CEB (CEB) 10-Q 2012 Q1 Quarterly report

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 March 31, 2012

or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-34849

THE CORPORATE EXECUTIVE BOARD COMPANY

(Exact name of registrant as specified in its charter)

Delaware	52-2056410
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
1919 North Lynn Street Arlington, Virginia	22209
(Address of principal executive offices)	(Zip Code)

(571) 303-3000

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address or 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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨    (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The Company had 33,510,188 shares of common stock, par value $0.01 per share, outstanding at May 4, 2012.

THE CORPORATE EXECUTIVE BOARD COMPANY

INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Income Condensed Consolidated Statements of Comprehensive Income	4 5
Condensed Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3. Quantitative and Qualitative Disclosures about Market Risk	20
Item 4. Controls and Procedures	20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	20
Item 1A. Risk Factors	20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3. Defaults Upon Senior Securities	21
Item 4. Mine Safety Disclosures	21
Item 5. Other Information	21
Item 6. Exhibits	22
Signatures	23

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

THE CORPORATE EXECUTIVE BOARD COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	March 31, 2012			December 31, 2011
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	208,699		$	133,429
Marketable securities		3,748			3,794
Membership fees receivable, net		95,628			154,255
Deferred income taxes, net		17,255			17,844
Deferred incentive compensation		18,839			17,330
Prepaid expenses and other current assets		14,813			21,624
Total current assets		358,982			348,276
Deferred income taxes, net		17,360			20,490
Marketable securities		6,670			6,722
Property and equipment, net		82,337			80,981
Goodwill		40,287			29,492
Intangible assets, net		21,166			13,581
Other non-current assets		35,613			34,150
Total assets	$	562,415		$	533,692
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued liabilities	$	35,723		$	46,067
Accrued incentive compensation		41,482			37,884
Deferred revenues		308,749			284,935
Total current liabilities		385,954			368,886
Deferred income taxes		1,354			1,436
Other liabilities		85,870			83,806
Total liabilities		473,178			454,128
Stockholders’ equity:
Common stock, par value $0.01; 100,000,000 shares authorized, 44,012,358 and 43,857,020 shares issued, and 33,420,907 and 33,302,495 shares outstanding at March 31, 2012 and December 31, 2011, respectively		440			439
Additional paid-in capital		419,215			418,318
Retained earnings		341,989			332,258
Accumulated elements of other comprehensive income		1,392			778
Treasury stock, at cost, 10,591,451 and 10,554,525 shares at March 31, 2012 and December 31, 2011, respectively		(673,799	)		(672,229	)
Total stockholders’ equity		89,237			79,564
Total liabilities and stockholders’ equity	$	562,415		$	533,692

See accompanying notes to condensed consolidated financial statements.

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THE CORPORATE EXECUTIVE BOARD COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2012		2011
Revenues	$	128,467	$	113,623
Costs and expenses:
Cost of services		43,651		39,786
Member relations and marketing		38,178		34,944
General and administrative		16,464		15,961
Depreciation and amortization		5,029		4,055
Total costs and expenses		103,322		94,746
Income from operations		25,145		18,877
Other income, net		1,410		1,505
Income from continuing operations before provision for income taxes		26,555		20,382
Provision for income taxes		10,994		8,322
Income from continuing operations		15,561		12,060
Loss from discontinued operations, net of provision for income taxes		—		(706	)
Net income	$	15,561	$	11,354
Basic earnings (loss) per share	$	0.47	$	0.33
Continuing operations	$	0.47	$	0.35
Discontinued operations	$	—	$	(0.02	)
Diluted earnings (loss) per share	$	0.46	$	0.33
Continuing operations	$	0.46	$	0.35
Discontinued operations	$	—	$	(0.02	)
Weighted average shares outstanding:
Basic		33,327		34,351
Diluted		33,661		34,746
Dividends per share	$	0.175	$	0.15

See accompanying notes to condensed consolidated financial statements.

4

THE CORPORATE EXECUTIVE BOARD COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2012			2011
Net income	$	15,561		$	11,354
Other comprehensive income (loss):
Currency translation adjustment		260			4
Foreign currency hedge, net of tax		396			25
Change in unrealized gains on available-for-sale marketable securities, net of tax		(42	)		(80	)
Comprehensive income	$	16,175		$	11,303

See accompanying notes to condensed consolidated financial statements.

5

THE CORPORATE EXECUTIVE BOARD COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2012			2011
Cash flows from operating activities:
Net income	$	15,561		$	11,354
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		5,029			4,258
Deferred income taxes		1,326			1,535
Share-based compensation		1,968			2,004
Excess tax benefits from share-based compensation arrangements		(1,311	)		(1,396	)
Foreign currency translation gain		(180	)		(695	)
Amortization of marketable securities premiums, net		29			69
Changes in operating assets and liabilities:
Membership fees receivable, net		60,236			51,934
Deferred incentive compensation		(1,481	)		(1,435	)
Prepaid expenses and other current assets		7,358			(584	)
Other non-current assets		(1,430	)		(1,329	)
Accounts payable and accrued liabilities		(13,016	)		(10,413	)
Accrued incentive compensation		3,470			(2,009	)
Deferred revenues		23,765			30,378
Other liabilities		769			1,317
Net cash flows provided by operating activities		102,093			84,988
Cash flows from investing activities:
Purchases of property and equipment		(1,082	)		(2,602	)
Acquisition of business, net of cash acquired		(20,982	)		—
Cost method investment		—			(150	)
Net cash flows used in investing activities		(22,064	)		(2,752	)
Cash flows from financing activities:
Proceeds from the exercise of common stock options		771			774
Proceeds from the issuance of common stock under the employee stock purchase plan		128			108
Excess tax benefits from share-based compensation arrangements		1,311			1,396
Withholding of shares to satisfy minimum employee tax withholding for restricted stock units		(1,570	)		(1,786	)
Payment of dividends		(5,833	)		(5,145	)
Net cash flows used in financing activities		(5,193	)		(4,653	)
Effect of exchange rates on cash		434			567
Net increase in cash and cash equivalents		75,270			78,150
Cash and cash equivalents, beginning of period		133,429			102,498
Cash and cash equivalents, end of period	$	208,699		$	180,648

See accompanying notes to condensed consolidated financial statements.

