UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

Commission File Number: 000-24799

THE CORPORATE EXECUTIVE BOARD COMPANY

(202) 777-5000
(Registrant’s Telephone Number, Including Area Code)

Not applicable.
(Former Name, Former Address and 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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [x]     No [  ]

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

As of July 23, 2004, we had outstanding 39,029,438 shares of Common Stock, par value $0.01 per share, and had outstanding no shares of Preferred Stock, par value $0.01 per share.

THE CORPORATE EXECUTIVE BOARD COMPANY
INDEX TO FORM 10-Q

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

See accompanying notes to condensed financial statements.

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THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)

See accompanying notes to condensed financial statements.

4

THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

See accompanying notes to condensed financial statements.

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THE CORPORATE EXECUTIVE BOARD COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Description of operations

     The Corporate Executive Board Company (the “Company”) provides “best practices” research, decision support tools and executive education focusing on corporate strategy, operations and general management issues. Best practices research supports senior executive decision making by identifying and analyzing specific management initiatives, processes and strategies that have been determined to produce the best results in solving common business problems or challenges. For a fixed annual fee, members of each of its research programs have access to an integrated set of services, including best practices research studies, executive education seminars, customized research briefs and Web-based access to the program’s content database and decision support tools.

Note 2 — Condensed consolidated financial statements

     The accompanying condensed unaudited consolidated financial statements included herein have been prepared by us in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete consolidated financial statements are not included herein. It is recommended that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and related notes as reported on the Company’s Form 10-K filed with the SEC on March 3, 2004.

     In management’s opinion, all adjustments, consisting of normal recurring adjustments, 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 as of December 31, 2003 has been derived from the financial statements that have been audited by the Company’s independent auditors. The results of operations for the three and six months ended June 30, 2004, may not be indicative of the results that may be expected for the year ending December 31, 2004, or any other period within calendar year 2004.

Note 3 — Public offerings of common stock

     In May 2004 and March 2003, certain of the Company’s shareholders agreed to sell 1.9 million and 588,000 shares of its common stock, respectively, in registered public offerings. The Company did not directly receive any proceeds from the sale of its common stock pursuant to these registered public offerings. However, it did receive cash from the exercise of common stock options in conjunction with these registered public offerings. In addition, the Company recognized $408,000 and $83,000 in compensation expense reflecting additional Federal Insurance Corporation Act (“FICA”) taxes as a result of the taxable income that the employees recognized upon the exercise of non-qualified common stock options in conjunction with the registered public offering in May 2004 and March 2003, respectively. The additional FICA taxes are included within “Stock option and related expenses” in the condensed consolidated statements of income for the three and six months ended June 30, 2004 and 2003.

Note 4 — Earnings per share

     Basic earnings per share was computed by dividing net income by the number of basic weighted average common shares outstanding during the period. Diluted earnings per share was computed by dividing net income by the number of diluted weighted average common shares outstanding during the period. The number of weighted average common share equivalents outstanding has been determined in accordance with the treasury stock method. Common share equivalents consist of common shares issuable upon the exercise of outstanding common stock options. A reconciliation of basic to diluted weighted average common shares outstanding is as follows (in thousands):

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Note 5 — Comprehensive income

     Comprehensive income is defined as net income plus the net-of-tax impact of foreign currency items, minimum pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities. Comprehensive income for the three months ended June 30, 2004 and 2003 was $8.4 million and $10.4 million, respectively. Comprehensive income for the six months ended June 30, 2004 and 2003 was $21.4 million and $18.3 million, respectively. The accumulated elements of comprehensive income, net of tax, included within stockholders’ equity on the condensed consolidated balance sheets are comprised primarily of the change in unrealized gains (losses) on available-for-sale marketable securities.

Note 6 — Supplemental cash flows disclosures

     For the six months ended June 30, 2004 and 2003, the Company recognized $15.2 million and $4.5 million, respectively, in stockholders’ equity for tax deductions associated with the exercise of non-qualified common stock options and disqualifying dispositions of incentive stock options. Estimated current income tax payments for the six months ended June 30, 2004 and 2003 were $438,000 and $134,000, respectively.

