##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2007
 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
  þ o o
 o þ




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THE CORPORATE EXECUTIVE BOARD COMPANY
 INDEX TO FORM 10-Q
 PART
I. FINANCIAL INFORMATIONItem 1.
Financial StatementsCondensed
Consolidated Balance Sheets at September 30, 2007 and
December 31, 2006
    
    
    3Condensed
Consolidated Statements of Income for the Three and Nine Months Ended
September 30, 2007 and 2006
    
    
    4Condensed
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2007 and 2006
    
    
    5Notes
to Condensed Consolidated Financial Statements
    
    
    6Item 2.
Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    10Item 3.
Quantitative and Qualitative Disclosures about Market Risk
    
    
    15Item 4.
Controls and Procedures
    
    
    15PART
II. OTHER INFORMATIONItem 1.
Legal Proceedings
    
    
    15Item 1A.
Risk Factors
    
    
    16Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16Item 3.
Defaults Upon Senior Securities
    
    
    16Item 4.
Submission of Matters to a Vote of Security Holders
    
    
    16Item 5.
Other Information
    
    
    16Item 6.
Exhibits
    
    
    16
  2




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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)
 September 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    73,906
    
    
    $
    171,367Marketable securities
    
    
    20,799
    
    
    
    119,534Membership fees receivable, net
    
    
    84,489
    
    
    
    153,107Deferred income taxes, net
    
    
    15,693
    
    
    
    15,109Deferred incentive compensation
    
    
    11,060
    
    
    
    13,160Prepaid expenses and other current assets
    
    
    9,147
    
    
    
    9,881Total current assets
    
    
    215,094
    
    
    
    482,158Deferred income taxes, net
    
    
    15,232
    
    
    
    12,896Marketable securities
    
    
    78,112
    
    
    
    196,386Property and equipment, net
    
    
    72,999
    
    
    
    26,988Goodwill
    
    
    42,246
    
    
    
    6,364Other intangible assets
    
    
    20,566
    
    
    
    1,462Other non-current assets
    
    
    18,978
    
    
    
    9,801Total assets
    
    $
    463,227
    
    
    $
    736,055Liabilities and stockholders equityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    50,991
    
    
    $
    66,773Accrued incentive compensation
    
    
    22,833
    
    
    
    25,062Deferred revenues
    
    
    252,315
    
    
    
    308,671Total current liabilities
    
    
    326,139
    
    
    
    400,506Other liabilities
    
    
    51,284
    
    
    
    17,684Total liabilities
    
    
    377,423
    
    
    
    418,190Stockholders equity:Common stock, par value $0.01; 100,000,000 shares
authorized, 43,109,481 and 42,805,325 shares issued, and
35,459,189 and 38,947,908 shares outstanding at
September 30, 2007 and December 31, 2006, respectively
    
    
    431
    
    
    
    428Additional paid-in capital
    
    
    376,821
    
    
    
    353,990Retained earnings
    
    
    260,919
    
    
    
    246,668Accumulated elements of other comprehensive income (loss)
    
    
    1,176
    
    
    
    (440
    )Treasury stock, at cost, 7,650,292 and 3,857,417 shares
at September 30, 2007 and December 31, 2006,
respectively
    
    
    (553,543
    )
    
    
    (282,781
    )Total stockholders equity
    
    
    85,804
    
    
    
    317,865Total liabilities and stockholders equity
    
    $
    463,227
    
    
    $
    736,055
  3




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THE CORPORATE EXECUTIVE BOARD COMPANY
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
 (Unaudited)
 Three months ended September 30,
    
    
    Nine months ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    136,288
    
    
    $
    118,390
    
    
    $
    390,510
    
    
    $
    335,121Cost of services
    
    
    45,600
    
    
    
    42,757
    
    
    
    137,540
    
    
    
    119,276Gross profit
    
    
    90,688
    
    
    
    75,633
    
    
    
    252,970
    
    
    
    215,845Costs and expenses:Member relations and marketing
    
    
    38,063
    
    
    
    30,455
    
    
    
    109,791
    
    
    
    91,230General and administrative
    
    
    16,898
    
    
    
    14,818
    
    
    
    52,923
    
    
    
    45,343Depreciation and amortization
    
    
    4,176
    
    
    
    2,141
    
    
    
    10,247
    
    
    
    6,563Total costs and expenses
    
    
    59,137
    
    
    
    47,414
    
    
    
    172,961
    
    
    
    143,136Income from operations
    
    
    31,551
    
    
    
    28,219
    
    
    
    80,009
    
    
    
    72,709Other income, net
    
    
    3,233
    
    
    
    6,109
    
    
    
    14,437
    
    
    
    18,337Income before provision for income taxes
    
    
    34,784
    
    
    
    34,328
    
    
    
    94,446
    
    
    
    91,046Provision for income taxes
    
    
    13,392
    
    
    
    13,216
    
    
    
    36,361
    
    
    