6

THE CORPORATE EXECUTIVE BOARD COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Nature of Business and Basis of Presentation

The Corporate Executive Board Company (the “Company”) provides essential information by analyzing and disseminating the most successful practices from its global network of members. The Company drives corporate performance through a network of executives and business professionals by providing actionable insights, analytical tools, and advisory support to quickly and confidently focus efforts on what executives and their teams need to know, and do, next. The Company provides its members with the authoritative and timely decision support they need to elevate company performance and excel in their careers. For an annual fee, members of each program and service have access to an integrated set of products and services, including best practices studies, executive education, customized analysis, proprietary databases and decision support tools.

The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and disclosures required for complete consolidated financial statements are not included. It is recommended that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and related notes in the Company’s 2011 Annual Report on Form 10-K.

In management’s opinion, all adjustments, consisting of a normal recurring nature, considered necessary for a fair presentation of the condensed consolidated financial position, results of operations, and cash flows at the dates and for the periods presented have been included. The condensed consolidated balance sheet presented at December 31, 2011 has been derived from the financial statements that were audited by the Company’s independent registered public accounting firm. The results of operations for the three months ended March 31, 2012 may not be indicative of the results that may be expected for the year ended December 31, 2012 or any other period within 2012.

Note 2. Recent Accounting Pronouncements

Recently Adopted

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.” The ASU is the result of joint efforts by the FASB and International Accounting Standards Board to develop a single, converged fair value framework on how (not when) to measure fair value and what disclosures to provide about fair value measurements. While the ASU is largely consistent with existing fair value measurement principles in U.S. GAAP, it modifies Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) to expand existing disclosure requirements for fair value measurements and makes other amendments. The Company adopted ASU 2011-04 on January 1, 2012 and it did not have a material impact on the consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income.” This ASU revises the manner in which entities present comprehensive income in their financial statements. The new guidance removes the presentation options in ASC Topic 220, “Comprehensive Income” and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The ASU does not change the items that must be reported in other comprehensive income. The Company adopted ASU 2011-05 on January 1, 2012 and have presented consolidated net income and consolidated comprehensive income in two separate, but consecutive, statements.

In September 2011, the FASB issued ASU 2011-08 “Testing Goodwill for Impairment.” This ASU allows entities to first assess qualitatively whether it is necessary to perform the two-step goodwill impairment test. If an entity believes, as a result of its qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative two-step goodwill impairment test is required. An entity has the unconditional option to bypass the qualitative assessment and proceed directly to performing the first step of the goodwill impairment test. The Company adopted ASU 2011-08 on January 1, 2012 and it did not have a material impact on the consolidated financial statements.

7

Note 3. Acquisitions

On February 3, 2012, the Company completed the acquisition of Valtera Corporation (“Valtera”), a global talent management company that provides tools and services to assist organizations in hiring, engaging, and developing talent. The Company acquired 100% of the equity interests for an initial cash payment of $22.4 million less cash acquired of $1.9 million. The initial cash payment includes $4.7 million which was placed in escrow and will be held until March 15, 2013 at which point the funds will be released to the seller. The Company allocated $8.8 million to intangible assets with a weighted average amortization period of 6 years and $10.5 million to goodwill.

Note 4. Discontinued Operations

On December 30, 2011, the Company sold substantially all of the assets of Toolbox.com for $2.1 million subject to a customary post-closing working capital adjustment. The components of discontinued operations included in the consolidated statements of income consisted of (in thousands):

	Three Months Ended March  31, 2011
Revenues	$	1,235
Costs and expenses:
Cost of services		623
Member relations and marketing		602
General and administrative		879
Depreciation and amortization		204
Loss from discontinued operations before provision for income taxes		(1,073	)
Provision for income taxes		(367	)
Loss from discontinued operations, net of provision for income taxes	$	(706	)

Note 5. Fair Value Measurements

Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. There is a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

8

The Company has segregated all assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the tables below (in thousands):

	March 31, 2012						December 31, 2011
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	208,699	$	—	$	—	$	133,429	$	—	$	—
Debt securities issued by the District of Columbia		10,418		—		—		10,516		—		—
Investments held through variable insurance products in a Rabbi Trust		—		15,026		—		—		13,985		—
Forward currency exchange contracts		—		472		—		—		34		—
Financial liabilities
Forward currency exchange contracts	$	—	$	46	$	—	$	—	$	334	$	—

Investments held through variable insurance products in a Rabbi Trust consist of mutual funds available only to institutional investors. The fair value of these investments are based on the fair value of the underlying investments held by the mutual funds allocated to each share of the mutual fund using a net asset value approach. The fair values of the underlying investments held by the mutual funds are observable inputs. The fair value of foreign currency exchange contracts are based on bank quotations for similar instruments using models with market-based inputs.

Certain assets (i.e., goodwill, intangible assets) and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is impairment). No fair value adjustments were made in the three months ended March 31, 2012 and 2011, respectively.