Note 7 — Stockholders’ equity

     In February 2003, the Company’s Board of Directors authorized a share repurchase of up to $75 million of the Company’s common stock. Repurchases will 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. The Company will fund its share repurchases with cash on hand and cash generated from operations. As of June 30, 2004 and December 31, 2003, the Company has repurchased 943,773 shares and 552,007 shares, respectively, of treasury stock at a total cost of $38.4 million and $19.6 million, respectively.

     In February 2004, the Board of Directors declared a quarterly dividend of $0.075 per share which was paid on March 31, 2004 to stockholders of record at the close of business on March 10, 2004. In addition, in May 2004, the Board of Directors declared a quarterly dividend of $0.075 per share which was paid on June 30, 2004 to stockholders of record at the close of business on June 15, 2004. For the six months ended June 30, 2004, the Company paid dividends to stockholders of record totaling $5.7 million. The Company paid no cash dividends prior to January 1, 2004.

Note 8 — Stock-based compensation

     At June 30, 2004, the Company had several stock-based employee compensation plans. These plans provide for the granting of stock options and restricted stock to employees and non-employee members of our Board of Directors. The Company accounts for those plans using the intrinsic value method of expense recognition and measurement prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations (collectively, “APB No. 25”). Accordingly, no stock-based compensation cost is reflected in net income, as reported, as all stock options granted under the Company’s stock-based employee compensation plans have an exercise price equal to the market value of the underlying common stock on the date of grant.

     FASB Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), as amended by FASB Statement No. 148, Accounting for Stock-Based Compensation Transition and Disclosure, established an alternative method of expense recognition for stock-based compensation awards to employees based on fair values. Pro forma information regarding net income is required by SFAS No. 123, as amended, and has been determined as if the Company had accounted for its employee stock options under the fair value method as prescribed by SFAS No. 123, as amended.

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     The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation. For purposes of pro forma disclosures, the estimated fair value of options is amortized to expense over the vesting period.

     Under the SFAS No. 123 pro forma disclosure provisions, the fair value of options granted subsequent to December 15, 1995, has been estimated using the Black-Scholes option valuation model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price characteristics that are significantly different from those of traded options. Because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock rights.

Note 9 — Income taxes -Washington, D.C. income tax incentives

     The Office of Tax and Revenue of the Government of the District of Columbia (the “Office of Tax and Revenue”) has adopted regulations in accordance with the New E-Conomy Transformation Act of 2000 (the “Act”) that modify the income and franchise tax, sales and use tax and personal property tax regulations, effective April 2001. Specifically, the regulations provide certain credits, exemptions and other benefits to a Qualified High Technology Company (“QHTC”). In October 2003, the Company received notification from the Office of Tax and Revenue that its certification as a QHTC under the Act had been accepted. As a QHTC, the Company’s Washington, D.C. statutory income tax rate will be 0.0% through 2005 and 6.0% thereafter, versus 9.975% prior to this qualification, and the Company is also eligible for certain Washington, D.C. income tax credits and other benefits.

     The Company filed a claim for refund of sales and use taxes previously paid to the Office of Tax and Revenue on qualifying QHTC purchases under the Act. In February 2004, the Company received a notice of refund denial for the claim. However, in May 2004, the Company received notification that the Office of Tax and Revenue has accepted the Company’s position under the QHTC provisions of the Act and that the Company is entitled to receive a refund of sales and use taxes previously paid on eligible purchases. The outcome of this process is consistent with the position taken by the QHTC Activity Review Committee of the Office of Tax and Revenue, which accepted the Company’s QHTC status in October 2003.

Note 10 — Subsequent events

     In July 2004, the Board of Directors declared a quarterly dividend of $0.075 per share. The Company will fund its dividend payments with cash on hand and cash generated from operations. The dividend is payable on September 30, 2004 to stockholders of record at the close of business on September 15, 2004.

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

     This Quarterly Report on Form 10-Q of The Corporate Executive Board Company contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth below and in our filings with the Securities and Exchange Commission, and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. 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, our inability to know in advance if new products will be successful, difficulties we may experience in anticipating market trends, our need to attract and retain a significant number of highly skilled employees, restrictions on selling our products and services to the health care industry, continued consolidation in the financial institutions industry, which may limit our business with such companies, fluctuations in operating results, our potential inability to protect our intellectual property rights, our potential exposure to litigation related to the content of our products, our potential exposure to loss of revenue resulting from our unconditional service guarantee, various factors that could affect our estimated income tax rate or our ability to use our existing deferred tax assets, whether the Washington, D.C. Office of Tax and Revenue withdraws our QHTC status and possible volatility of our stock price. These factors 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 Securities and Exchange Commission, including, but not limited to, its 2003 annual report on Form 10-K.

