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8-K - FORM 8-K - CEB Inc. | c12202e8vk.htm |
EX-10.1 - EXHIBIT 10.1 - CEB Inc. | c12202exv10w1.htm |
Exhibit 99.1
Contact:
|
Richard S. Lindahl | |||
Chief Financial Officer | 1919 North Lynn Street | |||
(571) 303-6956 | Arlington, Virginia 22209 | |||
jconnor@executiveboard.com | www.exbd.com |
THE CORPORATE EXECUTIVE BOARD REPORTS FOURTH-QUARTER RESULTS,
PROVIDES 2011 GUIDANCE AND INCREASES QUARTERLY CASH DIVIDEND
PROVIDES 2011 GUIDANCE AND INCREASES QUARTERLY CASH DIVIDEND
Arlington, Virginia (February 9, 2011) The Corporate Executive Board Company (CEB or the
Company) (NYSE: EXBD) today announces financial results for the fourth quarter and year ended
December 31, 2010. Revenues increased 8.4% to $117.0 million for the fourth quarter of 2010 from
$108.0 million for the fourth quarter of 2009. Net income and Adjusted net income for the fourth
quarter of 2010 was $10.8 million, or $0.31 per diluted share, compared to net income of $13.4
million, or $0.39 per diluted share, for the same period of 2009. Adjusted net income was $13.7
million and Non-GAAP diluted earnings per share was $0.40 for the fourth quarter of 2009, which
excludes the after-tax effects of restructuring costs and gain on acquisition (see Non-GAAP
Financial Measures below).
For 2010, revenues were $438.9 million, a 0.9% decrease from $442.9 million for 2009. Net income
for 2010 decreased to $40.4 million from $45.6 million for 2009. Diluted earnings per share for
2010 was $1.17, a decrease from $1.33 for 2009. Adjusted net income was $48.2 million and Non-GAAP
diluted earnings per share was $1.40 for 2010, compared to Adjusted net income of $57.7 million and
Non-GAAP diluted earnings per share of $1.68 for 2009 (see Non-GAAP Financial Measures below).
Contract Value at December 31, 2010 increased 13.5% to $447.1 million compared to December 31, 2009
as a result of improved cross-sales of large corporate memberships, the acquisition of
Iconoculture, and an increase in the purchase of memberships by middle market clients. As
previously discussed, growth from these factors was offset to some degree by reductions in Contract
Value as a result of discontinued programs. The average cross-sell ratio was 2.96, reflecting
cross-sell ratios of 3.41 for the traditional large corporate market and 1.88 for middle market
customers.
We are pleased with the progress we made against our core priorities in 2010, said Thomas
Monahan, Chairman and Chief Executive Officer. Through their energy and focus, our teams around
the world delivered on our financial commitments, maintained our relentless dedication to serving
critical member needs, and laid the foundation for continued, sustainable growth.
For 2011 and beyond, well help member companies drive higher levels of performance with our
uniquely valuable insights and data, actionable tools, and engaging service. Our 2011 plan calls
for us to balance continued growth and strong profitability with select investments in new products
and markets.
OUTLOOK FOR 2011
The Company announces 2011 annual guidance as follows: Revenues of $475 to $495 million; Non-GAAP
diluted earnings per share of $1.45 to $1.65; Depreciation and amortization expense of $17.0 to
$18.0 million; capital expenditures of approximately $8.0 to $10.0 million; and an Adjusted EBITDA
margin of between 22.0% and 23.5%.
QUARTERLY DIVIDEND
CEB is increasing its quarterly dividend 36% to $0.15 from $0.11 per share. The Company will fund
its dividend payments with cash on hand and cash generated from operations. The dividend is
payable on March 31, 2011 to
stockholders of record at the close of business on March 15, 2011.