Marketable Securities

The aggregate fair value, amortized cost, gross unrealized gains, and gross unrealized losses on available-for-sale marketable securities are as follows (in thousands):

	March 31, 2012
	Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses
Washington D.C. tax exempt bonds	$	10,418	$	10,196	$	222	$	—

	December 31, 2011
	Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses
Washington D.C. tax exempt bonds	$	10,516	$	10,226	$	290	$	—

The following table summarizes maturities of marketable securities (in thousands):

	March 31, 2012
	Fair Value		Amortized Cost
Less than one year	$	3,748	$	3,712
Matures in 1 to 5 years		6,670		6,484
Marketable securities	$	10,418	$	10,196

Note 6. Other Liabilities

Other liabilities consist of the following (in thousands):

	March 31, 2012		December 31, 2011
Deferred compensation	$	10,157	$	10,894
Lease incentives		30,454		29,999
Deferred rent benefit		26,897		25,862
Other		18,362		17,051
Total other liabilities	$	85,870	$	83,806

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Note 7. Stockholders’ Equity and Share-Based Compensation

Share-Based Compensation

The Company granted 300,298 and 277,855 restricted stock units with a weighted-average fair value of $41.87 and $39.04 in the three months ended March 31, 2012 and 2011, respectively. Share-based compensation expense is recognized on a straight line basis, net of an estimated forfeiture rate, for those shares expected to vest over the requisite service period of the award. Included in the 2012 grant of restricted stock units are 32,834 performance-based share awards (“PSAs”) granted to the Company’s Corporate Leadership Team. The ultimate number of PSAs that will vest is based upon the achievement of specified levels of revenue and adjusted EBITDA during the three-year period ending December 31, 2014. Approximately 159,000 and 150,000 shares were issued relating to the vesting of restricted stock units and the exercise of stock options in the three months ended March 31, 2012 and 2011, respectively.

The Company recognized total share-based compensation costs of $2.0 million in each of the three months ended March 31, 2012 and 2011. At March 31, 2012, there was $27.3 million of total unrecognized share-based compensation cost.

Dividends

In February 2012, the Board of Directors declared a cash dividend of $0.175 per share for the first quarter of 2012 for stockholders of record on March 15, 2012. This dividend, totaling $5.8 million, was paid on March 30, 2012.

In April 2012, the Board of Directors declared a second quarter cash dividend of $0.175 per share. The dividend is payable on June 29, 2012 to stockholders of record at the close of business on June 15, 2012. The Company funds its dividend payments with cash on hand and cash generated from operations.

Note 8. Derivative Instruments and Hedging Activities

The Company’s international operations are subject to risks related to currency exchange fluctuations. Prices for the Company’s products and services are denominated primarily in United States dollars (“USD”), including products and services sold to members that are located outside the United States. Many of the costs associated with the Company’s operations located outside the United States are denominated in local currencies. As a consequence, increases in local currencies against the USD in countries where the Company has foreign operations would result in higher effective operating costs and reduced earnings. The Company uses forward contracts, designated as cash flow hedging instruments, to protect against foreign currency exchange rate risks inherent with its cost reimbursement agreements with its United Kingdom subsidiary. A forward contract obligates the Company to exchange a predetermined amount of USD to make equivalent British pound sterling (“GBP”) payments equal to the value of such exchanges.

The Company formally documents all relationships between hedging instruments and hedged items as well as its risk management objective and strategy for undertaking hedge transactions. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is 12 months. The forward contracts are recognized on the consolidated balance sheets at fair value and changes in fair value measurements are reflected as adjustments to other comprehensive income (“OCI”) until such time as the actual foreign currency expenditures are made and the unrealized gain/loss is reclassified from accumulated OCI to current earnings. There is generally no or an immaterial amount of ineffectiveness. The notional amount of outstanding forward contracts was $23.2 million at March 31, 2012.

The fair value of derivative instruments, which are designated as hedging instruments, on the Company’s condensed consolidated balance sheets are as follows (in thousands):

Balance Sheet Location	March 31, 2012		December 31, 2011
Asset Derivatives
Prepaid expenses and other current assets	$	472	$	34
Liability Derivatives
Accounts payable and accrued liabilities	$	46	$	334

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The pre-tax effect of the derivative instruments on the Company’s consolidated statements of income is as follows (in thousands):

Location of Loss Reclassified from Accumulated OCI into Income (Effective portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective portion)		Derivatives in Cash Flow Hedging Relationships	Amount of Gain  (Loss) Recognized in OCI on Derivative (Effective portion)
	Three Months Ended March 31, 2012			Three Months Ended March 31, 2012
Cost of services	$	6	Forward currency	$	677
Member relations and marketing		6	Contracts
General & Administrative		2
Total	$	14

Location of Loss Reclassified from Accumulated OCI into Income (Effective portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective portion)		Derivatives in Cash Flow Hedging Relationships	Amount of Gain  (Loss) Recognized in OCI on Derivative (Effective portion)
	Three Months Ended March 31, 2011			Three Months Ended March 31, 2011
Cost of services	$	215	Forward currency	$	529
Member relations and marketing		186	Contracts
General & Administrative		88
Total	$	489

Note 9. Income Taxes

The Company computes its provision for income taxes by applying the estimated annual effective tax rate to income from operations and adjusts the provision for discrete tax items recorded in the period. The effective tax rate was 41.4% and 41.2% in the three months ended March 31, 2012 and 2011, respectively. The Company currently anticipates that its full-year 2012 tax rate will be approximately 41.0%, excluding the effects of unrealized currency translation gains and losses.

The Company made income tax payments of $0.6 million and $1.4 million in the three months ended March 31, 2012 and 2011, respectively.

Note 10. Earnings per Share

A reconciliation of basic to diluted weighted average common shares outstanding is as follows (in thousands):

	Three Months Ended March 31,
	2012		2011
Basic weighted average common shares outstanding		33,327		34,351
Effect of dilutive common shares outstanding		334		395
Diluted weighted average common shares outstanding		33,661		34,746

Approximately 1.5 million and 2.1 million shares in the three months ended March 31, 2012 and 2011, respectively, have been excluded from the calculation of the dilutive effect shown above because their impact would be anti-dilutive. These shares related to share-based compensation awards.