Overview

     We provide “best practices” research and quantitative analysis focusing on corporate strategy, operations and general management issues. Best practices research supports senior executive decision making by identifying and analyzing specific management initiatives, processes and strategies that have been determined to produce the best results in solving common business problems or challenges. For a fixed annual fee, members of each of our research programs have access to an integrated set of services, including best practices research studies, executive education seminars, customized research briefs and Web-based access to the program’s content database and decision support tools.

     Memberships, which are principally annually renewable agreements, are generally payable by members at the beginning of the contract term. Billings attributable to memberships in our research programs initially are recorded as deferred revenues and then recognized pro rata over the membership contract term, which is typically 12 months. At any time, a member may request a refund of their membership fee for a research program, which is provided on a pro rata basis relative to the remaining term of the membership.

     Our growth strategy is to cross-sell additional research programs to existing members, to add new members and to develop new research programs and decision support tools. The implementation of our growth strategy can be seen in our operating results. One measure of our business is its annualized Contract Value, which we calculate as the aggregate annualized revenue attributed to all agreements in effect at a given point in time, without regard to the remaining duration of any such agreement. Our experience has been that a substantial portion of members renew subscriptions for an equal or higher level each year. Contract Value has increased 32.1% to $255.5 million at June 30, 2004, from $193.4 million at June 30, 2003.

     Our operating costs and expenses consist of cost of services, member relations and marketing, general and administrative expenses, depreciation, and stock option and related expenses. Cost of services represents the costs associated with the production and delivery of our products and services, including compensation of research personnel and in-house faculty, the production of published materials, the organization of executive education seminars and all associated support services. Member relations and marketing expenses include the costs of acquiring new members, the costs of maintaining and renewing existing members, compensation expense (including sales commissions), travel and all associated support services. General and administrative expenses include the costs of human resources and recruiting, finance and accounting, management information systems, facilities management, new product development and other administrative functions. Stock option and related expenses includes additional cash payroll taxes for compensation expense relating to the taxable income recognized by employees upon the exercise of non-qualified common stock options.

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Results of Operations

     The following table sets forth certain financial data as a percentage of revenues for the periods indicated:

Three and Six Months Ended June 30, 2004 and June 30, 2003

     Revenues. Revenues increased 33.5% to $67.2 million for the three months ended June 30, 2004, from $50.3 million for the three months ended June 30, 2003. Revenues increased 34.4% to $131.2 million for the six months ended June 30, 2004, from $97.6 million for the six months ended June 30, 2003. The largest driver of the increase in revenues during the three and six months ended June 30, 2004 was the cross-selling of additional subscriptions to existing members. Other drivers contributing to the increase in revenues for the three and six months ended June 30, 2004 included the introduction of new research programs, price increases and the addition of new members.

     Cost of services. Cost of services increased 30.5% to $22.2 million for the three months ended June 30, 2004, from $17.0 million for the three months ended June 30, 2003. Cost of services increased 31.6% to $43.6 million for the six months ended June 30, 2004, from $33.2 million for the six months ended June 30, 2003. The increase in cost of services was principally due to compensation costs for new research and executive education staff, an increase in external consulting expenses to support existing programs and an increase in travel costs due to an increase of executive education seminars. Cost of services as a percentage of revenues decreased to 33.1% for the three months ended June 30, 2004, from 33.8% for the three months ended June 30, 2003. Cost of services as a percentage of revenues decreased to 33.3% for the six months ended June 30, 2004, from 34.0% for the six months ended June 30, 2003. The year-over-year changes in the cost of services as a percentage of revenue are due to the leverage inherent in our membership-based business model and a shift in the timing of our publishing and executive education seminar schedule relative to the period ending June 30, 2003. Cost of services as a percentage of revenues may fluctuate from quarter to quarter due to the timing of executive education seminars, the timing of the completion and delivery of best practices research studies and the introduction of new research programs. Accordingly, the cost of services as a percentage of revenues for the three and six months ended June 30, 2004 may not be indicative of future quarterly or annual results.

