The Corporate Executive Board Reports Third Quarter Pro Forma Earnings of $0.29 Per Diluted Share; Qualifies for Washington, D.C. Tax Benefits.Business Editors WASHINGTON--(BUSINESS WIRE)--Oct. 22, 2003 The Corporate Executive Board Company (CEB CEB Chief Executives Board (United Nations) CEB Council of Europe Development Bank CEB Corporate Executive Board CEB Ceylon Electricity Board (Sri Lanka) ) (Nasdaq: EXBD) today announced financial results for the third quarter ended September September: see month. 30, 2003. Revenues for the third quarter increased 30.2% to $53,758,000 from $41,275,000 for the third quarter of 2002. The Office of Tax and Revenue of the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). recently accepted CEB's certification that it is a Qualified High Technology Company (QHTC QHTC Qualified High Technology Company (Washington, DC) ). This acceptance has the effect of reducing the Company's statutory income tax rate as well as providing other tax benefits, which are discussed below. As a result of a non-cash income tax charge arising from CEB's new QHTC status, net income for the third quarter decreased 29.7% to $5,513,000 from $7,837,000. Earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share were $0.14 for the latest quarter, down 33.3% from $0.21 for the comparable period in 2002. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income for the third quarter increased 44.3% to $11,307,000 from $7,837,000. Pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per diluted share for the latest quarter were $0.29, up 38.1% from $0.21 for the comparable period in 2002. The pro forma disclosures above exclude the non-cash income tax charge of $8,192,000 recorded within the provision for income taxes for the effects of CEB's QHTC qualification, partially offset by an adjustment to reflect a change in CEB's effective income tax rate. A reconciliation of CEB's reported and pro forma results is set forth in the notes to the Financial Highlights section below. In October October: see month. 2003, CEB received notification from the Office of Tax and Revenue of the District of Columbia that its certification as a QHTC under the New E-Conomy Transformation Act of 2000 (the Act) had been accepted. As a QHTC, the Company's Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , D.C. statutory income tax rate will be 0.0% through 2005 and 6.0% thereafter, versus 9.975% prior to this qualification. Under the Act, CEB is also eligible for certain Washington, D.C. income tax credits and other benefits. Accordingly, CEB expects its annual effective income tax rate will be approximately 31.25% for 2003 and between 34.0% and 35.0% for 2004. As a result, the Company recorded a non-cash income tax charge of $8,192,000 within the provision for income taxes for the effects of these benefits. This non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. consists of a reduction in the Company's deferred tax assets and liabilities to reflect a lower Washington, D.C. income tax rate, partially offset by the recognition of certain Washington, D.C. income tax credits. The Washington, D.C. tax benefits available to the Company as a QHTC are discussed more fully in CEB's filings with the Securities and Exchange Commission, including its 2002 annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and quarterly reports on Form 10-Q Form 10-Q See 10-Q. for the quarters ended March 31 and June June: see month. 30, 2003. Jay McGonigle, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of The Corporate Executive Board commented, "We are very pleased to announce another strong quarter. All of our key growth metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. were on track, with the average cross-sell ratio climbing to 2.80 memberships per institution, price increases running in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with expectations, and continued strength in our new customer growth. In the third quarter, we were delighted to welcome some of the world's largest companies to our membership; including Albertson's, Inc., CNF CNF Configuration (File Name Extension) CNF Conference CNF Conjunctive Normal Form CNF Could Not Find CNF Chin National Front (Burma) CNF Canadian Nature Federation CNF Cornell NanoScale Facility Transportation, EADS EADS European Aeronautic Defence and Space Company N.V. EADS Expeditionary Air Defense System (USMC) EADS Extended Air Defense Systems EADS Environmental Assessment Data System EADS Echelons Above Division Study N.V., Louisiana-Pacific Louisiana-Pacific Corporation NYSE: LPX, commonly known as "LP", is a building materials manufacturer. It was founded in 1973 and is based in Nashville, Tennessee. Corp., Southwest Southwest or south west is the ordinal direction halfway between south and west, the opposite of northeast. Southwest or south west may also refer to:
Major German automobile manufacturer. It was founded in 1937 to mass-produce a low-priced “people's car” (Volkswagen). After World War II the company was rebuilt with Allied help, and within a decade it was producing half of West Germany's . You can see the impact of these metrics reflected in our 27.2% contract value growth in the quarter. Contract value growth, in combination with strength across our key growth metrics, enables us to reiterate re·it·er·ate tr.v. re·it·er·at·ed, re·it·er·at·ing, re·it·er·ates To say or do again or repeatedly. See Synonyms at repeat. re·it comfort with our full year target of a minimum of 25% revenue growth and modest operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: expansion within our 25-30% target range. And of course, we are delighted to have been qualified by the Office of Tax and Revenue of the District of Columbia as a Qualified High Technology Company. "Today, we are also very happy to announce the launch of our fourth new membership program in 2003: the Applications Executive Council (AEC AEC US Atomic Energy Commission Noun 1. AEC - a former executive agency (from 1946 to 1974) that was responsible for research into atomic energy and its peacetime uses in the United States Atomic Energy Commission ). This new program will serve senior IT executives who lead the design, development and deployment of technology solutions across the world's largest enterprises. Applications development typically represents 30-40% of a company's IT budget, which in turn is the single largest capex item for many large companies. It is our privilege to serve the leaders of such a critical function, which is also very much a function in transition -- as traditional development work gives way to packaged solutions, mixed sourcing models and tighter alignment Alignment is the adjustment of an object in relation with other objects, or a static orientation of some object or set of objects in relation to others.
Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. During the nine months ended September 30, 2003, the Company repurchased 542,752 shares of its common stock at a total cost of approximately $19,204,000. Repurchases will continue to be made in open market and privately negotiated transactions subject to market conditions. No minimum number of shares has been fixed. The Company is funding its share repurchases with cash on hand and cash generated from operations. At September 30, 2003, the Company had approximately $260,083,000 in cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has and no debt. Outlook for 2003 The following statements summarize sum·ma·rize intr. & tr.v. sum·ma·rized, sum·ma·riz·ing, sum·ma·riz·es To make a summary or make a summary of. sum the Company's guidance for 2003. The Company reiterated comfort with its target for annual growth in revenues of a minimum of 25% and continued modest expansion in the operating margin within its target annual range of 25% - 30%. As in the past, the operating margin may fluctuate on a quarterly basis. The Company expects quarterly revenues of approximately $55.2 million for the fourth quarter of 2003. For 2003, the Company expects other income of approximately $7.6 million, an effective income tax rate of approximately 31.25% and diluted weighted shares outstanding of approximately 38.4 million to 38.7 million. The Company is raising fourth quarter earnings per diluted share guidance to $0.31 from $0.28 reflecting a lower effective income tax rate. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth below and in CEB's 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, changes to our effective income tax rate, 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 An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. related to our content, our potential exposure to loss of revenue resulting from our unconditional HEIR, UNCONDITIONAL. A term used in the civil law, adopted by the Civil Code of Louisiana. Unconditional heirs are those who inherit without any reservation, or without making an inventory, whether their acceptance be express or tacit. Civ. Code of Lo. art. 878. 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 withdrawals our QHTC status and possible volatility of our stock price. These factors are discussed more fully in the "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations" and "Risk Factors" sections of CEB's filings with the Securities and Exchange Commission, including, but not limited to, its 2002 annual report on Form 10-K, as amended, and quarterly reports on Form 10-Q for the quarters ended March 31 and June 30, 2003. The forward-looking statements in this press release are made as of October 22, 2003, and we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. The Corporate Executive Board Company is a leading provider of best practices research and analysis focusing on corporate strategy, operations and general management issues. CEB provides its integrated set of services currently to more than 1,900 of the world's largest and most prestigious corporations, including over 70% of the Fortune 500. These services are provided primarily on an annual subscription basis and include best practices research studies, executive education seminars, customized research briefs and Web-based access to a library of over 225,000 corporate best practices.
THE CORPORATE EXECUTIVE BOARD COMPANY
Financial Highlights
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
2003 2002 2003 2002
-------- ------------ --------- ----------
Revenues $53,758 $41,275 $151,380 $117,845
Net income $5,513 $7,837 $23,336 $21,357
Basic earnings per share $0.15 $0.21 $0.63 $0.58
Diluted earnings per share $0.14 $0.21 $0.61 $0.57
Weighted average shares outstanding:
Basic 37,308 37,123 37,298 36,572
Diluted 38,762 37,734 38,403 37,607
Pro forma:
Pro forma net income (1) $11,307 $7,837 $31,528 $21,357
Pro forma diluted
earnings per share (1) $0.29 $0.21 $0.82 $0.57
(1) Reconciliation of GAAP to pro forma net income and pro forma
diluted earnings per share:
Net income, as
reported $5,513 $7,837 $23,336 $21,357
Non-cash charge to
value deferred tax
assets, net, at new
statutory Washington,
D.C. rate of 0.0%,
net of tax credits 8,192 -- 8,192 --
True up for change in
effective tax rate
from 39.4% to 31.25%
for the six months
ending June 30, 2003 (2,398) -- -- --
-------- ------------ --------- ----------
Pro forma net
income $11,307 $7,837 $31,528 $21,357
======== ============ ========= ==========
Diluted earnings per
share, as reported $0.14 $0.21 $0.61 $0.57
Non-cash charge to
value deferred tax
assets, net, at new
statutory Washington,
DC rate of 0.0%, net
of tax credits 0.21 -- 0.21 --
True up for change in
effective tax rate
from 39.4% to 31.25%
for the six months
ending June 30, 2003 (0.06) -- -- --
-------- ------------ --------- ----------
Pro forma diluted
earnings per share $0.29 $0.21 $0.82 $0.57
======== ============ ========= ==========
The Company believes its calculation of pro forma net income and pro forma diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , which exclude a nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. non-cash charge, provides additional information about CEB's ongoing operating performance and provides additional information to compare to prior periods because the pro forma information excludes items not related to CEB's core business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . Pro forma financial results should not be considered as measures of financial performance under accounting principles generally accepted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , and the items excluded from them are significant components in understanding and assessing financial performance. Because pro forma financial results are not measurements determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting and are thus susceptible to varying calculations, they may not be comparable as presented to other similarly titled measures of other companies.