Note 11. Commitments and Contingencies

Operating Leases

The Company leases office facilities that expire on various dates through 2028. Generally, the leases carry renewal provisions and rental escalations and require the Company to pay executory costs such as taxes and insurance.

Future minimum rental payments under non-cancelable operating leases and future minimum receipts under subleases, excluding executory costs, are as follows at March 31, 2012:

	Total			2012*			YE 2013			YE 2014			YE 2015			YE 2016			Thereafter
Operating lease obligations	$	571,417		$	27,922		$	37,291		$	36,978		$	37,415		$	38,052		$	393,759
Sublease receipts		(292,052	)		(10,521	)		(14,311	)		(13,795	)		(16,612	)		(17,028	)		(219,785	)
Total net lease obligations	$	279,365		$	17,401		$	22,980		$	23,183		$	20,803		$	21,024		$	173,974

* For the nine months ended December 31, 2012.

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Contingencies

From time to time, the Company is subject to litigation related to normal business operations. The Company vigorously defends itself in litigation and is not currently a party to, and the Company’s property is not subject to, any legal proceedings likely to materially affect the Company’s financial results.

The Company continues to evaluate potential tax exposures relating to sales and use, payroll, income and property tax laws, and regulations for various states in which the Company sells or supports its goods and services. Accruals for potential contingencies are recorded by the Company when it is probable that a liability has been incurred and the liability can be reasonably estimated. As additional information becomes available, changes in the estimates of the liability are reported in the period that those changes occur. The Company had a $3.0 million liability at March 31, 2012 and December 31, 2011, respectively, relating to certain sales and use tax regulations for states in which the Company sells or supports its goods and services.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. The following discussion includes forward-looking statements that involve certain risks and uncertainties. For additional information regarding forward-looking statements and risk factors, see “Forward-looking statements.”

Executive Overview

In 2012, our efforts will remain focused on our four key operating priorities: create “must have” data and insights, build brand strength through member impact, globalize the business, and deliver innovative products and services. We maintain a strong balance sheet and the gains we experienced in 2011 for bookings, Contract Value, and revenues have positioned us to sustain growth and progress in 2012. We continue to focus on three opportunities for growth in our business. Our largest and most scalable opportunity is to grow relationships with existing customers. Our second is to add new member companies, including in key international markets and the middle market. Our third is to leverage the member platform to launch new products and services.

In the three months ended March 31, 2012, our teams made good overall progress securing important relationships and building pipelines for the rest of the year. Contract Value, which we define as the aggregate annualized revenues attributed to all agreements in effect at a given date without regard to the remaining duration of any such agreement, was $490.2 million at March 31, 2012, an increase of 10.3%, compared to $444.6 million at March 31, 2011, primarily as a result of increased sales to new members. Contract Value per member institution increased 1.5% at March 31, 2012 to $85,535 from $84,296 at March 31, 2011.

We believe that member-based operating metrics provide a useful view of the true economics, management, and growth trends in our business. Wallet retention rate, which we define as the total current year Contract Value from prior year members as a percentage of the total prior year Contract Value, was 99% at March 31, 2012 compared to 104% at March 31, 2011. This decrease is due to a one-time increase in the 2011 rate due to the integration of the Iconoculture acquisition offset by a decrease in pricing performance contributing less growth than in 2011. We believe that Wallet Retention Rate provides an integrated view of member buying activity as it reflects the cumulative year-over-year impact of renewals, cross sales, and pricing growth.

The year-over-year growth in revenues of $14.8 million includes the impact of the Baumgartner Partner GmbH (“Baumgartner”) and Valtera Corporation (“Valtera”) acquisitions and was partially offset by higher operating costs, including Baumgartner and Valtera, and additional investments in new products and market extensions to further enhance organic growth. Total costs and expenses were $103.3 million in the three months ended March 31, 2012, an increase of $8.6 million from the three months ended March 31, 2011.

Net income was $15.6 million, or $0.46 per diluted share, in the three months ended March 31, 2012 compared to $11.4 million, or $0.33 per diluted share, in the three months ended March 31, 2011. Income from continuing operations was $15.6 million, or $0.46 per diluted share, in the three months ended March 31, 2012 compared to $12.1 million, or $0.35 per diluted share, in the three months ended March 31, 2011. Adjusted net income was $15.8 million and non-GAAP diluted earnings per share was $0.47 in the three months ended March 31, 2012 compared to $12.1 million and $0.35 for the same period of 2011, respectively. Adjusted EBITDA and Adjusted EBITDA margin was $32.0 million and 24.9%, respectively, in the three months ended March 31, 2012 compared to $24.1 million and 21.2%, respectively, in the three months ended March 31, 2011.

12

Non-GAAP Financial Measures

This report includes financial measures of Adjusted EBITDA, Adjusted net income, and Non-GAAP diluted earnings per share, which are non-GAAP financial measures provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The term “Adjusted EBITDA” refers to a financial measure that we define as net income before loss from discontinued operations, net of provision for income taxes; interest income, net; depreciation and amortization; provision for income taxes; acquisition related costs; costs associated with exit activities; restructuring costs; and gain on acquisition. The term “Adjusted net income” refers to net income before loss from discontinued operations, net of provision for income taxes and excludes the after tax effects of acquisition related costs, costs associated with exit activities, restructuring costs, and gain on acquisition. “Non-GAAP diluted earnings per share” refers to diluted earnings per share before the per share effect of loss from discontinued operations, net of provision for income taxes and excludes the after tax per share effects of acquisition related costs, costs associated with exit activities, restructuring costs, and gain on acquisition.

