CEB Reports Second Quarter Results and Reaffirms 2014 Guidance

  CEB Reports Second Quarter Results and Reaffirms 2014 Guidance

  Company Achieves Q2 Total Revenue Growth of 12.6%, YTD Operating Cash Flow
       Growth of 16.1%, and CEB Segment Contract Value Growth of 13.0%

Business Wire

ARLINGTON, Va. -- July 29, 2014

The Corporate Executive Board Company (“CEB” or the “Company”) (NYSE: CEB)
today announced financial results for the second quarter and six months ended
June 30, 2014. Revenue increased 12.6% to $230.4 million in the second quarter
of 2014 from $204.6 million in the second quarter of 2013. Net loss in the
second quarter of 2014 was $6.4 million, or $0.19 per diluted share, compared
to net income of $13.6 million, or $0.40 per diluted share, in the same period
of 2013. Included in the net loss for the second quarter of 2014 is a $39.7
million pre-tax impairment loss associated with nondeductible intangible
assets and goodwill of Personnel Decision Research Institutes, Inc. (“PDRI”)
and a $6.6 million pre-tax gain related to a cost method investment. Adjusted
net income was $25.5 million and Non-GAAP diluted earnings per share were
$0.75 in the second quarter of 2014 compared to $24.8 million and $0.73 in the
same period of 2013, respectively.

In the first six months of 2014, revenue was $439.9 million, an 11.4% increase
from $394.9 million in the first six months of 2013. Net income in the first
six months of 2014 was $1.2 million, or $0.04 per diluted share, compared to
$24.8 million, or $0.73 per diluted share, in the same period of 2013.
Adjusted net income was $43.9 million and Non-GAAP diluted earnings per share
were $1.29 in the first six months of 2014 compared to $47.4 million and $1.40
in the same period of 2013, respectively.

“CEB’s second quarter results reflect broad-based growth across our primary
markets,” said Tom Monahan, Chairman and CEO. “Ongoing challenges in the US
Federal Government sector led us to record a non-cash impairment loss related
to PDRI’s carrying value. Nevertheless, our focused execution produced healthy
operating metrics and keeps us on track to achieve our strategic and financial
objectives for the year.”

OUTLOOK FOR 2014

The Company reaffirms its 2014 annual guidance is as follows: Adjusted revenue
of $910 to $935 million, revenue of $904 to $929 million, capital expenditures
of $31 to $35 million, Non-GAAP diluted earnings per share of $3.15 to $3.40,
an Adjusted EBITDA margin between 24.5% and 25.0%, acquisition related costs
of $3 million and depreciation and amortization expense of $70 to $72 million.
Adjusted revenue refers to revenue before the impact of the reduction of the
revenue of SHL Talent Measurement™ and KnowledgeAdvisors recognized in the
post-acquisition period to reflect the adjustment of deferred revenue at the
acquisition dates to fair value. The estimated reduction in 2014 revenue to
reflect the impact of the deferred revenue fair value adjustment is
approximately $6 million.

SEGMENT HIGHLIGHTS

The CEB segment includes the historical CEB products and services provided to
senior executives and their teams to drive corporate performance. In addition,
the CEB segment includes the previously disclosed acquisitions in February
2014 of Talent Neuron, a provider of market intelligence technology tools
based on large-scale data analytics, and KnowledgeAdvisors, a provider of
analytics solutions for talent development professionals. The 2014 financial
results only include the results of operations of Talent Neuron and
KnowledgeAdvisors from their respective dates of acquisition. The SHL Talent
Measurement segment includes the SHL products and services of cloud-based
solutions for talent assessment and talent mobility, as well as professional
services that support those solutions. PDRI, a subsidiary acquired as part of
the SHL acquisition, is included in the CEB segment. PDRI provides customized
personnel assessment and performance management tools and services primarily
to various agencies of the US government and also to commercial enterprises.

CEB Segment

Revenue increased in the second quarter of 2014 to $175.4 million from $156.8
million in the same period of 2013. Adjusted revenue increased 12.8% in the
second quarter of 2014 to $176.9 million from $156.8 million in the same
period of 2013. There was $4.1 million of KnowledgeAdvisors and Talent Neuron
revenue included in CEB segment revenue in the second quarter of 2014.
Adjusted EBITDA in the second quarter of 2014 was $44.7 million compared to
$41.0 million in the same period of 2013. Adjusted EBITDA margin in the second
quarter of 2014 was 25.3% of segment Adjusted revenue compared to 26.2% in the
second quarter of 2013.