THE CORPORATE EXECUTIVE BOARD COMPANY
Operating Statistics and Financial Highlights
(in thousands, except per share data)
Three Months Ended Nine Months Ended
Selected September 30, Selected September 30,
Growth ------------------- Growth -------------------
Rates 2003 2002 Rates 2003 2002
-------- --------- --------- -------- --------- ---------
Operating Statistic
Contract value (1)
(at period
end) 27.2% $207,762 $163,399
Financial Highlights
Revenues 30.2% $53,758 $41,275 28.5% $151,380 $117,845
Cost of
services 18,225 14,126 51,380 40,659
--------- --------- --------- ---------
Gross profit 35,533 27,149 100,000 77,186
Member relations
and marketing 14,375 10,248 39,727 29,222
General and
admini-
strative 5,293 4,388 15,789 13,215
Depreciation 1,343 1,399 4,092 3,988
Stock option
and related
expenses - - 113 668
--------- --------- --------- ---------
Income from
operations 30.7% 14,522 11,114 33.8% 40,279 30,093
Other income,
net 1,925 1,734 5,580 4,563
--------- --------- --------- ---------
Income before
provision
for income
taxes 16,447 12,848 45,859 34,656
Provision for
income taxes 10,934 5,011 22,523 13,299
--------- --------- --------- ---------
Net income (29.7)% $5,513 $7,837 9.3% $23,336 $21,357
========= ========= ========= =========
Basic earnings
per share $0.15 $0.21 $0.63 $0.58
Diluted earnings
per share (33.3)% $0.14 $0.21 7.0% $0.61 $0.57
Weighted average shares outstanding
Basic 37,308 37,123 37,298 36,572
Diluted 38,762 37,734 38,403 37,607
Pro forma net
income 44.3% $11,307 $7,837 47.6% $31,528 $21,357
Pro forma diluted
earnings per
share 38.1% $0.29 $0.21 43.9% $0.82 $0.57
Percentages of Revenues
Gross profit 66.1% 65.8% 66.1% 65.5%
Member relations
and marketing 26.7% 24.8% 26.2% 24.8%
General and
admini-
strative 9.8% 10.6% 10.4% 11.2%
(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.
THE CORPORATE EXECUTIVE BOARD COMPANY
CONDENSED BALANCE SHEETS
(in thousands)
Sept. 30, Dec. 31,
2003 2002
----------- ---------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $58,908 $71,346
Marketable securities 21,585 17,030
Membership fees receivable, net 28,751 50,356
Deferred income taxes, net 24,568 28,806
Deferred incentive compensation 4,759 4,974
Prepaid expenses and other current assets 6,149 3,668
----------- ---------
Total current assets 144,720 176,180
Deferred income taxes, net 18,957 30,920
Marketable securities 179,590 137,565
Property and equipment, net 15,458 14,916
----------- ---------
Total assets $358,725 $359,581
=========== =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $11,896 $12,549
Accrued incentive compensation 7,275 9,660
Deferred revenues 106,260 121,415
----------- ---------
Total current liabilities 125,431 143,624
Other liabilities 2,694 2,600
----------- ---------
Total liabilities 128,125 146,224
Stockholders' equity 230,600 213,357
----------- ---------
Total liabilities and stockholders' equity $358,725 $359,581
=========== =========
THE CORPORATE EXECUTIVE BOARD COMPANY
STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
-------------------
2003 2002
---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $23,336 $21,357
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation 4,092 3,988
Deferred income taxes 21,777 13,299
Amortization of marketable securities
premiums, net 1,550 1,072
Changes in operating assets and liabilities:
Membership fees receivable, net 21,605 15,575
Deferred incentive compensation 215 665
Prepaid expenses and other current
assets (2,481) (1,281)
Accounts payable and accrued
liabilities (669) (222)
Accrued incentive compensation (2,385) 717
Deferred revenues (15,155) (11,682)
Other liabilities 94 846
---------- --------
Net cash flows provided by
operating activities 51,979 44,334
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (4,634) (2,483)
Maturity (purchase) of marketable securities,
net (49,166) (69,176)
---------- --------
Net cash flows used in investing
activities (53,800) (71,659)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercise of common
stock options 8,031 12,409
Proceeds from the issuance of common stock
under the employee stock purchase plan 540 485
Purchase of treasury shares (19,204) --
Reimbursement of common stock offering costs 175 300
Payment of common stock offering costs (159) (172)
---------- --------
Net cash flows provided by (used
in) financing activities (10,617) 13,022
---------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (12,438) (14,303)
Cash and cash equivalents, beginning of period 71,346 48,271
---------- --------
Cash and cash equivalents, end of period $58,908 $33,968
---------- --------
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