We believe that Adjusted EBITDA, Adjusted net income, and Non-GAAP diluted earnings per share are relevant and useful supplemental information for our investors. We use these non-GAAP financial measures for internal budgeting and other managerial purposes, when publicly providing the Company’s business outlook and as a measurement for potential acquisitions. A limitation associated with Adjusted EBITDA is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. Management compensates for these limitations by also relying on the comparable GAAP financial measure of Operating profit, which includes depreciation and amortization.

These non-GAAP measures may be considered in addition to results prepared in accordance with GAAP, but they should not be considered a substitute for, or superior to, GAAP results. We intend to continue to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting.

A reconciliation of these non-GAAP measures to the most nearly comparable GAAP financial measure is provided below (in thousands):

	Three Months Ended March 31,
	2012			2011
Adjusted EBITDA
Net income	$	15,561		$	11,354
Loss from discontinued operations, net of provision for income taxes		—			706
Income from continuing operations		15,561			12,060
Interest income, net		(77	)		(314	)
Depreciation and amortization		5,029			4,055
Provision for income taxes		10,994			8,322
Acquisition related costs		476			—
Adjusted EBITDA	$	31,983		$	24,123
Adjusted EBITDA margin		24.9	%		21.2	%
Adjusted net income
Net income	$	15,561		$	11,354
Loss from discontinued operations, net of provision for income taxes		—			706
Income from continuing operations		15,561			12,060
Acquisition related costs		279			—
Adjusted net income	$	15,840		$	12,060
Non-GAAP earnings per diluted share
Earnings per diluted share	$	0.46		$	0.33
Loss from discontinued operations, net of provision for income taxes		—			0.02
Earnings per diluted share from continuing operations		0.46			0.35
Acquisition related costs		0.01			—
Non-GAAP earnings per diluted share	$	0.47		$	0.35

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Critical Accounting Policies

Our accounting policies require us to apply methodologies, estimates and judgments that have a significant impact on the results we report in our consolidated financial statements. In our 2011 Annual Report on Form 10-K, we discussed those material policies that we believe are critical and require the use of complex judgment in their application. There have been no changes to our critical accounting policies since that time.

Recent Accounting Pronouncements

See Note 2 to the condensed consolidated financial statements for a discussion of recent accounting pronouncements.

Results of Operations

We generate the majority of our revenues through memberships that provide access to our products and services, which are delivered through several channels. Memberships, which principally are annually renewable agreements, primarily are payable by members at the beginning of the contract term. Billings attributable to memberships for our products and services initially are recorded as deferred revenues and then generally are recognized on a pro-rata basis over the membership contract term, which typically is 12 months. Generally, a member may request a refund of its membership fee during the membership term under our service guarantee. Refunds are provided from the date of the refund request on a pro-rata basis relative to the remaining term of the membership.

Our operating costs and expenses consist of:

• Cost of services, which represents the costs associated with the production and delivery of our products and services, consisting of compensation, including share-based compensation, for research personnel, in-house faculty, and product advisors; the organization and delivery of membership meetings, seminars, and other events; ongoing product development costs; production of published materials, costs of developing and supporting our membership Web platform and digital delivery of products and services; and associated support services.

• Member relations and marketing, which represents the costs of acquiring new members and the costs of account management, consisting of compensation, including sales incentives and share-based compensation; travel and related expenses; recruiting and training of personnel; sales and marketing materials; and associated support services, as well as the costs of maintaining our member relationship management software.

• General and administrative, which represents the costs associated with the corporate and administrative functions, including human resources and recruiting, finance and accounting, legal, management information systems, facilities management, business development, integration costs and other. Costs include compensation, including share-based compensation; third-party consulting and compliance expenses; and associated support services.

• Depreciation and amortization, consisting of depreciation of our property and equipment, including leasehold improvements, furniture, fixtures and equipment, capitalized software and website development costs and the amortization of intangible assets.

Three Months Ended March 31, 2012 Compared to the Three Months Ended March 31, 2011

Revenues

Revenues increased 13.1% to $128.5 million in the three months ended March 31, 2012 from $113.6 million in the three months ended March 31, 2011. The increase of $14.9 million was primarily due to an increase in sales bookings to new and existing members throughout 2011 and approximately $2.0 million of revenues from the Baumgartner and Valtera acquisitions.

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Costs and Expenses

Changes in compensation and related costs, variable compensation, share-based compensation, third-party consulting, travel and related expenses, facilities costs, deferred compensation, additional costs from the businesses we acquired, and the impact of changes in the exchange rates of the US dollar to the British Pound all contributed to year-over-year variances in costs and expenses. These items are allocated to Cost of services, Member relations and marketing, and General and administrative expenses. We discuss these major components of costs and expenses on an aggregated basis below:

• Compensation and related costs, including salaries, payroll taxes and benefits, increased $5.6 million in the three months ended March 31, 2012 to $52.0 million from $46.4 million in three months ended March 31, 2011. The increase was primarily due to headcount and salary increases, as well as the Baumgartner and Valtera acquisitions.

• Variable compensation, consisting of sales commissions and annual bonuses, increased $0.8 million in the three months ended March 31, 2012 to $14.4 million from $13.6 million in three months ended March 31, 2011. The increase was primarily due to a $0.6 million increase in bonus expense. Additionally, sales commission expense increased $0.3 million as a result of increased bookings in 2011.

• Share-based compensation costs were $2.0 million in each of the three months ended March 31, 2012 and 2011.

• Third-party consulting increased $0.4 million in the three months ended March 31, 2012 to $4.6 million from $4.2 million in the three months ended March 31, 2011. The increase in the three months ended March 31, 2012 was primarily due to the use of consultants for member-facing technology development and the implementation of operating systems enhancements.

