December 31,
2005, respectively
    
    
    (145,756
    )
    
    
    (106,796
    )Total stockholders equity
    
    
    405,115
    
    
    
    385,414Total liabilities and stockholders equity
    
    $
    729,819
    
    
    $
    726,995
  3




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THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
 Three months endedMarch 31,2006
    
    
    2005Revenues
    
    $
    105,069
    
    
    $
    81,608Cost of services(1)
    
    
    37,460
    
    
    
    26,394Gross profit
    
    
    67,609
    
    
    
    55,214Costs and expenses:Member relations and marketing(1)
    
    
    28,850
    
    
    
    21,613General and administrative(1)
    
    
    15,027
    
    
    
    9,394Depreciation and amortization
    
    
    1,997
    
    
    
    1,449Total costs and expenses
    
    
    45,874
    
    
    
    32,456Income from operations
    
    
    21,735
    
    
    
    22,758Other income, net
    
    
    6,100
    
    
    
    3,019Income before provision for income taxes
    
    
    27,835
    
    
    
    25,777Provision for income taxes
    
    
    10,716
    
    
    
    8,635Net income
    
    $
    17,119
    
    
    $
    17,142Earnings per share:Basic
    
    $
    0.43
    
    
    $
    0. 44Diluted
    
    $
    0.42
    
    
    $
    0.42Dividends per share
    
    $
    0.30
    
    
    $
    0.10Weighted average shares used in the calculation of earnings per share:Basic
    
    
    39,579
    
    
    
    39,021Diluted
    
    
    41,065
    
    
    
    40,577
 
  Cost of services
    
    $
    3,086
    
    
    $
    Member relations and marketing
    
    
    1,507
    
    
    
    General and administrative
    
    
    1,942
    
    
    
    
  4




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THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three months endedMarch 31,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    17,119
    
    
    $
    17,142Adjustments to reconcile net income to net cash flows provided by operating activities:Depreciation and amortization
    
    
    2,023
    
    
    
    1,449Deferred income taxes
    
    
    (2,081
    )
    
    
    8,635Share-based compensation
    
    
    6,535
    
    
    
    Amortization of marketable securities premiums, net
    
    
    (216
    )
    
    
    635Changes in operating assets and liabilities:Membership fees receivable, net
    
    
    46,065
    
    
    
    34,753Deferred incentive compensation
    
    
    672
    
    
    
    896Prepaid expenses and other current assets
    
    
    1,105
    
    
    
    (615
    )Accounts payable and accrued liabilities
    
    
    (14,562
    )
    
    
    (2,367
    )Accrued incentive compensation
    
    
    (11,131
    )
    
    
    (5,817
    )Deferred revenues
    
    
    5,610
    
    
    
    (862
    )Other liabilities
    
    
    (943
    )
    
    
    506Net cash flows provided by operating activities
    
    
    50,196
    
    
    
    54,355Cash flows from investing activities:Purchases of property and equipment, net
    
    
    (4,945
    )
    
    
    (1,160
    )(Purchases) sales and maturities of marketable securities, net
    
    
    (194,920
    )
    
    
    21,559Net cash flows (used in) provided by investing activities
    
    
    (199,865
    )
    
    
    20,399Cash flows from financing activities:Proceeds from the exercise of common stock options
    
    
    1,555
    
    
    
    44,676Proceeds from the issuance of common stock under the employee stock purchase plan
    
    
    416
    
    
    
    334Excess tax benefits from share-based compensation arrangements
    
    
    12,797
    
    
    
    Purchase of treasury shares
    
    
    (38,960
    )
    
    
    (16,218
    )Payment of dividends
    
    
    (11,851
    )
    
    
    (3,873
    )Reimbursement of common stock offering costs
    
    
    70
    
    
    
    35Payment of common stock offering costs
    
    
    
    
    
    
    (2
    )Net cash flows (used in) provided by financing activities
    
    
    (35,973
    )
    
    
    24,952Net (decrease) increase in cash and cash equivalents
    
    
    (185,642
    )
    
    
    99,706Cash and cash equivalents, beginning of period
    
    
    424,276
    
    
    
    113,996Cash and cash equivalents, end of period
    
    $
    238,634
    
    
    $
    213,702
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THE CORPORATE EXECUTIVE BOARD COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Description of operations
  Note 2. Condensed consolidated financial statements
   Note 3. Share-based compensation
    6




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Impact of adoption of FAS 123(R)
    Pro-forma information for periods prior to the adoption of FAS 123(R)
   Three MonthsEnded March31, 2005(In thousands,except pershare amounts)Net income, as reported
    
    $
    17,142Deduct: Total share-based compensation expense determined
under fair value based methods for all awards, net of
related tax effects
    