Revenue increased in the first six months of 2014 to $336.1 million from
$305.0 million in the same period of 2013. Adjusted revenue increased 10.8% in
the first six months of 2014 to $337.9 million from $305.0 million in the same
period of 2013. There was $5.5 million of KnowledgeAdvisors and Talent Neuron
revenue included in CEB segment revenue in the first six months of 2014.
Adjusted EBITDA in the first six months of 2014 was $80.0 million compared to
$79.9 million in the same period of 2013. Adjusted EBITDA margin in the first
six months of 2014 was 23.7% of segment Adjusted revenue compared to 26.2% in
the first six months of 2013.

Contract Value at June 30, 2014 increased 13.0% to $641.1 million compared to
$567.2 million at June 30, 2013. Wallet retention rate at June 30, 2014 and
2013 was 99%. Contract Value per member institution increased 1.0% at June 30,
2014 to $94,366 from $93,457 at June 30, 2013.

In the second quarter of 2014, the Company performed impairment testing of its
PDRI reporting unit due to lower than expected revenues and margins due to
changes in the government services sector. As a result, the Company recorded a
$39.7 million impairment loss for intangible assets and goodwill. This loss
had no impact on cash flows.

SHL Talent Measurement Segment

Revenue increased in the second quarter of 2014 to $55.1 million from $47.8
million in the same period of 2013. Adjusted revenue increased 9.3% in the
second quarter of 2014 to $55.5 million from $50.7 million in the same period
of 2013. Adjusted EBITDA in the second quarter of 2014 was $9.4 million
compared to $10.0 million in the same period of 2013. Adjusted EBITDA margin
in the second quarter of 2014 was 16.9% of segment Adjusted revenue compared
to 19.7% in the second quarter of 2013.

Revenue increased in the first six months of 2014 to $103.8 million from $89.9
million in the same period of 2013. Adjusted revenue increased 8.0% in the
first six months of 2014 to $105.2 million from $97.4 million in the same
period of 2013. Adjusted EBITDA in the first six months of 2014 was $15.1
million compared to $18.4 million in the same period of 2013. Adjusted EBITDA
margin in the first six months of 2014 was 14.3% of segment Adjusted revenue
compared to 18.9% in the first six months of 2013.

Wallet retention rate at June 30, 2014 was 104% compared to 96% at June 30,
2013. Unlike CEB members, a majority of SHL Talent Measurement customers do
not typically enter into contracts for fixed periods, so Contract Value is not
a relevant operating statistic for the segment.

SHARE REPURCHASE

In the second quarter of 2014, the Company repurchased approximately 77,000
shares of its common stock at a total cost of $5.2 million. These purchases
were made pursuant to the Company’s existing stock repurchase authorization
which expires on December 31, 2014. Repurchases may be made through open
market purchases or privately negotiated transactions. The timing of
repurchases and the exact number of shares of common stock to be repurchased
will be determined by CEB’s management, in its discretion, and will depend
upon market conditions and other factors. The purchases will be funded using
the Company’s cash on hand and cash generated from operations.

NON-GAAP FINANCIAL MEASURES

This press release and the accompanying tables, as well as earnings
discussions, include a discussion of Adjusted revenue, Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted net income, and Non-GAAP diluted earnings per
share, all of 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 revenue” refers to revenue before the impact of the
reduction of SHL and KnowledgeAdvisors revenue recognized in the
post-acquisition period to reflect the adjustment of deferred revenue at the
acquisition date to fair value (the “deferred revenue fair value adjustment”).

The term “Adjusted EBITDA” refers to net (loss) income before loss from
discontinued operations, net of provision for income taxes; provision for
income taxes; interest expense, net; gain on cost method investment;
depreciation and amortization; the impact of the deferred revenue fair value
adjustment; acquisition related costs; impairment loss; debt extinguishment
costs; share-based compensation; costs associated with exit activities;
restructuring costs; and gain on acquisition.

The term “Adjusted EBITDA margin” refers to Adjusted EBITDA as a percentage of
Adjusted revenue.

