##### 



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 June 30, 2005 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, NW
    
    20006Suite 6000
    
    (Zip Code)Washington, D.C.(Address of principal executive offices)
 
 
  þ o
  þ o




---



##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
INDEX TO FORM 10-Q
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements.Condensed Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004.
    
    
    3Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2005 and 2004.
    
    
    4Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004.
    
    
    5Notes to Condensed Consolidated Financial Statements.
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    9Item 3. Quantitative and Qualitative Disclosures About Market Risk.
    
    
    13Item 4. Controls and Procedures.
    
    
    13PART II. OTHER INFORMATIONItem 1. Legal Proceedings.
    
    
    14Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    14Item 3. Defaults Upon Senior Securities.
    
    
    14Item 4. Submission of Matters to a Vote of Security Holders.
    
    
    14Item 5. Other Information.
    
    
    14Item 6. Exhibits.
    
    
    14




---



##### 



PART I. FINANCIAL INFORMATION
 Item 1. Financial Statements.
 THE CORPORATE EXECUTIVE BOARD COMPANY
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
 June 30, 2005
    
    December 31, 2004(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    287,251
    
    
    $
    113,996Marketable securities
    
    
    18,260
    
    
    
    50,292Membership fees receivable, net
    
    
    56,664
    
    
    
    97,106Deferred income taxes, net
    
    
    24,133
    
    
    
    26,121Deferred incentive compensation
    
    
    8,317
    
    
    
    9,277Prepaid expenses and other current assets
    
    
    8,581
    
    
    
    8,107Total current assets
    
    
    403,206
    
    
    
    304,899Deferred income taxes, net
    
    
    3,912
    
    
    
    3,466Marketable securities
    
    
    204,275
    
    
    
    252,689Property and equipment, net
    
    
    16,741
    
    
    
    17,397Total assets
    
    $
    628,134
    
    
    $
    578,451Liabilities and stockholders equityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    20,452
    
    
    $
    17,450Accrued incentive compensation
    
    
    17,204
    
    
    
    18,213Deferred revenues
    
    
    193,635
    
    
    
    205,494Total current liabilities
    
    
    231,291
    
    
    
    241,157Other liabilities
    
    
    10,589
    
    
    
    9,833Total liabilities
    
    
    241,880
    
    
    
    250,990Stockholders equity:Common stock, par value $0.01; 100,000,000 shares
authorized and 41,380,982 and 39,991,749 shares
issued, and 39,891,317 and 38,930,648 shares
outstanding as of June 30, 2005 and December 31,
2004, respectively
    
    
    413
    
    
    
    399Additional paid-in capital
    
    
    276,015
    
    
    
    214,987Retained earnings
    
    
    181,945
    
    
    
    155,619Accumulated elements of comprehensive income (loss)
    
    
    722
    
    
    
    1,763Treasury stock, 1,489,665 and 1,061,101 shares,
at cost, at June 30, 2005 and December 31, 2004,
respectively
    
    
    (72,841
    )
    
    
    (45,307
    )Total stockholders equity
    
    
    386,254
    
    
    
    327,461Total liabilities and stockholders equity
    
    $
    628,134
    
    
    $
    578,451
  3




---



##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
 Three months ended June 30,
    
    Six months ended June 30,2005
    
    2004
    
    2005
    
    2004Revenues
    
    $
    87,351
    
    
    $
    67,198
    
    
    $
    168,959
    
    
    $
    131,177Cost of services
    
    
    30,088
    
    
    
    22,232
    
    
    
    56,145
    
    
    
    43,632Gross profit
    
    
    57,263
    
    
    
    44,966
    
    
    
    112,814
    
    
    
    87,545Costs and expenses:Member relations and marketing
    
    
    23,478
    
    
    
    18,563
    
    
    
    44,962
    
    
    
    36,444General and administrative
    
    
    9,385
    
    
    
    7,739
    
    
    
    18,734
    
    
    
    14,977Depreciation
    
    
    1,921
    
    
    
    1,592
    
    
    
    3,370
    
    
    
    3,340Stock option and related expenses (1)
    
    
    
    
    
    
    408
    
    
    
    511
    
    
    
    408Total costs and expenses
    
    
    34,784
    
    
    
    28,302
    
    
    
    67,577
    
    
    
    55,169Income from operations
    
    
    22,479
    
    
    
    16,664
    
    
    
    45,237
    
    
    
    32,376Other income, net
    
    
    3,154
    
    
    
    2,341
    
    
    
    6,173
    
    
    
    4,509Income before provision for income taxes
    
    
    25,633
    
    
    
    19,005
    
    
    
    51,410
    
    
    
    36,885Provision for income taxes
    
    
    8,587
    
    
    
    6,272
    
    
    
    17,222
    
    
    