    35,052Net income
    
    $
    21,392
    
    
    $
    21,112
    
    
    $
    58,085
    
    
    $
    55,994Earnings per share:Basic
    
    $
    0.60
    
    
    $
    0.53
    
    
    $
    1.57
    
    
    $
    1.40Diluted
    
    $
    0.59
    
    
    $
    0.52
    
    
    $
    1.54
    
    
    $
    1.37Dividends per share
    
    $
    0.40
    
    
    $
    0.30
    
    
    $
    1.20
    
    
    $
    0.90Weighted average shares used in the
calculation of earnings per share:Basic
    
    
    35,932
    
    
    
    39,759
    
    
    
    37,106
    
    
    
    39,937Diluted
    
    
    36,346
    
    
    
    40,481
    
    
    
    37,626
    
    
    
    41,007
  4




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THE CORPORATE EXECUTIVE BOARD COMPANY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Nine months endedSeptember 30,2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    58,085
    
    
    $
    55,994Adjustments to reconcile net income to net cash flows provided by operating activities:Depreciation and amortization
    
    
    10,247
    
    
    
    6,530Deferred income taxes, net
    
    
    (2,759
    )
    
    
    34,328Share-based compensation
    
    
    18,103
    
    
    
    18,997Excess tax benefits from share-based compensation arrangements
    
    
    (2,409
    )
    
    
    (29,031
    )Amortization of marketable securities discounts, net
    
    
    (633
    )
    
    
    (1,658
    )Changes in operating assets and liabilities:Membership fees receivable, net
    
    
    70,159
    
    
    
    46,423Deferred incentive compensation
    
    
    2,100
    
    
    
    1,589Prepaid expenses and other current assets
    
    
    734
    
    
    
    (1,502
    )Other non-current assets
    
    
    (5,291
    )
    
    
    (7,061
    )Accounts payable and accrued liabilities
    
    
    (20,244
    )
    
    
    (8,891
    )Accrued incentive compensation
    
    
    (2,229
    )
    
    
    (6,684
    )Deferred revenues
    
    
    (56,356
    )
    
    
    (37,430
    )Other liabilities
    
    
    2,400
    
    
    
    5,694Net cash flows provided by operating activities
    
    
    71,907
    
    
    
    77,298Cash flows from investing activities:Purchases of property and equipment, net
    
    
    (16,482
    )
    
    
    (13,487
    )Cost method investment
    
    
    (3,829
    )
    
    
    Acquisition of business, net of cash acquired
    
    
    (58,288
    )
    
    
    Sales and maturities (purchases) of marketable securities, net
    
    
    219,098
    
    
    
    (194,537
    )Net cash flows provided by (used in) investing activities
    
    
    140,499
    
    
    
    (208,024
    )Cash flows from financing activities:Proceeds from the exercise of common stock options
    
    
    691
    
    
    
    2,890Proceeds from the issuance of common stock under the employee stock purchase plan
    
    
    1,630
    
    
    
    1,461Excess tax benefits from share-based compensation arrangements
    
    
    2,409
    
    
    
    29,031Purchase of treasury shares
    
    
    (270,764
    )
    
    
    (166,807
    )Payment of dividends
    
    
    (43,833
    )
    
    
    (35,680
    )Reimbursement of common stock offering costs
    
    
    
    
    
    
    70Payment of common stock offering costs
    
    
    
    
    
    
    (70
    )Net cash flows used in financing activities
    
    
    (309,867
    )
    
    
    (169,105
    )Net decrease in cash and cash equivalents
    
    
    (97,461
    )
    
    
    (299,831
    )Cash and cash equivalents, beginning of period
    
    
    171,367
    
    
    
    424,276Cash and cash equivalents, end of period
    
    $
    73,906
    
    
    $
    124,445
  5




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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. Recent accounting pronouncements
    6




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Note 4. Acquisition
   Net working capital
    
    $
    1,547Property and equipment
    
    
    600Intangible assets
    
    
    20,294Goodwill
    
    
    35,847Allocated purchase price
    
    $
    58,288
  Note 5. Other liabilities
  September 30,
    
    
    December 31,2007
    
    
    2006Deferred compensation
    
    $
    9,867
    
    
    $
    7,882Lease incentives
    
    
    31,200
    
    
    
    Deferred rent benefit  long term
    
    
    5,007
    
    
    
    4,592Accrued lease restructuring charges
    
    
    5,210
    
    
    
    5,210Total other
liabilities
    
    $
    51,284
    
    
    $
    17,684
 Note 6. Stockholders equity
 Share-based compensation
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Cost of services
    
    $
    2,760
    
    
    $
    2,812
    
    
    $
    8,624
    
    
    $
    9,140Member relations and marketing
    
    
    1,248
    
    
    
    1,365
    
    
    
    3,772
    
    
    
    4,298General and administrative
    
    
    1,997
    
    
    
    1,721
    
    
    
    5,707
    
    
    
    5,5596,005
    
    
    