The term “Adjusted net income” refers to net (loss) income before loss from
discontinued operations, net of provision for income taxes and excludes the
after tax effects of the impact of the deferred revenue fair value adjustment;
acquisition related costs; impairment loss; gain on cost method investment;
share-based compensation; debt extinguishment costs; amortization of
acquisition related intangibles; costs associated with exit activities;
restructuring costs; and gain on acquisition.

“Non-GAAP diluted earnings per share” refers to diluted (loss) 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 the
impact of the deferred revenue fair value adjustment; acquisition related
costs; impairment loss; gain on cost method investment; share-based
compensation; debt extinguishment costs; amortization of acquisition related
intangibles; costs associated with exit activities; restructuring costs; and
gain on acquisition.

We believe that these non-GAAP financial measures are relevant and useful
supplemental information for evaluating our results of operations as compared
from period to period and as compared to our competitors. We use these
non-GAAP financial measures for internal budgeting and other managerial
purposes, including comparison against our competitors, when publicly
providing our business outlook, and as a measurement for potential
acquisitions. These non-GAAP financial measures are not defined in the same
manner by all companies and therefore may not be comparable to other similarly
titled measures used by other companies.

Our non-GAAP financial measures reflect adjustments based on the following
items, as well as the related income tax effects:

  *Certain business combination accounting entries and expenses related to
    acquisitions: We have adjusted for the impact of the deferred revenue fair
    value adjustment, amortization of acquisition related intangibles, and
    acquisition related costs. We incurred transaction and certain other
    operating expenses in connection with our acquisitions which we generally
    would not have otherwise incurred in the periods presented as a part of
    our continuing operations. We believe that excluding these acquisition
    related items from our non-GAAP financial measures provides useful
    supplemental information to our investors and is important in illustrating
    what our core operating results would have been had we not incurred these
    acquisition related items since the nature, size, and number of
    acquisitions can vary from period to period.
  *Share-based compensation: Although share-based compensation is a key
    incentive offered to our employees, we evaluate our operating results
    excluding such expense. Accordingly, we exclude share-based compensation
    from our non-GAAP financial measures because we believe it provides
    valuable supplemental information that helps investors have a more
    complete understanding of our operating results. In addition, we believe
    the exclusion of this expense facilitates the ability of our investors to
    compare our operating results with those of other peer companies, many of
    which also exclude such expense in determining their non-GAAP measures,
    given varying valuation methodologies, subjective assumptions, and the
    variety and amount of award types that may be utilized.
  *Impairment loss, gain on cost method investment, and debt extinguishment
    costs: We believe that excluding these items from our non-GAAP financial
    measures provides useful supplemental information to our investors and is
    important in illustrating what our core operating results would have been
    had we not incurred these items. We exclude these items because management
    does not believe they correlate to the ongoing operating results of the
    business.

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 directly comparable
GAAP measure is included in the accompanying tables.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Statements using words
such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,”
“believes,” “forecasts,” and variations of such words or similar expressions
are intended to identify forward-looking statements. In addition, all
statements other than statements of historical fact are statements that could
be deemed forward-looking statements, including but not limited to our 2014
annual guidance. You are hereby cautioned that these statements are based upon
our expectations at the time we make them and may be affected by important
factors including, among others, the factors set forth below and in our
filings with the US Securities and Exchange Commission (“SEC”), and
consequently, actual operations and results may differ materially from the
results discussed in the forward-looking statements. Our expectations, beliefs
and projections are expressed in good faith and we believe there is a
reasonable basis for them. 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 changing member needs and demands,
our potential failure to develop and sell, or expand sales markets for our SHL
Talent Measurement tools and services, our potential inability to attract and
retain a significant number of highly skilled employees or successfully manage
succession planning issues, fluctuations in operating results, our potential
inability to protect our intellectual property rights, our potential inability
to adequately maintain and protect our information technology infrastructure
and our member and client data, potential confusion about our rebranding,
including our integration of the SHL brand, our potential exposure to loss of
revenue 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 use our existing deferred tax
assets, changes in estimates, assumptions or revenue recognition policies used
to prepare our consolidated financial statements, including those related to
testing for potential goodwill impairment, our potential inability to make,
integrate and maintain acquisitions and investments, the amount and timing of
the benefits expected from acquisitions and investments, the risk that we will
be required to recognize additional impairments to the carrying value of the
significant goodwill and amortizable intangible asset amounts included in our
balance sheet as a result of our acquisitions, which would require us to
record charges that would reduce our reported results, our potential inability
to effectively manage the risks associated with the indebtedness we incurred
and the senior secured credit facilities we entered into in connection with
our acquisition of SHL or any additional indebtedness we may incur in the
future, 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, the US
economy (including sequestration under the Budget Control Act of 2011), and
possible volatility of our stock price. Various important factors that could
cause our actual results to differ from our expected or historical results are
discussed more fully in the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Risk Factors” sections of our
filings with the SEC, including, but not limited to, our 2013 Annual Report on
Form 10-K filed on March 3, 2014. The forward-looking statements in this press
release are made as of July 29, 2014, and we undertake no obligation to update
any forward-looking statements, whether as a result of new information, future
events, or otherwise.