NON-GAAP FINANCIAL MEASURES
This press release and the accompanying tables include a discussion of EBITDA, 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 EBITDA refers to a financial measure
that we define as earnings before interest income, net, depreciation and amortization, and
provision for income taxes. The term Adjusted EBITDA refers to a financial measure that we define
as earnings before interest income, net, depreciation and amortization, provision for income taxes,
impairment loss, costs associated with exit activities, restructuring costs, and gain on
acquisition. The term Adjusted net income refers to net income excluding the after tax effects
of impairment loss, costs associated with exit activities, restructuring costs, and gain on
acquisition. Non-GAAP diluted earnings per share refers to diluted earnings per share excluding
the after tax per share effects of impairment loss, costs associated with exit activities,
restructuring costs, and gain on acquisition.
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 GAAP results is provided below.
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income |
$ | 10,761 | $ | 13,434 | $ | 40,363 | $ | 45,629 | ||||||||
Interest income, net |
(410 | ) | (389 | ) | (1,526 | ) | (1,787 | ) | ||||||||
Depreciation and amortization |
5,172 | 5,642 | 20,462 | 22,991 | ||||||||||||
Provision for income taxes |
7,479 | 7,405 | 28,047 | 27,989 | ||||||||||||
EBITDA |
$ | 23,002 | $ | 26,092 | $ | 87,346 | $ | 94,822 | ||||||||
Impairment loss |
| | 12,645 | | ||||||||||||
Costs associated with exit activities |
| | | 11,518 | ||||||||||||
Restructuring costs |
| 1,053 | | 8,568 | ||||||||||||
Gain on acquisition |
| (680 | ) | | (680 | ) | ||||||||||
Adjusted EBITDA |
$ | 23,002 | $ | 26,465 | $ | 99,991 | $ | 114,228 | ||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income |
$ | 10,761 | $ | 13,434 | $ | 40,363 | $ | 45,629 | ||||||||
Adjustments, net of tax: |
||||||||||||||||
Impairment loss |
| | 7,789 | | ||||||||||||
Costs associated with exit activities |
| | | 7,141 | ||||||||||||
Restructuring costs |
| 653 | | 5,312 | ||||||||||||
Gain on acquisition |
| (422 | ) | | (422 | ) | ||||||||||
Adjusted net income |
$ | 10,761 | $ | 13,665 | $ | 48,152 | $ | 57,660 | ||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
GAAP diluted earnings per share |
$ | 0.31 | $ | 0.39 | $ | 1.17 | $ | 1.33 | ||||||||
Adjustments, net of tax: |
||||||||||||||||
Impairment loss |
| | 0.23 | | ||||||||||||
Costs associated with exit activities |
| | | 0.20 | ||||||||||||
Restructuring costs |
| 0.02 | | 0.16 | ||||||||||||
Gain on acquisition |
| (0.01 | ) | | (0.01 | ) | ||||||||||
Non-GAAP diluted earnings per share |
$ | 0.31 | $ | 0.40 | $ | 1.40 | $ | 1.68 | ||||||||
With respect to the Companys 2011 annual guidance, reconciliations of Non-GAAP diluted earnings
per share to GAAP diluted earnings per share, Adjusted net income to net income and Adjusted EBITDA
to net income as projected for 2011 are not provided because CEB cannot, without unreasonable
effort, determine the components of GAAP diluted earnings per share and net income to provide
reconciliations to Non-GAAP diluted earnings per share and Adjusted EBITDA for its 2011 fiscal year
with certainty at this time.
We believe that EBITDA, 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 Companys business outlook and as a measurement for potential acquisitions. A limitation
associated with EBITDA and Adjusted EBITDA is that they do 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 income from operations, which includes
depreciation and amortization.
FORWARD-LOOKING STATEMENTS
This news 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, statements about anticipated
future financial results, such as our 2011 guidance, are forward-looking statements. 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 U.S. Securities and Exchange Commission, 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 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 rights, 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 or assumptions
used to prepare our financial statements, our potential inability to make, integrate and maintain
acquisitions and investments, the amount and timing of the benefits expected from acquisitions and
investments, and 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. These and other factors are
discussed more fully in the Managements Discussion and Analysis of Financial Condition and
Results of Operations and Risk Factors sections of our filings with the U.S. Securities and
Exchange Commission, including, but not limited to, our 2009 Annual Report on Form 10-K. The
forward-looking statements in this press release are made as of February 9, 2011, and we undertake
no obligation to update any forward-looking statements, whether as a result of new information,
future events, or otherwise.