• Travel and related expenses remained consistent at $5.8 million in each of the three months ended March 31, 2012 and 2011.

• Allocated facilities costs, consisting primarily of rent, operating expenses, and real estate tax escalations decreased $0.7 million in the three months ended March 31, 2012 to $6.4 million from $7.1 million in the three months ended March 31, 2011. The decrease is primarily due to the sublease of approximately 331,000 square feet of our corporate headquarters to third parties offset by increased rent expense from lease assumed as part of the Valtera acquisition.

• Deferred compensation costs included in operating expenses increased $0.6 million in the three months ended March 31, 2012 to $1.1 million of expense from $0.5 million of expense in the three months ended March 31, 2011. Variances related to deferred compensation are the result of changes in the value of investments in variable insurance products held in a Rabbi Trust. Operating expense variances resulting from changes in the fair value of deferred compensation costs are offset in Other income, net and have no impact on Net income or earnings per share.

• Our operating expenses are impacted by currency fluctuations, primarily in the value of the British Pound compared to the US dollar. The value of the British Pound versus the US dollar was approximately $0.03 lower, on average, in the three months ended March 31, 2012 compared to the same period in 2011. Costs incurred for foreign subsidiaries will fluctuate based on changes in foreign currency rates in addition to other operational factors. We enter into cash flow hedges for our UK subsidiary to mitigate foreign currency risk, which offsets a portion of the impact foreign currency fluctuations have on costs and expenses.

• In September 2011, we acquired 100% of the equity interests in Baumgartner. Our total costs and expenses, including compensation and related costs, increased $1.4 million in the three months ended March 31, 2012 compared to the same period in 2011 due to the acquisition.

• In February 2012, we acquired 100% of the equity interests in Valtera. Our total costs and expenses, including compensation and related costs, increased $3.2 million in the three months ended March 31, 2012 compared to the same period in 2011 due to the acquisition.

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Cost of services

Cost of services increased 9.8%, or $3.9 million, to $43.7 million in the three months ended March 31, 2012 from $39.8 million in the three months ended March 31, 2011. The following table outlines the primary components of Cost of services (in thousands):

	Three Months Ended March 31,
	2012		% of Revenues			2011		% of Revenues
Compensation and related		24,001		18.7	%		21,726		19.1	%
Variable compensation		4,531		3.5	%		4,285		3.8	%
Share-based compensation		629		0.5	%		812		0.7	%
Third-party consulting		2,578		2.0	%		2,533		2.2	%
Travel and related		2,460		1.9	%		2,478		2.2	%
Allocated facilities		2,586		2.0	%		2,986		2.6	%
Deferred compensation expense		453		0.4	%		278		0.2	%

In the three months ended March 31, 2012, the $2.3 million increase in compensation and related costs was primarily due to headcount increases relating to investments in our product research and delivery teams and headcount obtained from the Baumgartner and Valtera acquisitions. The $0.4 million decrease in allocated facilities costs was primarily due to the sublease of a portion of our headquarters as discussed above.

Cost of services as a percentage of revenues was 34.0% and 35.0% in the three months ended March 31, 2012 and 2011, respectively. Cost of services as a percentage of revenues may fluctuate from year to year due to the timing of the completion and delivery of best practices research studies, the timing of executive education seminars, the introduction of new membership programs, and 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. Accordingly, Cost of services as a percentage of revenues may not be indicative of future operating results. However, because Cost of services includes both fixed and variable components in terms of both the amount and timing of expenses incurred, we have some flexibility to manage a portion of these expenses in light of changing market conditions.

Member relations and marketing

Member relations and marketing increased 9.3%, or $3.3 million, to $38.2 million in the three months ended March 31, 2012 from $34.9 million in the three months ended March 31, 2011. The following table outlines the primary components of Member relations and marketing (in thousands):

	Three Months Ended March 31,
	2012		% of Revenues			2011		% of Revenues
Compensation and related		19,755		15.4	%		17,164		15.1	%
Variable compensation		8,137		6.3	%		7,745		6.8	%
Share-based compensation		372		0.3	%		311		0.3	%
Third-party consulting		706		0.5	%		543		0.5	%
Travel and related		2,882		2.2	%		2,808		2.5	%
Allocated facilities		2,906		2.3	%		3,086		2.7	%
Deferred compensation expense		422		0.3	%		128		0.1	%

In the three months ended March 31, 2012, the $2.6 million increase in compensation and related costs was primarily due to headcount increases relating to additional capacity and support for our sales teams. The $0.4 million increase in variable compensation was primarily due to higher bookings across 2011.

Member relations and marketing expense as a percentage of revenues was 29.7% and 30.8% in the three months ended March 31, 2012 and 2011, respectively.

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General and administrative

General and administrative increased 3.2%, or $0.5 million, to $16.5 million in the three months ended March 31, 2012 from $16.0 million in the three months ended March 31, 2011. The following table outlines the primary components of General and administrative (in thousands):

	Three Months Ended March 31,
	2012		% of Revenues			2011		% of Revenues
Compensation and related		8,293		6.5	%		7,488		6.6	%
Variable compensation		1,775		1.4	%		1,540		1.4	%
Share-based compensation		923		0.7	%		916		0.8	%
Third-party consulting		1,296		1.0	%		1,126		1.0	%
Allocated facilities		912		0.7	%		1,073		0.9	%
Deferred compensation expense		178		0.1	%		133		0.1	%

The $0.8 million increase in compensation and related costs was primarily due to headcount increases and headcount obtained from the Baumgartner and Valtera acquisitions. In addition, acquisition related costs were $0.4 million in the three months ended March 31, 2012. The $0.2 million decrease in allocated facilities costs was primarily due to the sublease of a portion of our headquarters as discussed above. Additionally, there was a $0.6 million charge in the three months ended March 31, 2011 for the fair value of the Iconoculture contingent consideration and employee search costs decreased $0.4 million in the three months ended March 31, 2012 compared to the same period in 2011.