    5,898
    
    
    
    18,103
    
    
    
    18,997Income tax benefit
    
    
    (2,312
    )
    
    
    (2,271
    )
    
    
    (6,970
    )
    
    
    (7,314
    )Total share-based compensation, net of tax benefit
    
    $
    3,693
    
    
    $
    3,627
    
    
    $
    11,133
    
    
    $
    11,683
  7




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Share Repurchases
  Dividends
  Note 7. Income taxes
   Note 8. Sale of common stock
  8




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Note 9. Earnings per share
  Three months ended September 30,
    
    
    Nine months ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Basic weighted average common
shares outstanding
    
    
    35,932
    
    
    
    39,759
    
    
    
    37,106
    
    
    
    39,937Dilutive common shares outstanding
    
    
    414
    
    
    
    722
    
    
    
    520
    
    
    
    1,070Diluted weighted average common
shares outstanding
    
    
    36,346
    
    
    
    40,481
    
    
    
    37,626
    
    
    
    41,007
 Note 10. Comprehensive income
  Note 11. Commitments and contingencies
  9




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Note 12. Subsequent events
 Dividends
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Business Overview
   10




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Critical Accounting Policies
  11




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Results of Operations
  Three months ended September 30,
    
    
    Nine months ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of services
    
    
    33.5
    
    
    
    36.1
    
    
    
    35.2
    
    
    
    35.6Gross profit
    
    
    66.5
    
    
    
    63.9
    
    
    
    64.8
    
    
    
    64.4Costs and expenses:Member relations and marketing
    
    
    27.9
    
    
    
    25.7
    
    
    
    28.1
    
    
    
    27.2General and administrative
    
    
    12.4
    
    
    
    12.5
    
    
    
    13.6
    
    
    
    13.5Depreciation and amortization
    
    
    3.1
    
    
    
    1.8
    
    
    
    2.6
    
    
    
    2.0Total costs and expenses
    
    
    43.4
    
    
    
    40.0
    
    
    
    44.3
    
    
    
    42.7Income from operations
    
    
    23.2
    
    
    
    23.8
    
    
    
    20.5
    
    
    
    21.7Other income, net
    
    
    2.4
    
    
    
    5.2
    
    
    
    3.7
    
    
    
    5.5Income before provision for income taxes
    
    
    25.5
    
    
    
    29.0
    
    
    
    24.2
    
    
    
    27.2Provision for income taxes
    
    
    9.8
    
    
    
    11.2
    
    
    
    9.3
    
    
    
    10.5Net income
    
    
    15.7
    %
    
    
    17.8
    %
    
    
    14.9
    %
    
    
    16.7
    %
 Three and Nine Months Ended September 30, 2007 and 2006
 Revenues
 Cost of services
 Gross profit
 12




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Member relations and marketing
 General and administrative
 Depreciation and amortization.
 Other income, net.
 Provision for income taxes.
 Liquidity and Capital Resources
  13




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Cash flows from operating activities.
 Cash flows from investing activities.
 Cash flows from financing activities.
  Contractual obligations
  14




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Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Interest rate risk
  Foreign currency exchange rate risk
  
 Item 4. Controls and Procedures.
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  15




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Item 1A. Risk Factors.
  
 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 PlansJuly 1, 2007 to July 31, 2007(1)
    
    
    2,310
    
    
    $
    68.09
    
    
    
    2,310
    
    
    $
    149,052,332August 1, 2007 to August 31, 2007(1)
    
    
    398,617
    
    
    $
    68.37
    
    
    
    398,617
    
    
    $
    121,797,367September 1, 2007 to September 30, 2007(1)
    
    
    372,637
    
    
    $
    68.00
    
    
    
    372,637
    
    
    $
    96,456,675Total
    
    
    773,564
    
    
    $
    68.19
    
    
    
    773,564
 
 (1)
    
    Amounts include the effect of employees using common stock received from the exercise of
share-based awards to satisfy the statutory minimum federal and state withholding requirements
generated from the exercise of such awards. In effect, the Company repurchased, at fair market
value, a portion of the common stock received by employees upon exercise of their awards. The
Company repurchased approximately 18,564 shares for $1.3 million under these arrangements
during the quarter.  
 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.
    
    Description31.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a  14(a) of the
Securities Exchange Act of 1934, as amended31.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a  14(a) of the
Securities Exchange Act of 1934, as amended32.1
    
    Certifications pursuant to 18 U.S.C. Section 1350
 16




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SIGNATURES
  THE CORPORATE EXECUTIVE BOARD COMPANY(Registrant)Date: November 9, 2007
    By:
    /s/ Timothy R. YostTimothy R. YostChief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer) 17




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Exhibit Index
 Exhibit No.
    
    Description31.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a  14(a) of the
Securities Exchange Act of 1934, as amended31.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a  14(a) of the
Securities Exchange Act of 1934, as amended32.1
    
    Certifications pursuant to 18 U.S.C. Section 1350
 18