ABOUT THE CORPORATE EXECUTIVE BOARD COMPANY
The Corporate Executive Board drives faster, more effective decision making among the worlds
leading executives and business professionals. As the premier, network-based knowledge resource,
The Corporate Executive Board provides customers with the authoritative and timely guidance needed
to excel in their roles, take decisive action and improve company performance. Powered by an
executive network that spans more than 50 countries and represents approximately 85% of the worlds
Fortune 500 companies, The Corporate Executive Board offers unique research insights along with an
integrated suite of exclusive tools and resources that enable the worlds most successful
organizations to deliver superior business outcomes. For more information, visit www.exbd.com.
THE CORPORATE EXECUTIVE BOARD COMPANY
Financial Highlights and Other Operating Statistics
(In thousands, except percentages and per share data)
Financial Highlights and Other Operating Statistics
(In thousands, except percentages and per share data)
Selected | Three Months Ended | Selected | Year Ended | |||||||||||||||||||||
Percentage | December 31, | Percentage | December 31, | |||||||||||||||||||||
Changes | 2010 | 2009 | Changes | 2010 | 2009 | |||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||
Financial Highlights (GAAP, as reported): |
||||||||||||||||||||||||
Revenues |
8.4 | % | $ | 117,042 | $ | 107,952 | (0.9 | )% | $ | 438,907 | $ | 442,906 | ||||||||||||
Net income |
$ | 10,761 | $ | 13,434 | $ | 40,363 | $ | 45,629 | ||||||||||||||||
Basic earnings per share |
$ | 0.31 | $ | 0.39 | $ | 1.18 | $ | 1.34 | ||||||||||||||||
Diluted earnings per share |
$ | 0.31 | $ | 0.39 | $ | 1.17 | $ | 1.33 | ||||||||||||||||
Weighted average shares outstanding: |
||||||||||||||||||||||||
Basic |
34,310 | 34,145 | 34,256 | 34,111 | ||||||||||||||||||||
Diluted |
34,666 | 34,398 | 34,553 | 34,293 | ||||||||||||||||||||
Other Operating Statistics: |
||||||||||||||||||||||||
Contract value (In thousands) |
$ | 447,051 | $ | 393,737 | ||||||||||||||||||||
Average subscription price |
$ | 28,685 | $ | 28,552 | ||||||||||||||||||||
Member institutions |
5,271 | 4,812 | ||||||||||||||||||||||
Total membership subscriptions |
15,585 | 13,790 | ||||||||||||||||||||||
Average subscriptions per member institution* |
2.96 | 2.87 | ||||||||||||||||||||||
Client renewal rate** |
83 | % | 78 | % |
* | Also known as cross-sell ratio, represents the average across all subscription
memberships, including the traditional large company market average of 3.41 and 3.30 and the
middle market average of 1.88 and 1.79 in 2010 and 2009, respectively. |
|
** | Represents a client renewal rate of 88% and 83% for our traditional large company market and
74% and 70% for the middle market in 2010 and 2009, respectively. |
THE CORPORATE EXECUTIVE BOARD COMPANY
Operating Statistic and Statements of Operations
(In thousands, except percentages and per share data)
Operating Statistic and Statements of Operations
(In thousands, except percentages and per share data)