     Gross profit. Historically, the gross profit as a percentage of revenues, or gross profit margin, has fluctuated based upon the growth in revenues offset by the costs of delivering best practices research studies, the timing of executive education seminars, the volume of customized research briefs, the hiring of personnel, and the introduction of new membership programs. Accordingly, the gross profit margin for the three and six months ended June 30, 2004, may not be indicative of future results. A number of factors that impact gross profit margin are discussed in the “Cost of services” description above.

     Member relations and marketing. Member relations and marketing costs increased 43.2% to $18.6 million for the three months ended June 30, 2004 from $13.0 million for the three months ended June 30, 2003. Member relations and marketing costs increased 43.8% to $36.4 million for the six months ended June 30, 2004 from $25.4 million for the six months ended June 30, 2003. The year-over-year increase in member relations and marketing costs is due to an increase in marketing travel expenses to support higher revenue activity, commission expenses associated with increased revenue and, to a lesser extent, an increase in member relations and marketing personnel and related costs. Member relations and marketing costs as a percentage of revenues increased to 27.6% for the three months ended June 30, 2004, from 25.8% for the three months ended June 30, 2003. Member relations and marketing costs as a percentage of revenues increased to 27.8% for the six months ended June 30, 2004, from 26.0% for the six months ended June 30, 2003. The year-over-year increase of the three and six months ending June 30, 2004 is due primarily to the changes in expenses in member relations and marketing noted above.

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     General and administrative. General and administrative expenses increased 49.8% to $7.7 million for the three months ended June 30, 2004, from $5.2 million for the three months ended June 30, 2003. General and administrative expenses increased 42.7% to $15.0 million for the six months ended June 30, 2004, from $10.5 million for the six months ended June 30, 2003. The increase in general and administrative expenses is driven by an increase in staff and related costs and the use of external financial, legal and information technology consultants to support our organizational growth and our compliance with certain regulatory requirements. In addition to these items, the increase in general and administrative expenses during the six months ended June 30, 2004, as compared to 2003, is driven by one-time, lease termination costs associated with our move to a new office facility within London, England, offset by decrease, as compared to 2003, in recruiting costs by reducing our use of external search firms. General and administrative expenses as a percentage of revenues increased to 11.5% for the three months ended June 30, 2004, from 10.3% for the three months ended June 30, 2003. General and administrative costs as a percentage of revenues increased to 11.4% for the six months ended June 30, 2004, from 10.8% for the six months ended June 30, 2003. Although a portion of our general and administrative expenses are fixed in nature, our general and administrative expenses may continue to be higher as a percentage of revenue for the balance of calendar year 2004 as we incur additional financial, legal and information technology consultants to support our compliance with certain regulatory requirements. The year-over-year increase of the three and six months ending June 30, 2004 is due primarily to the changes in expenses in general and administrative costs noted above.

     Depreciation. Depreciation expense increased 14.3% to $1.6 million for the three months ended June 30, 2004, from $1.4 million for the three months ended June 30, 2003. Depreciation expense increased 21.5% to $3.3 million for the six months ended June 30, 2004, from $2.7 million for the six months ended June 30, 2003. The increase in depreciation expense was principally due to the additional investment in leasehold improvements for additional office space in Washington, D.C. and for the new office space in London, England and new computer equipment and software to support organizational growth.

     Stock option and related expenses. We recognized $408,000 and $2,000 in compensation expense for the three months ended June 30, 2004 and 2003, respectively, reflecting additional FICA taxes as a result of the taxable income that the employees recognized upon the exercise of non-qualified common stock options, primarily in conjunction with the sale of our common stock in the registered public offering in May 2004. We recognized $408,000 and $113,000 in compensation expense for the six months ended June 30, 2004 and 2003, respectively, reflecting additional FICA taxes as a result of the taxable income that the employees recognized upon the exercise of non-qualified common stock options, primarily in conjunction with the sale of our common stock in the registered public offering in May 2004 and March 2003. See further discussion of the sale of our common stock in the registered public offerings of common stock in the“Liquidity and Capital Resources” section below.