ABOUT CEB

CEB, the leading member-based advisory company, equips more than 10,000
organizations around the globe with insights, tools and actionable solutions
to transform enterprise performance. By combining advanced research and
analytics with best practices from member companies, CEB helps leaders realize
outsized returns by more effectively managing talent, information, customers
and risk. Member companies include nearly 90% of the Fortune 500, more than
75% of the Dow Jones Asian Titans, and 85% of the FTSE 100. More at
www.cebglobal.com.






THE CORPORATE EXECUTIVE BOARD COMPANY
Financial Highlights and Other Operating Statistics

              Selected     Three Months Ended          Selected     Six Months Ended
                                                   
              Percentage   June 30,                    Percentage  June 30,

              Changes      2014         2013          Changes      2014         2013
                                                                                  
Financial
Highlights:
(In thousands, except
per share data)
                                                                                  
Revenue       12.6   %     $ 230,427     $ 204,610     11.4   %     $ 439,864     $ 394,882
Adjusted      12.0   %     $ 232,377     $ 207,560     10.1   %     $ 443,098     $ 402,341
revenue
Net (loss)                 $ (6,421  )   $ 13,568                   $ 1,235       $ 24,776
income
Adjusted      3.1    %     $ 25,528      $ 24,761      (7.6   )%    $ 43,852      $ 47,448
net income
Adjusted      6.0    %     $ 54,124      $ 51,041      (3.2   )%    $ 95,071      $ 98,223
EBITDA
Adjusted
EBITDA                       23.3    %     24.6    %                  21.5    %     24.4    %
margin
Diluted
(loss)                     $ (0.19   )   $ 0.40                     $ 0.04        $ 0.73
earnings
per share
Non-GAAP
diluted       2.7    %     $ 0.75        $ 0.73        (7.9   )%    $ 1.29        $ 1.40
earnings
per share
                                                                                  
                                                                                  
Other Operating Statistics:
CEB segment Contract Value (in                         13.0   %     $ 641,091     $ 567,220
thousands) ^(1)
CEB segment Member institutions ^(2)                   11.9   %       6,780         6,061
CEB segment Contract Value per member                  1.0    %     $ 94,366      $ 93,457
institution ^(2)
CEB segment Wallet retention rate ^(3)                                99      %     99      %
SHL Talent Measurement segment Wallet                                 104     %     96      %
retention rate ^(4)


^(1) We define “CEB segment Contract Value,” at the end of the quarter, as the aggregate
annualized revenue attributed to all agreements in effect on such date, without regard to the
remaining duration of any such agreement. CEB segment Contract Value at June 30, 2014
includes $20.2 million from KnowledgeAdvisors and Talent Neuron. CEB segment Contract Value
does not include the impact of PDRI.

^(2) We define “CEB segment Member institutions,” at the end of the quarter, as member
institutions with Contract Value in excess of $10,000. The same definition is applied to “CEB
segment Contract Value per member institution.”

^(3) We define “CEB segment Wallet retention rate,” at the end of the quarter, as the total
current year segment Contract Value from prior year members as a percentage of the total
prior year segment Contract Value. The CEB segment Wallet retention rate does not include the
impact of PDRI.

^(4) We define “SHL Talent Measurement segment Wallet retention rate,” at the end of the
quarter on a constant currency basis, as the last current 12 months of total segment Adjusted
revenue from prior year customers as a percentage of the prior 12 months of total segment
Adjusted revenue.