General and administrative expense as a percentage of revenues was 12.8% and 14.0% in the three months ended March 31, 2012 and 2011, respectively.

Depreciation and amortization

Depreciation and amortization increased 24.0%, or $0.9 million, to $5.0 million in the three months ended March 31, 2012 from $4.1 million in the three months ended March 31, 2011. The increase of $0.9 million was primarily due to a $0.5 million increase in amortization and an increase in depreciation related to 2011 fixed asset purchases and fixed assets acquired with Valtera.

Depreciation and amortization expense as a percentage of revenues was 3.9% in 2012 and 3.6% in 2011.

Other (expense) income, net

Other income, net decreased in the three months ended March 31, 2012 to $1.4 million from $1.5 million in the three months ended March 31, 2011. The table below details the components of other income, net:

	Three Months Ended March 31,
	2012		2011
Increase in fair value of deferred compensation plan assets	$	1,146	$	578
Foreign currency translation gain		180		695
Interest income, net		77		232
Other		7		—
Other income, net	$	1,410	$	1,505

Provision for income taxes.

We recorded a provision for income taxes of $11.0 million in the three months ended March 31, 2012 compared to $8.3 million in the three months ended March 31, 2011. The effective tax rate was 41.4% and 41.2% in the three months ended March 31, 2012 and 2011, respectively. The Company currently anticipates that is full-year 2012 tax rate will be approximately 41.0%, excluding the effects of unrealized currency translation gains and losses. Our provision for income taxes differs from the U.S. statutory rate of 35% primarily due to state income taxes and nondeductible expenses. The tax expense or benefit for unusual items, or certain adjustments are treated as discrete items in the interim period in which the events occur.

Loss from discontinued operations, net of provision for income taxes

On December 30, 2011, we sold substantially all of the assets of Toolbox.com for $2.1 million subject to a customary post-closing working capital adjustment. As a result, the operations of Toolbox.com have been classified as discontinued operations.

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Liquidity and Capital Resources

Cash flows generated from operating activities have been our primary source of liquidity. We have a $100 million five-year senior unsecured, revolving credit facility (the “Credit Facility”) with certain lenders. The Credit Facility contains letter of credit and swing line loan sub-facilities and has a maturity date of March 16, 2016.

The Credit Facility is available for working capital and general corporate purposes. Under the terms of the Credit Facility, we have the right, from time to time, to increase the aggregate revolving commitments from $100 million up to a maximum $150 million, subject to certain limitations set forth in the Credit Facility. We have issued letters of credit under the Credit Facility in an aggregate amount of $6.4 million at March 31, 2012 and have otherwise not borrowed under the Credit Facility.

We had cash and cash equivalents and marketable securities of $219.1 million and $143.9 million at March 31, 2012 and December 31, 2011, respectively. We believe that existing cash and cash equivalents and marketable securities balances and operating cash flows will be sufficient to support operations, anticipated capital expenditures, and the payment of dividends, as well as potential share repurchases for at least the next 12 months. Our future cash flows will depend on many factors, including our rate of Contract Value growth and selective investments to expand our market presence and enhance technology. Also, we may make investments in, or acquisitions of, complementary businesses, which could require us to borrow under the Credit Facility as an additional source of liquidity for permitted acquisitions or seek additional financing, which may not be available on acceptable terms or at all.

In September 2011, we completed the acquisition of Baumgartner. We acquired 100% of the equity interests of Baumgartner for an initial cash payment of approximately $6.4 million less cash acquired of $1.0 million. We will be required to pay up to an additional $1.5 million at various times prior to September 30, 2013.

In February 2012, we completed the acquisition of Valtera. We acquired 100% of the equity interests of Valtera for an initial cash payment of $22.4 million less cash acquired of $1.9 million.

Cash flows from operating activities

Membership subscriptions, which principally are annually renewable agreements, generally are payable by members at the beginning of the contract term. Historically, the combination of revenue growth, profitable operations, and advance payments of membership subscriptions has resulted in net cash flows provided by operating activities. Net cash flows provided by operating activities were $102.1 million and $85.0 million in the three months ended March 31, 2012 and 2011, respectively. The increase in cash flows from operations was primarily due to increased cash collections from the year over year bookings growth as well as the timing of paying certain expenses.

We made income tax payments of $0.6 million and $1.4 million in the three months ended March 31, 2012 and 2011, respectively and expect to continue making tax payments in future periods. We expect cash income tax payments in 2012 to benefit from the overpayment of 2011 taxes as a result of the deductions associated with the sale of Toolbox.com.

Cash flows from investing activities

Our cash management, acquisition, and capital expenditure strategies affect cash flows from investing activities. Net cash flows used in investing activities were $22.1 million and $2.8 million in the three months ended March 31, 2012 and 2011, respectively. We used $1.1 million for capital expenditures, primarily on technology infrastructure and new product platforms in the three months ended March 31, 2012. Additionally, we utilized $21.0 million for acquisitions of businesses, primarily related to Valtera, which included an initial payment of $20.5 million, which is net of cash acquired totaling $1.9 million. We used $2.6 million for capital expenditures, primarily on technology infrastructure, in the three months ended March 31, 2011.

We estimate that capital expenditures to support our infrastructure will be between $12.0 million and $15.0 million in 2012.