     Other income, net. Other income, net increased 24.5% to $2.3 million for the three months ended June 30, 2004, from $1.9 million for the three months ended June 30, 2003. Other income, net increased 23.4% to $4.5 million for the six months ended June 30, 2004, from $3.7 million for the six months ended June 30, 2003. The growth in other income, net, was principally from interest income associated with the increased levels of cash, cash equivalents and marketable securities and the gain on the sale of available-for-sale marketable securities. Cash, cash equivalents and marketable securities increased as a result of cash flows from operating activities and cash flows from financing activities as further discussed in the “Liquidity and Capital Resources” section below.

     Provision for income taxes. We recorded a provision for income taxes of $6.3 million and $6.2 million for the three months ended June 30, 2004 and 2003, respectively. We recorded a provision for income taxes of $12.2 million and $11.6 million for the six months ended June 30, 2004 and 2003, respectively. The decrease in our effective income tax rate to 33.0% for the three and six months ended June 30, 2004 from 39.4% for the three and six months ended June 30, 2003 primarily reflects the recognition of the credits, exemptions and other tax benefits associated with our status as a Qualified High Technology Company (“QHTC”) within Washington, D.C.

     In October 2003, we received notification from the Office of Tax and Revenue that our certification as a QHTC had been accepted. As a QHTC, our Washington, D.C. statutory income tax rate will be 0.0% through 2005 and 6.0% thereafter, versus 9.975% prior to this qualification, and we are eligible for certain Washington, D.C. income tax credits and other benefits. Accordingly, we recorded a non-cash income tax charge to earnings of $8.2 million during the third quarter ended September 30, 2003 for the impact on our deferred tax assets of lowering the Washington, D.C. income tax rate to 0.0%, partially offset by the recognition of certain Washington, D.C. income tax credits.

     We filed a claim for refund for sales and use taxes previously paid to the Office of Tax and Revenue on qualifying QHTC purchases under the Act. We subsequently received a notice of refund denial for the claim. However, in May 2004, we received notification that the Office of Tax and Revenue has accepted our position under the QHTC provisions of the Act and that the Company is entitled to receive a refund of sales and use taxes previously paid on eligible purchases. The outcome of this process is consistent with the position taken by the QHTC Activity Review Committee of the Office of Tax and Revenue, which accepted the Company’s QHTC status in October 2003.

Liquidity and Capital Resources

     Cash flows from operating activities. We have financed our operations to date through funds generated from operating activities. Membership subscriptions, which are principally annually renewable agreements, are generally payable by members at the beginning of the contract term. The combination of revenue growth, profitable operations and advance payment of membership subscriptions has historically resulted in net positive cash flows provided by operating activities. We generated net cash flows from operating activities of $55.8 million and $36.3 million for the six months ended June 30, 2004 and 2003, respectively. For the six months ended June 30, 2004 and 2003, operating cash flows were generated within the period principally by net income, the utilization of tax benefits created by the exercise of common stock options, the collection of membership fees receivable, offset by the increase in prepaid expenses and other current assets and a decrease in accrued incentive compensation and deferred revenues. As of June 30, 2004, we had cash, cash equivalents and marketable securities of $368.7 million. We expect that our current cash, cash equivalents and marketable securities balances and anticipated net positive cash flows from operations will satisfy working capital, financing, and capital expenditure requirements for the next twelve months.

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     Cash flows from investing activities. We used net cash flows in investing activities of $46.2 million and $59.4 million during the six months ended June 30, 2004 and 2003, respectively. During the six months ended June 30, 2004 we purchased available-for-sale marketable securities, net, of $40.2 million and purchased leasehold improvements for additional office space in Washington, D.C. and London, England and computer equipment and software totaling $6.0 million. During the six months ended June 30, 2003 investing cash flows were used for the purchase, net of sales and maturities, of available-for-sale marketable securities of $56.2 million and for the purchases of leasehold improvements for additional office space in Washington, DC, computer equipment and software of $3.2 million.

     Cash flows from financing activities. We generated net cash flows from financing activities of $31.2 million and used net cash flows from financing activities of $6.6 million during the six months ended June 30, 2004 and 2003, respectively. Net cash generated from financing activities during the six months ending June 30, 2004 was primarily attributed to the receipt of $55.2 million in cash from the exercise of common stock options, primarily in conjunction with the sale of 1.9 million shares of our common stock in a registered public offering in May 2004, which was offset by the repurchase of our common stock during the period, which totaled $18.7 million, and the payment of dividends during the period, which totaled $5.7 million. Net cash used in financing activities during the six months ending June 30, 2003 was primarily attributed to the repurchase of our common stock during the period, which totaled $14.8 million, partially offset by the receipt of $7.8 million in cash from the exercise of common stock options, primarily in conjunction with the sale of 588,000 shares of our common stock in a registered public offering in March 2003.