THE CORPORATE EXECUTIVE BOARD COMPANY
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

                   Three Months Ended                Six Months Ended
                                                 
                   June 30,                          June 30,
                   2014             2013            2014         2013
                                                                   
Revenue ^(1)       $  230,427        $ 204,610       $ 439,864     $ 394,882
Costs and
expenses:
Cost of               85,034           75,797          163,221       146,788
services
Member
relations and         67,581           58,238          134,929       113,896
marketing
General and           27,799           25,253          55,390        50,470
administrative
Acquisition
related costs         1,106            2,024           2,445         3,022
^(2)
Impairment loss       39,700           —               39,700        —
Depreciation
and                  18,437         14,783        34,931      29,489  
amortization
Total costs and      239,657        176,095       430,616     343,665 
expenses
                                                                   
Operating             (9,230   )       28,515          9,248         51,217
(loss) profit
Other income
(expense), net
Interest income       (1,435   )       (256    )       (2,088  )     1,296
and other ^(3)
Gain on cost
method                6,585            —               6,585         —
investment
Interest             (4,528   )      (6,240  )      (9,311  )    (12,640 )
expense
Other income         622            (6,496  )      (4,814  )    (11,344 )
(expense), net
(Loss) income
before                (8,608   )       22,019          4,434         39,873
provision for
income taxes
Provision for        (2,187   )      8,451         3,199       15,097  
income taxes
Net (loss)         $  (6,421   )     $ 13,568       $ 1,235      $ 24,776  
income
                                                                   
Basic (loss)
earnings per       $  (0.19    )     $ 0.41          $ 0.04        $ 0.74
share
Diluted (loss)
earnings per       $  (0.19    )     $ 0.40          $ 0.04        $ 0.73
share
                                                                   
Weighted
average shares
outstanding
Basic                 33,703           33,459          33,709        33,481
Diluted               34,003           33,741          34,101        33,850
                                                                   
Percentage of
Adjusted
Revenue
Cost of               36.6     %       36.5    %       36.8    %     36.5    %
services
Member
relations and         29.1     %       28.1    %       30.5    %     28.3    %
marketing
General and           12.0     %       12.2    %       12.5    %     12.5    %
administrative
Depreciation
and                   7.9      %       7.1     %       7.9     %     7.3     %
amortization
Operating             (4.0     )%      13.7    %       2.1     %     12.7    %
(loss) profit
Adjusted EBITDA       23.3     %       24.6    %       21.5    %     24.4    %
^(4)

^(1) Net of a $2.0 million and $3.2 million reduction to reflect the impact of
the deferred revenue fair value adjustment in the three and six months ended
June 30, 2014, respectively, and $3.0 million and $7.5 million in the three
and six months ended June 30, 2013, respectively.

^(2) Acquisition related costs in the three and six months ended June 30, 2014
primarily relate to transaction and integration costs associated with the
acquisition of KnowledgeAdvisors and Talent Neuron. Acquisition related costs
in the three and six months ended June 30, 2013 primarily relate to
integration costs associated with the SHL acquisition.

^(3) Interest income and other in the three months ended June 30, 2014
includes a $0.6 million increase in the fair value of deferred compensation
plan assets and $0.2 million of interest income offset by a $2.0 million net
foreign currency loss and $0.2 million of other loss. Interest income and
other in the three months ended June 30, 2013 includes a $0.2 million decrease
in the fair value of deferred compensation plan assets and a $0.1 million net
foreign currency loss offset by $0.1 million of interest income. Interest
income and other in the six months ended June 30, 2014 includes a $0.8 million
increase in the fair value of deferred compensation plan assets and $0.2
million of interest income offset by a $2.9 million net foreign currency loss
and $0.2 million of other loss. Interest income and other in the six months
ended June 30, 2013 includes a $0.6 million increase in the fair value of
deferred compensation plan assets, $0.6 million of other income, and $0.1
million of interest income offset by a $0.1 million net foreign currency loss.

^(4) See “Non-GAAP Financial Measures” for further explanation.