Selected | Three Months Ended | Selected | Year Ended | |||||||||||||||||||||
Percentage | December 31, | Percentage | December 31, | |||||||||||||||||||||
Changes | 2010 | 2009 | Changes | 2010 | 2009 | |||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||
Operating Statistic |
||||||||||||||||||||||||
Contract Value (1) (at period end) |
13.5 | % | $ | 447,051 | $ | 393,737 | ||||||||||||||||||
Statements of Operations |
||||||||||||||||||||||||
Revenues |
8.4 | % | $ | 117,042 | $ | 107,952 | (0.9 | )% | $ | 438,907 | $ | 442,906 | ||||||||||||
Cost and expenses: |
||||||||||||||||||||||||
Cost of services |
42,903 | 36,407 | 155,769 | 147,019 | ||||||||||||||||||||
Member relations and marketing |
35,733 | 30,095 | 123,890 | 126,023 | ||||||||||||||||||||
General and administrative |
16,256 | 15,101 | 60,871 | 59,415 | ||||||||||||||||||||
Depreciation and amortization |
5,172 | 5,642 | 20,462 | 22,991 | ||||||||||||||||||||
Impairment loss |
| | 12,645 | | ||||||||||||||||||||
Costs associated with exit activities |
| | | 11,518 | ||||||||||||||||||||
Restructuring costs |
| 1,053 | | 8,568 | ||||||||||||||||||||
Total costs and expenses |
100,064 | 88,298 | 373,637 | 375,534 | ||||||||||||||||||||
Income from operations |
16,978 | 19,654 | 65,270 | 67,372 | ||||||||||||||||||||
Other income, net (2) |
1,262 | 1,185 | 3,140 | 6,246 | ||||||||||||||||||||
Income before provision for
income taxes |
18,240 | 20,839 | 68,410 | 73,618 | ||||||||||||||||||||
Provision for income taxes |
7,479 | 7,405 | 28,047 | 27,989 | ||||||||||||||||||||
Net income |
$ | 10,761 | $ | 13,434 | $ | 40,363 | $ | 45,629 | ||||||||||||||||
Basic earnings per share |
$ | 0.31 | $ | 0.39 | $ | 1.18 | $ | 1.34 | ||||||||||||||||
Diluted earnings per share |
$ | 0.31 | $ | 0.39 | $ | 1.17 | $ | 1.33 | ||||||||||||||||
Weighted average shares outstanding |
||||||||||||||||||||||||
Basic |
34,310 | 34,145 | 34,256 | 34,111 | ||||||||||||||||||||
Diluted |
34,666 | 34,398 | 34,553 | 34,293 | ||||||||||||||||||||
Percentages of Revenues |
||||||||||||||||||||||||
Cost of services |
36.7 | % | 33.7 | % | 35.5 | % | 33.2 | % | ||||||||||||||||
Member relations and marketing |
30.5 | % | 27.9 | % | 28.2 | % | 28.5 | % | ||||||||||||||||
General and administrative |
13.9 | % | 14.0 | % | 13.9 | % | 13.4 | % | ||||||||||||||||
Depreciation and amortization |
4.4 | % | 5.2 | % | 4.7 | % | 5.2 | % | ||||||||||||||||
Income from operations |
14.5 | % | 18.2 | % | 14.9 | % | 15.2 | % | ||||||||||||||||
EBITDA (3) |
19.7 | % | 24.2 | % | 19.9 | % | 21.4 | % | ||||||||||||||||
Adjusted EBITDA (3) |
19.7 | % | 24.5 | % | 22.8 | % | 25.8 | % |
(1) | We define Contract Value as of the quarter-end as the aggregate annualized
revenue attributed to all agreements in effect on such date, without regard to the remaining
duration of any such agreement. |
|
(2) | Other income, net for the three months ended December 31, 2010 includes $0.4 million
of interest income, a $0.9 million increase in the fair value of deferred compensation plan
assets, and a $0.1 million foreign currency gain offset by other expense of $0.1 million.