     In addition, in July 2004 the Board of Directors declared a quarterly dividend of $0.075 per share which will be payable in September 2004. See further discussion of the quarterly dividend and the effect of this event on the cash flows from financing activities in “Note 10 — Subsequent Events” to the condensed consolidated financial statements which can be found in this Form 10-Q under the heading “Item 1. Financial Statements.”

     During the six months ended June 30, 2004, we had no material changes, outside the ordinary course of business, in our non-cancelable contractual financial obligations. At June 30, 2004 and December 31, 2003, we have 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.

Critical Accounting Policies

     Our accounting policies, which are in compliance with accounting principles generally accepted in the United States, require us to apply methodologies, estimates and judgments that have a significant impact on the results we report in our financial statements. In our annual report on Form 10-K we have discussed those policies that we believe are critical and require the use of complex judgment in their application. Since the date of that Form 10-K, there have been no material changes to our critical accounting policies or the methodologies or assumptions applied under them.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

     We are exposed to interest rate risk primarily through our portfolio of cash, cash equivalents and marketable securities, which is designed for safety of principal and liquidity. Cash and cash equivalents consist of highly liquid U.S. Treasury obligations with maturities of less than three months. Marketable securities consist primarily of U.S. Treasury notes and bonds and insured Washington, D.C. tax exempt notes and bonds. We perform periodic evaluations of the relative credit ratings related to the cash, cash equivalents and marketable securities. This portfolio is subject to inherent interest rate risk as investments mature and are reinvested at current market interest rates. We currently do not use derivative financial instruments to adjust our portfolio risk or income profile.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures: The Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report based on the evaluation of these controls and procedures required by Rules 13a-15(b) or 15d-15(b) of the Exchange Act. The Company’s management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Based on their evaluation, such officers have concluded that, as of the end of the period covered by this quarterly report, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company required to be included in the Company’s periodic filings under the Exchange Act. During the period covered by this quarterly report, there have been no changes to our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we are subject to certain legal proceedings and claims in the ordinary course of business. We currently are not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

Item 2. Change in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

During the three months ended June 30, 2004, we did not purchase any shares of our common stock.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

		The Annual Meeting of Stockholders of The Corporate Executive Board Company was held on July 28, 2004. The following is a tabulation of the voting on the proposals presented at the Annual Meeting of Stockholders:
		Proposal No. 1 – Election of Directors. The following nominees were elected as directors, each to serve until the next annual meeting of stockholders or until a successor is named and qualified:

Proposal No. 2 – Adoption of 2004 Stock Incentive Plan

The adoption of the 2004 Stock Incentive Plan was ratified

Proposal No. 3 – Ratification of the Appointment of Ernst & Young LLP as independent auditors for the year ending December 31, 2004

The appointment of Ernst & Young LLP was ratified

Item 5. Other Information.

None.

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Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

(b) Reports on Form 8-K:

(i)		On May 4, 2004, the Company furnished a Current Report on Form 8-K, which included a press release, dated April 28, 2004, in which the Company announced and commented on its financial results for the first quarter of 2004 and provided a financial outlook for fiscal 2004.
(ii)		On May 5, 2004, the Company furnished a Current Report on Form 8-K, which included an underwriting agreement, dated May 4, 2004, entered into by the Company and certain of its stockholders for the sale by the stockholders of 1,939,113 shares of the registrant’s common stock, par value $0.01 per share, in a registered public offering.
(iii)		On May 5, 2004, the Company furnished a Current Report on Form 8-K/A, which included an underwriting agreement, dated May 4, 2004, entered into by the Company and certain of its stockholders for the sale by the stockholders of 1,939,113 shares of the registrant’s common stock, par value $0.01 per share, in a registered public offering.
(iv)		On May 17, 2004, the Company furnished a Current Report on Form 8-K, which included a press release, dated May 13, 2004, in which the Company announced that it has resolved the sales and use tax refund denial with The Office of Tax and Revenue of the Government of the District of Columbia.

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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.

Date: July 29, 2004

The Corporate Executive Board Company

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