                                      
                                      
                                      
                                      
                                      
THE CORPORATE EXECUTIVE BOARD COMPANY
Segment Operating Results
(In thousands)
                                      
                                      
                         Three Months Ended          Six Months Ended
                                                 
                         June 30,                    June 30,
                         2014         2013           2014         2013
                                                  
Adjusted Revenue ^(1)
CEB segment              $ 176,917    $ 156,818      $ 337,936     $ 304,957
SHL Talent Measurement    55,460     50,742       105,162     97,384  
segment
                         $ 232,377   $ 207,560     $ 443,098    $ 402,341 
                                                                   
Adjusted EBITDA ^(1)
CEB segment              $ 44,744     $ 41,044       $ 79,985      $ 79,865
SHL Talent Measurement    9,380      9,997        15,086      18,358  
segment
                         $ 54,124    $ 51,041      $ 95,071     $ 98,223  
                                                                   
Adjusted EBITDA Margin
^(1)
CEB segment                25.3    %    26.2    %      23.7    %     26.2    %
SHL Talent Measurement     16.9    %    19.7    %      14.3    %     18.9    %
segment
Consolidated               23.3    %    24.6    %      21.5    %     24.4    %

^(1) See “Non-GAAP Financial Measures” for further explanation.







THE CORPORATE EXECUTIVE BOARD COMPANY
Condensed Consolidated Balance Sheets
(In thousands)


                           June 30, 2014               December 31, 2013
                            (unaudited)
Assets
Current assets:
Cash and cash               $     95,241                  $      119,554
equivalents
Accounts receivable,              206,729                        271,264
net ^(1)
Deferred income taxes,            19,215                         17,524
net
Deferred incentive                25,290                         24,472
compensation
Prepaid expenses and             33,752                        29,355
other current assets
Total current assets              380,227                        462,169
                                                                 
Deferred income taxes,            1,624                          1,230
net
Property and                      116,286                        106,854
equipment, net
Goodwill                          481,453                        442,775
Intangible assets, net            302,970                        309,692
Other non-current                67,427                        60,955
assets
Total assets                $     1,349,987               $      1,383,675
                                                                 
Liabilities and
stockholders’ equity
Current liabilities:
Accounts payable and        $     64,740                  $      85,294
accrued liabilities
Accrued incentive                 40,340                         61,498
compensation
Deferred revenue ^(2)             428,376                        416,367
Deferred income taxes,            875                            969
net
Debt – current portion           10,270                        10,274
Total current                     544,601                        574,402
liabilities
                                                                 
Deferred income taxes             47,449                         48,553
Other liabilities                 120,406                        115,424
Debt – long term                 500,419                       505,554
Total liabilities                 1,212,875                      1,243,933
                                                                 
Total stockholders’              137,112                       139,742
equity
Total liabilities and       $     1,349,987               $      1,383,675
stockholders’ equity

^(1) Includes accounts receivable, net of $71.7 million at June 30, 2014
related to the SHL Talent Measurement segment, PDRI, and KnowledgeAdvisors and
$64.0 million at December 31, 2013 related to the SHL Talent Measurement
segment and PDRI.

^(2) Includes deferred revenue of $76.6 million at June 30, 2014 related to
the SHL Talent Measurement segment, PDRI, and KnowledgeAdvisors and $61.2
million at December 31, 2013 related to the SHL Talent Measurement segment and
PDRI.







THE CORPORATE EXECUTIVE BOARD COMPANY
Unaudited Consolidated Statements of Cash Flows
(In thousands)


                                                    Six Months Ended June 30,
                                                     2014         2013
CASH FLOWS FROM OPERATING ACTIVITIES:                            
Net income                                           $ 1,235       $ 24,776
Adjustments to reconcile net income to net cash
flows provided by operating activities:
Impairment loss                                        39,700        —
Gain on cost method investment                         (6,585  )     —
Depreciation and amortization                          34,931        29,489
Amortization of credit facility issuance costs         1,294         1,609
Deferred income taxes                                  (13,851 )     (4,588  )
Share-based compensation                               7,757         5,857
Excess tax benefits from share-based compensation      (3,053  )     (4,036  )
arrangements
Net foreign currency remeasurement loss                1,755         579
Changes in operating assets and liabilities:
Accounts receivable, net                               68,630        49,458
Deferred incentive compensation                        (901    )     (3,060  )
Prepaid expenses and other current assets              (2,715  )     (1,001  )
Other non-current assets                               (902    )     392
Accounts payable and accrued liabilities               (22,528 )     (23,435 )
Accrued incentive compensation                         (21,560 )     (16,010 )
Deferred revenue                                       3,626         17,562
Other liabilities                                     3,325       70      
Net cash flows provided by operating activities        90,158        77,662
                                                                     