    12,172Net income
    
    $
    17,046
    
    
    $
    12,733
    
    
    $
    34,188
    
    
    $
    24,713Earnings per share:Basic
    
    $
    0.43
    
    
    $
    0.33
    
    
    $
    0.87
    
    
    $
    0.66Diluted
    
    $
    0.41
    
    
    $
    0.32
    
    
    $
    0.84
    
    
    $
    0.63Dividends per share
    
    $
    0.10
    
    
    $
    0.075
    
    
    $
    0.20
    
    
    $
    0.15Weighted average shares used in the calculation of
earnings per share:Basic
    
    
    39,926
    
    
    
    38,151
    
    
    
    39,475
    
    
    
    37,697Diluted
    
    
    41,194
    
    
    
    39,684
    
    
    
    40,886
    
    
    
    39,301(1) Composition of Stock option and related expenses:Cost of services
    
    $
    
    
    
    $
    184
    
    
    $
    337
    
    
    $
    184Member relations and marketing
    
    
    
    
    
    
    100
    
    
    
    129
    
    
    
    100General and administrative
    
    
    
    
    
    
    124
    
    
    
    45
    
    
    
    124Total
    
    $
    
    
    
    $
    408
    
    
    $
    511
    
    
    $
    408
  4




---



##### 



THE CORPORATE EXECUTIVE BOARD COMPANY
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six months endedJune 30,2005
    
    2004Cash flows from operating activities:Net income
    
    $
    34,188
    
    
    $
    24,713Adjustments to reconcile net income to net cash flows provided
by operating activities:Depreciation
    
    
    3,370
    
    
    
    3,340Deferred income taxes
    
    
    17,222
    
    
    
    11,388Amortization of marketable securities premiums, net
    
    
    1,240
    
    
    
    1,460Changes in operating assets and liabilities:Membership fees receivable, net
    
    
    40,442
    
    
    
    19,778Deferred incentive compensation
    
    
    960
    
    
    
    943Prepaid expenses and other current assets
    
    
    (873
    )
    
    
    (2,910
    )Accounts payable and accrued liabilities
    
    
    3,004
    
    
    
    2,996Accrued incentive compensation
    
    
    (976
    )
    
    
    (1,724
    )Deferred revenues
    
    
    (11,859
    )
    
    
    (4,186
    )Other liabilities
    
    
    756
    
    
    
    4Net cash flows provided by operating activities
    
    
    87,474
    
    
    
    55,802Cash flows from investing activities:Purchases of property and equipment, net
    
    
    (3,024
    )
    
    
    (6,007
    )Maturities and sales (purchases) of marketable securities, net
    
    
    78,608
    
    
    
    (40,184
    )Net cash flows provided by (used in) investing activities
    
    
    75,584
    
    
    
    (46,191
    )Cash flows from financing activities:Proceeds from the exercise of common stock options
    
    
    44,905
    
    
    
    55,175Proceeds from the issuance of common stock under the employee
stock purchase plan
    
    
    655
    
    
    
    418Purchase of treasury shares
    
    
    (27,534
    )
    
    
    (18,731
    )Payment of dividends
    
    
    (7,862
    )
    
    
    (5,725
    )Reimbursement of common stock offering costs
    
    
    35
    
    
    
    225Payment of common stock offering costs
    
    
    (2
    )
    
    
    (121
    )Net cash flows provided by financing activities
    
    
    10,197
    
    
    
    31,241Net increase in cash and cash equivalents
    
    
    173,255
    
    
    
    40,852Cash and cash equivalents, beginning of period
    
    
    113,996
    
    
    
    118,568Cash and cash equivalents, end of period
    
    $
    287,251
    
    
    $
    159,420
  5




---



##### 



THE
CORPORATE EXECUTIVE BOARD COMPANY
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Description of operations
  Note 2. Condensed consolidated financial statements
   Note 3. New accounting pronouncements
 Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
  Accounting Standards No. 148, Accounting
for Stock-Based Compensation Transition and Disclosure
 6




---



##### 



Note 4. Sales and public offerings of common stock
  Note 5. Earnings per share
  Three months
    
    
    Six monthsended June 30,
    
    
    ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Basic weighted average common shares outstanding
    
    
    39,926
    
    
    
    38,151
    
    
    
    39,475
    
    
    
    37,697Dilutive common shares outstanding
    
    
    1,268
    
    
    
    1,533
    
    
    
    1,411
    
    
    
    1,604Diluted weighted average common shares outstanding
    
    
    41,194
    
    
    
    39,684
    
    
    
    40,886
    
    
    
    39,301
 Note 6. Comprehensive income (loss)
  Note 7. Supplemental cash flows disclosures
  7




---



##### 



Note
8. Stockholders equity
   Note 9. Stock-based compensation
    Three months
    
    
    Six monthsended June 30,
    
    
    ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands, except per share amounts)Net income, as reported
    