    
    3,460Pro-forma net income
    
    $
    13,682Earnings per share:Basic  as reported
    
    $
    0.44Basic  pro-forma
    
    $
    0.35Diluted  as reported
    
    $
    0.42Diluted  pro-forma
    
    $
    0.34
  Equity incentive plans
  7




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Valuation assumptions
   Three Months EndedMarch 31,2006
    
    2005Risk-free interest rate
    
    
    4.8
    %
    
    
    4.3
    %Dividend yield
    
    
    1.3
    %
    
    
    0.6
    %Expected life of option (in years)
    
    
    4.5
    
    
    
    4.4Expected volatility
    
    
    30
    %
    
    
    30
    %Weighted-average fair value of share-based compensation awards granted
    
    $
    26.13
    
    
    $
    19.49
  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
    
    
    (13,248
    )
    
    
    33.37Options exercised
    
    
    (2,126,964
    )
    
    
    36.60Options outstanding, March 31, 2006
    
    
    3,130,971
    
    
    $
    50.66
    
    
    
    5.88
    
    
    $
    157.3Options exercisable, March 31, 2006
    
    
    842,097
    
    
    $
    43.47
    
    
    
    5.89
    
    
    $
    48.4
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Employee stock purchase plan
  Note 4. Sales of common stock
   9




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Note 5. Earnings per share
  Three monthsended March 31,2006
    
    
    2005Basic weighted average common shares outstanding
    
    
    39,579
    
    
    
    39,021Dilutive common shares outstanding
    
    
    1,486
    
    
    
    1,556Diluted weighted average common shares outstanding
    
    
    41,065
    
    
    
    40,577
 Note 6. Comprehensive income (loss)
  Note 7. Supplemental cash flow disclosures
  Note 8. Stockholders equity
  10




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Note 9. Income taxes
  Note 10. Deferred Compensation Plan
  Note 11. Subsequent events
  Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  11




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Business Overview
       Critical Accounting Policies
  Share- based compensation
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.
   Results of Operations
  Three monthsended March 31,2006
    
    
    2005Revenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of services
    
    
    35.7
    
    
    
    32.3Gross profit
    
    
    64.3
    
    
    
    67.7Costs and expenses:Member relations and marketing
    
    
    27.5
    
    
    
    26.5General and administrative
    
    
    14.3
    
    
    
    11.5Depreciation and amortization
    
    
    1.9
    
    
    
    1.8Total costs and expenses
    
    
    43.7
    
    
    
    39.8Income from operations
    
    
    20.7
    
    
    
    27.9Other income, net
    
    
    5.8
    
    
    
    3.7Income before provision for income taxes
    
    
    26.5
    
    
    
    31.6Provision for income taxes
    
    
    10.2
    
    
    
    10.6Net income
    
    
    16.3
    %
    
    
    21.0
    %
 Three Months Ended March 31, 2006 and 2005
 Revenues.
 Cost of services.
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Gross profit.
 Member relations and marketing.
 General and administrative.
 Depreciation and amortization.
 Other income, net.
 Provision for income taxes.
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Liquidity and Capital Resources
  Cash flows from operating activities.
 Cash flows from investing activities.
 Cash flows from financing activities.
   Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  15




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Item 4. Controls and Procedures.
  PART II. OTHER INFORMATION
 Item 1. Legal Proceedings.
  Item 1A. Risk Factors.
  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.
 Share-Based Payment.
  16




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 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 PlansJanuary 1, 2006 to January 31, 2006
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    218,203,250February 1, 2006 to February 28, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    218,203,250March 1, 2006 to March 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    179,243,004
    *Total
    
    
    
    
    
    $
    
    
    
    
    
 
 *
    
    Refer to Note 4. Sales of common stock for discussion of the stock repurchased by the
Company in conjunction with the sale of common stock by employees and directors of the Company
during the three months ended March 31, 2006. The dollar value of the shares repurchased by the
Company during the three months ended March 31, 2006, in conjunction with the exercise of Company
common stock options and the subsequent sale of the common stock, will count against the existing
authorized share repurchase amount.  Item 3. Defaults Upon Senior Securities.
  Item 4. Submission of Matters to a Vote of Security Holders.
  Item 5. Other Information.
  Item 6. Exhibits.
  Exhibit No.
    
    Description10.1
    
    Standard Terms and Conditions for Restricted Stock Units under the 2004 Stock Incentive Plan and form of Term Sheet for Restricted Stock Units.10.2
    
    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.10.3
    
    The Corporate Executive Board
Deferred Compensation Plan, as amended.31.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a  14(a) of the Securities Exchange Act of 1934, as amended.31.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a  14(a) of the Securities Exchange Act of 1934, as amended.32.1
    
    Certifications pursuant to 18 U.S.C. Section 1350.
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SIGNATURES
  The Corporate Executive Board Company(Registrant)Date:
May 10, 2006By:

    /s/ Timothy R. YostTimothy R. YostChief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
 18