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                    (23,819 )     (14,384 )
Cost method investment                                 (1,092  )     (7,300  )
Acquisition of businesses, net of cash acquired       (58,902 )    —       
Net cash flows used in investing activities            (83,813 )     (21,684 )
                                                                     
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of credit facility                            (5,376  )     (26,626 )
Proceeds from the exercise of common stock options     —             1,098
Proceeds from the issuance of common stock under       557           384
the employee stock purchase plan
Excess tax benefits from share-based compensation      3,053         4,036
arrangements
Purchase of treasury shares                            (5,241  )     (2,751  )
Withholding of shares to satisfy minimum employee      (6,673  )     (6,466  )
tax withholding for equity awards
Payment of dividends                                  (17,691 )    (15,064 )
Net cash flows used in financing activities            (31,371 )     (45,389 )
                                                                     
Effect of exchange rates on cash                      713         (1,715  )
Net (decrease) increase in cash and cash               (24,313 )     8,874
equivalents
Cash and cash equivalents, beginning of year          119,554     72,699  
Cash and cash equivalents, end of period             $ 95,241     $ 81,573  







THE CORPORATE EXECUTIVE BOARD COMPANY
Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share data)

A reconciliation of each of the non-GAAP measures to the most directly comparable GAAP
measure is provided below.

Adjusted Revenue

            Three Months Ended June 30, 2014       Three Months Ended June 30, 2013
             CEB          SHL         Total       CEB         SHL       Total
Revenue      $ 175,370      $ 55,057     $ 230,427   $ 156,818    $ 47,792   $ 204,610
Impact of
the
deferred      1,547         403         1,950      —           2,950     2,950
revenue
fair value
adjustment
Adjusted     $ 176,917      $ 55,460     $ 232,377   $ 156,818    $ 50,742   $ 207,560
revenue


             Six Months Ended June 30, 2014          Six Months Ended June 30, 2013
             CEB            SHL          Total       CEB          SHL        Total
Revenue      $ 336,089      $ 103,775    $ 439,864   $ 304,957    $ 89,925   $ 394,882
Impact of
the
deferred      1,847          1,387       3,234      —           7,459     7,459
revenue
fair value
adjustment
Adjusted     $ 337,936      $ 105,162    $ 443,098   $ 304,957    $ 97,384   $ 402,341
revenue


Adjusted EBITDA

              Three Months Ended June 30, 2014      Three Months Ended June 30, 2013
               CEB         SHL         Total        CEB         SHL         Total
Net (loss)                               $ (6,421 )                             $ 13,568
income
Provision
for income                                 (2,187 )                               8,451
taxes
Interest                                   4,347                                  6,174
expense, net
Gain on cost
method                                     (6,585 )                               —
investment
Other
expense                                   1,616                                322    
(income),
net
Operating
(loss)         $ (9,158 )   $ (72    )     (9,230 )   $ 30,894     $ (2,379 )     28,515
profit
Other
(expense)        (1,008 )     (608   )     (1,616 )     (869   )     547          (322   )
income, net
Depreciation
and              9,343        9,094        18,437       7,085        7,698        14,783
amortization
Impact of
the deferred
revenue fair     1,547        403          1,950        —            2,950        2,950
value
adjustment
Acquisition
related          1,106        —            1,106        1,189        835          2,024
costs
Impairment       39,700       —            39,700       —            —            —
loss
Share-based     3,214      563        3,777      2,745      346        3,091  
compensation
Adjusted       $ 44,744    $ 9,380     $ 54,124    $ 41,044    $ 9,997     $ 51,041 
EBITDA
                                                                                  
Adjusted
EBITDA          25.3   %    16.9   %    23.3   %    26.2   %    19.7   %    24.6   %
margin