    $
    17,046
    
    
    $
    12,733
    
    
    $
    34,188
    
    
    $
    24,713Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects
    
    
    4,536
    
    
    
    2,787
    
    
    
    7,997
    
    
    
    7,693Pro forma net income
    
    $
    12,510
    
    
    $
    9,946
    
    
    $
    26,191
    
    
    $
    17,020Earnings per share:Basic  as reported
    
    $
    0.43
    
    
    $
    0.33
    
    
    $
    0.87
    
    
    $
    0.66Basic  pro forma
    
    $
    0.31
    
    
    $
    0.26
    
    
    $
    0.66
    
    
    $
    0.45Diluted  as reported
    
    $
    0.41
    
    
    $
    0.32
    
    
    $
    0.84
    
    
    $
    0.63Diluted  pro forma
    
    $
    0.31
    
    
    $
    0.25
    
    
    $
    0.64
    
    
    $
    0.44Assumptions:Risk-free interest rate
    
    
    3.7
    %
    
    
    3.9
    %
    
    
    4.3
    %
    
    
    3.5
    %Dividend yield
    
    
    0.6
    %
    
    
    0.5
    %
    
    
    0.6
    %
    
    
    0.6
    %Expected life of option (in years)
    
    
    4.5
    
    
    
    5
    
    
    
    4.4
    
    
    
    5Expected volatility
    
    
    30
    %
    
    
    38
    %
    
    
    30
    %
    
    
    39
    %Weighted-average fair value of options granted
    
    $
    19.70
    
    
    
    
    
    
    $
    19.49
    
    
    $
    17.50
 8




---



##### 



Note 10. Subsequent events
  Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Overview
     9




---



##### 



Results of Operations
  Three months
    
    
    Six monthsended June 30,
    
    
    ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of services
    
    
    34.4
    
    
    
    33.1
    
    
    
    33.2
    
    
    
    33.3Gross profit
    
    
    65.6
    
    
    
    66.9
    
    
    
    66.8
    
    
    
    66.7Costs and expenses:Member relations and marketing
    
    
    26.9
    
    
    
    27.6
    
    
    
    26.6
    
    
    
    27.8General and administrative
    
    
    10.7
    
    
    
    11.5
    
    
    
    11.1
    
    
    
    11.4Depreciation
    
    
    2.2
    
    
    
    2.4
    
    
    
    2.0
    
    
    
    2.5Stock option and related expenses
    
    
    
    
    
    
    0.6
    
    
    
    0.3
    
    
    
    0.3Total costs and expenses
    
    
    39.8
    
    
    
    42.1
    
    
    
    40.0
    
    
    
    42.1Income from operations
    
    
    25.7
    
    
    
    24.8
    
    
    
    26.8
    
    
    
    24.7Other income, net
    
    
    3.6
    
    
    
    3.5
    
    
    
    3.7
    
    
    
    3.4Income before provision for income taxes
    
    
    29.3
    
    
    
    28.3
    
    
    
    30.4
    
    
    
    28.1Provision for income taxes
    
    
    9.8
    
    
    
    9.3
    
    
    
    10.2
    
    
    
    9.3Net income
    
    
    19.5
    %
    
    
    18.9
    %
    
    
    20.2
    %
    
    
    18.8
    %
 Three and Six Months Ended June 30, 2005 and June 30, 2004
 Revenues.
 Cost of services.
 10




---



##### 



Gross profit.
 Member relations and marketing.
 General and administrative.
 Depreciation.
 Stock option and related expenses.
 Other income, net.
 11




---



##### 



Provision for income taxes.
 Liquidity and Capital Resources
 Cash flows from operating activities.
 Cash flows from investing activities.
 Cash flows from financing activities.
   12




---



##### 



Critical Accounting Policies
  Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Item 4. Controls and Procedures.
 
 13




---



##### 



PART II. OTHER INFORMATION
 Item 1. Legal Proceedings.
  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 PlansApril 1, 2005 to April 30, 2005
    
    
    115,000
    
    
    $
    64.45
    
    
    
    115,000
    
    
    $
    106,063,206May 1, 2005 to May 31, 2005
    
    
    57,616
    
    
    $
    67.76
    
    
    
    57,616
    
    
    $
    102,159,112June 1, 2005 to June 30, 2005
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    102,159,112Total
    
    
    172,616
    
    
    $
    65.55
    
    
    
    172,616
  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
    
    The Corporate Executive Board
Deferred Compensation Plan31.1
    
    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.
 14




---



##### 



SIGNATURES
    By:
    
    /s/ Timothy R. YostTimothy R. YostChief Financial Officer(Principal Financial Officer andPrincipal Accounting Officer)
 15