Cash flows from financing activities

Net cash flows used in financing activities were $5.2 million and $4.7 million in the three months ended March 31, 2012 and 2011, respectively. The $0.5 million increase in cash flows used in financing activities is primarily the result of the increase in our quarterly dividend from $0.15 per share in the first quarter of 2011 to $0.175 per share in the first quarter of 2012. Additionally, we withheld $1.6 million and $1.8 million in shares in the three months ended March 31, 2012 and 2011, respectively, to satisfy the minimum statutory employee tax withholding requirements for vested restricted stock units. We also received $0.8 million from the exercise of share-based awards in each of the three months ended March 31, 2012 and 2011. We recorded a $1.3 million excess tax benefit in the three months ended March 31, 2012 compared to $1.4 million in the three months ended March 31, 2011.

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Commitments and contingencies

We continue to evaluate potential tax exposure relating to sales and use, payroll, income and property tax laws, and regulations for various states in which we sell or support our goods and services. Accruals for potential contingencies are recorded when it is probable that a liability has been incurred, and the liability can be reasonably estimated. As additional information becomes available, changes in the estimates of the liability are reported in the period that those changes occur. We had a liability of $3.0 million at March 31, 2012 and December 31, 2011, respectively, relating to certain sales and use tax regulations for states in which we sell or support our goods and services.

Contractual obligations

There have been no material changes to the contractual obligations table as disclosed in our 2011 Annual Report on Form 10-K other than operating lease obligations incurred as a result of our acquisition of Valtera. See Note 11 to the condensed consolidated financial statements for the updated future minimum rental payments under non-cancelable operating leases.

Off-Balance Sheet Arrangements

At March 31, 2012 and December 31, 2011, we had 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.

Forward-looking statements

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions. If the risks or uncertainties materialize or the assumptions prove incorrect, the results of the Company and its consolidated subsidiaries may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenues, margins, expenses, provision for income taxes, earnings, cash flows, share repurchases, acquisition synergies, foreign currency exchange rates or other financial items; any statements of the plans, strategies and objectives of management for future operations, including the execution of cost reduction programs and restructuring plans; any statements concerning expected development, performance or market share relating to products or services; any statements regarding future economic conditions or performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing.

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, the sale of additional programs to existing members and our ability to attract new members, our potential failure to adapt to member needs and demands, our potential inability to attract and retain a significant number of highly skilled employees, risks associated with the results of restructuring plans, fluctuations in operating results, our potential inability to protect our intellectual property, our potential exposure to loss of revenues resulting from our unconditional service guarantee, exposure to litigation related to our content, various factors that could affect our estimated income tax rate or our ability to utilize our deferred tax assets, changes in estimates, assumptions or revenue recognition policies used to prepare our consolidated financial statements, our potential inability to make, integrate and maintain acquisitions and investments, and the amount and timing of the benefits expected from acquisitions and investments, our potential inability to implement, maintain, upgrade and effectively operate our technology and information infrastructure, our potential inability to effectively manage the risks associated with our international operations, including the risk of foreign currency exchange fluctuations, our potential inability to effectively anticipate, plan for and respond to changing economic and financial markets conditions, especially in light of ongoing uncertainty in the worldwide economy and possible volatility of our stock price. In Part I, “Item 1A. Risk Factors” of the Company’s 2011 Annual Report on Form 10-K, as filed with the SEC on February 29, 2012, the Company discusses in more detail various important factors that could cause actual results to differ from expected or historic results. One should understand that it is not possible to predict or identify all such factors. Consequently, the reader should not consider any such list to be a complete statement of all potential risks or uncertainties. All forward-looking statements contained in this Quarterly Report on Form 10-Q are qualified by these cautionary statements and are made only as of the date this Quarterly Report on Form 10-Q is filed. We assume no obligation and do not intend to update these forward-looking statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There has been no material change in the Company’s assessment of its sensitivity to market risk since its presentation set forth in Item  7A, “Quantitative and Qualitative Disclosures About Market Risk,” in its 2011 Annual Report on Form 10-K.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer, with the participation of management, have evaluated our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that as of March 31, 2012, our disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed in the reports that the Company files and submits under the Exchange Act is recorded, processed, summarized, and reported when required and is accumulated and communicated to management, as appropriate, to allow timely decisions regarding required disclosure

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company is subject to litigation related to normal business operations. The Company vigorously defends itself in litigation. The Company is not currently a party to, and the Company’s property is not subject to, any legal proceedings likely to materially affect our financial results.

Item 1A. Risk Factors.

In addition to the other information contained in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2011 Annual Report on Form 10-K. There were no material changes during the quarter ended March 31, 2012 to the information included in “Item 1A. Risk Factors” in our 2011 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

	Total Number of Shares Purchased (1)		Average Price Paid Per Share		Total Number  of Shares Purchased as Part of a Publicly Announced Plan		Approximate $ Value of  Shares That May Yet  Be Purchased Under the Plans (2)
January 1, 2012 to January 31, 2012		3,937	$	36.37		—	$	28,063,156
February 1, 2012 to February 29, 2012		492	$	39.39		—	$	28,063,156
March 1, 2012 to March 31, 2012		32,497	$	43.29		—	$	28,063,156
Total		36,926	$	42.50		—

(1) Represents shares of common stock surrendered by employees to the Company in January, February and March 2012, respectively, to satisfy minimum statutory employee tax withholding obligations.

(2) Reflects remaining authorization under the $50 million stock repurchase program approved by the Board of Directors in August 2011.

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Repurchases may be made from time to time in open market and privately negotiated transactions subject to market conditions. No minimum number of shares has been fixed. We fund our share repurchases with cash on hand and cash generated from operations.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

(a) Exhibits:

Exhibit No.	Description
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
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB**	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

** Furnished with the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2012

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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 (Registrant)
Date: May 9, 2012	By:	/s/ Richard S. Lindahl
		Richard S. Lindahl
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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Exhibit Index

Exhibit No.	Description
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
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB**	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

** Furnished with the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2012

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