               Six Months Ended June 30, 2014         Six Months Ended June 30, 2013
               CEB          SHL          Total        CEB          SHL          Total
Net income                               $ 1,235                                $ 24,776
Provision
for income                                 3,199                                  15,097
taxes
Interest                                   9,155                                  12,523
expense, net
Gain on cost
method                                     (6,585 )                               —
investment
Other
expense                                   2,244                                (1,179 )
(income),
net
Operating
profit         $ 13,216     $ (3,968 )     9,248      $ 57,326     $ (6,109 )     51,217
(loss)
Other
(expense)        (1,089 )     (1,155 )     (2,244 )     872          307          1,179
income, net
Depreciation
and              17,135       17,796       34,931       14,292       15,197       29,489
amortization
Impact of
the deferred
revenue fair     1,847        1,387        3,234        —            7,459        7,459
value
adjustment
Acquisition
related          2,445        —            2,445        2,019        1,003        3,022
costs
Impairment       39,700       —            39,700       —            —            —
loss
Share-based     6,731      1,026      7,757      5,356      501        5,857  
compensation
Adjusted       $ 79,985    $ 15,086    $ 95,071    $ 79,865    $ 18,358    $ 98,223 
EBITDA
                                                                                  
Adjusted
EBITDA          23.7   %    14.3   %    21.5   %    26.2   %    18.9   %    24.4   %
margin



Adjusted Net Income

                   Three Months Ended              Six Months Ended
                                              
                   June 30,                        June 30,
                   2014            2013           2014            2013
Net (loss)         $  (6,421  )     $  13,568     $  1,235         $  24,776
income
Impact of the
deferred
revenue fair          1,219            2,100          2,127            5,310
value
adjustment ^(1)
Acquisition
related costs         743              1,334          1,545            1,958
^(1)
Impairment loss       24,139           —              24,139           —
^(2)
Gain on cost
method                (3,944  )        —              (3,944  )        —
investment ^(1)
Share-based
compensation          2,363            1,915          4,821            3,605
^(1)
Amortization of
acquisition
related              7,429          5,844         13,929         11,799
intangibles
^(1)
Adjusted net       $  25,528       $  24,761      $  43,852       $  47,448
income


Non-GAAP Earnings per Diluted Share

                   Three Months Ended              Six Months Ended

                   June 30,                        June 30,
                   2014             2013           2014             2013
Diluted (loss)
earnings per       $  (0.19   )     $  0.40        $  0.04          $  0.73
share
Impact of the
deferred
revenue fair          0.04             0.06           0.06             0.16
value
adjustment ^(1)
Acquisition
related costs         0.02             0.04           0.05             0.05
^(1)
Impairment loss       0.71             —              0.71             —
^(2)
Gain on cost
method                (0.12   )        —              (0.12   )        —
investment ^(1)
Share-based
compensation          0.07             0.06           0.14             0.11
^(1)
Amortization of
acquisition
related              0.22           0.17          0.41           0.35
intangibles
^(1)
Non-GAAP
diluted            $  0.75         $  0.73        $  1.29         $  1.40
earnings per
share

^(1) Adjustments are net of the annual estimated income tax effect using
statutory rates based on the relative amounts allocated to each jurisdiction.
The following income tax rates were used: 34% in 2014 and 29% in 2013 for the
deferred revenue fair value adjustment; 37% in 2014 and 2013 for acquisition
related costs; 40% in 2014 for the gain on cost method investment; 38% in 2014
and 39% in 2013 for share-based compensation; and 30% in 2014 and 32% in 2013
for amortization of acquisition related intangibles.

(2) The $39.7 million impairment loss associated with PDRI’s non-deductible
intangible assets and goodwill recognized in the three months ended June 30,
2014 was not treated as a discrete event in the provision for income taxes;
rather, it was considered to be a component of the estimated annual effective
tax rate. Approximately $0.4 million of the income tax effect associated with
the non-deductible goodwill impairment loss was reflected in the income tax
provision in the three and six months ended June 30, 2014 and the remaining
tax effect of approximately $3.1 million and $4.1 million will be added back
in the third and fourth quarter of 2014, respectively, to bring the full year
adjustment to $31.3 million.



With respect to our 2014 annual guidance, reconciliations of net income to
Adjusted EBITDA, net income to Adjusted net income, and GAAP diluted earnings
per share to Non-GAAP diluted earnings per share as projected for 2014 are not
provided because we cannot, without unreasonable effort, determine the
components of net income and GAAP diluted earnings per share to provide
reconciliations with certainty at this time.

Contact:

The Corporate Executive Board Company
Richard S. Lindahl, 571-303-6956
Chief Financial Officer
c/o June Connor
 
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