Other income, net for the three months ended December 31, 2009 includes $0.4 million of
interest income, a $0.5 million increase in the fair value of deferred compensation plan
assets, a $0.7 million gain on acquisition and a $0.1 million foreign currency gain offset by
other expenses of $0.5 million. Other income, net for the year ended December 31, 2010
includes $1.5 million of interest income, a $1.7 million increase in the fair value of
deferred compensation plan assets, and a $0.1 million foreign currency gain offset by $0.2
million of other expense. Other income, net for the year ended December 31, 2009 includes
$1.8 million of interest income, a $2.7 million increase in the fair value of deferred
compensation plan assets, a $1.1 million foreign currency gain and a $0.7 million gain on
acquisition offset by $0.1 million of other expense. |
|
(3) | See NON-GAAP FINANCIAL MEASURES for further explanation. |
THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, | ||||||||
2010 | 2009 | |||||||
(Unaudited) | ||||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 102,498 | $ | 31,760 | ||||
Marketable securities |
10,114 | 18,666 | ||||||
Membership fees receivable, net |
141,322 | 125,716 | ||||||
Deferred income taxes, net |
18,727 | 7,989 | ||||||
Deferred incentive compensation |
15,710 | 9,721 | ||||||
Prepaid expenses and other current assets |
10,388 | 9,584 | ||||||
Total current assets |
298,759 | 203,436 | ||||||
Deferred income taxes, net |
43,524 | 39,744 | ||||||
Marketable securities |
10,850 | 25,784 | ||||||
Property and equipment, net |
83,140 | 89,462 | ||||||
Goodwill |
29,266 | 27,129 | ||||||
Intangible assets, net |
13,828 | 12,246 | ||||||
Other non-current assets |
30,782 | 25,394 | ||||||
Total assets |
$ | 510,149 | $ | 423,195 | ||||
Liabilities and stockholders equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 52,439 | $ | 48,764 | ||||
Accrued incentive compensation |
40,719 | 27,975 | ||||||
Deferred revenues |
251,200 | 222,053 | ||||||
Total current liabilities |
344,358 | 298,792 | ||||||
Deferred income taxes |
679 | 867 | ||||||
Other liabilities |
82,296 | 73,259 | ||||||
Total liabilities |
427,333 | 372,918 | ||||||
Total stockholders equity |
82,816 | 50,277 | ||||||
Total liabilities and
stockholders equity |
$ | 510,149 | $ | 423,195 | ||||
THE CORPORATE EXECUTIVE BOARD COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
(Unaudited) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 40,363 | $ | 45,629 | ||||
Adjustments to reconcile net income to net cash flows provided by
operating activities: |
||||||||
Depreciation and amortization |
20,462 | 22,991 | ||||||
Deferred income taxes |
(11,628 | ) | (255 | ) | ||||
Share-based compensation |
7,490 | 10,751 | ||||||
Excess tax benefits from share-based compensation arrangements |
(942 | ) | | |||||
Gain on acquisition |
| (680 | ) | |||||
Amortization of marketable securities premiums, net |
357 | 691 | ||||||
Impairment loss |
12,645 | | ||||||
Costs associated with exit activities |
| 11,518 | ||||||
Changes in operating assets and liabilities: |
||||||||
Membership fees receivable, net |
(13,231 | ) | 3,622 | |||||
Deferred incentive compensation |
(5,989 | ) | 2,900 | |||||
Prepaid expenses and other current assets |
(446 | ) | (91 | ) | ||||
Other non-current assets |
(5,387 | ) | (9,525 | ) | ||||
Accounts payable and accrued liabilities |
(2,792 | ) | (18,533 | ) | ||||
Accrued incentive compensation |
12,744 | 2,387 | ||||||
Deferred revenues |
22,413 | (47,512 | ) | |||||
Other liabilities |
9,036 | 4,681 | ||||||
Net cash flows provided by operating activities |
85,095 | 28,574 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchases of property and equipment |
(8,322 | ) | (7,052 | ) | ||||
Cost method investment |
| (1,000 | ) | |||||
Acquisition of businesses, net of cash acquired |
(13,957 | ) | 5,173 | |||||
Maturities of marketable securities, net |
22,381 | 14,409 | ||||||
Net cash flows provided by investing activities |
102 | 11,530 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Proceeds from the exercise of common stock options |
436 | | ||||||
Proceeds from the issuance of common stock under the
employee stock purchase plan |
451 | 725 | ||||||
Excess tax benefits from share-based compensation arrangements |
942 | | ||||||
Purchase of treasury shares |
(1,237 | ) | (87 | ) | ||||
Payment of dividends |
(15,051 | ) | (25,196 | ) | ||||
Net cash flows used in financing activities |
(14,459 | ) | (24,558 | ) | ||||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
70,738 | 15,546 | ||||||
Cash and cash equivalents, beginning of period |
31,760 | 16,214 | ||||||
Cash and cash equivalents, end of period |
$ | 102,498 | $ | 31,760 | ||||