The Corporate Executive Board Company (“CEB” or the “Company”) (NYSE:
CEB) today announced financial results for the fourth quarter and the
year ended December 31, 2014. Revenue increased 7.5% to $240.1 million
in the fourth quarter of 2014 from $223.4 million in the fourth quarter
of 2013. Net income in the fourth quarter of 2014 was $28.6 million, or
$0.84 per diluted share, compared to $12.6 million, or $0.37 per diluted
share, in the same period of 2013. Included in net income for the fourth
quarter of 2014 was $5.5 million of pretax net non-operating foreign
currency gains. Included in net income for the fourth quarter of 2013
was $0.7 million of pretax net non-operating foreign currency losses.
Adjusted net income was $43.0 million and Non-GAAP diluted earnings per
share were $1.27 in the fourth quarter of 2014 compared to $28.8 million
and $0.84 in the same period of 2013, respectively.
In 2014, revenue was $909.0 million, a 10.8% increase from $820.1
million in 2013. Net income in 2014 was $51.2 million, or $1.50 per
diluted share, compared to $32.0 million, or $0.94 per diluted share, in
2013. Included in net income for 2014 was a $39.7 million pre-tax
impairment loss associated with nondeductible intangible assets and
goodwill for Personnel Decision Research Institutes, Inc. (“PDRI”), a
$6.6 million pre-tax gain related to a cost method investment, and $8.6
million of pretax net non-operating foreign currency gains. Included in
net income for 2013 was a $22.6 million goodwill impairment loss for
PDRI, $6.7 million of pre-tax debt extinguishment costs associated with
the refinancing of the Company’s senior secured credit facilities in
August 2013, and $3.3 million of pretax net non-operating foreign
currency losses. Adjusted net income was $122.6 million and Non-GAAP
diluted earnings per share were $3.60 in 2014 compared to $105.4 million
and $3.10 in 2013, respectively.
“Our business continued its strong top and bottom line trajectory in Q4,
setting us up well as we enter 2015,” said Tom Monahan, Chairman and
CEO. “While the recent and rapid strengthening of the US dollar creates
some comparability issues, we saw healthy growth and margin expansion on
a constant currency basis – trends we expect to see continue for the
full year of 2015. Success in acquiring new customers and high levels of
wallet retention across the business reinforces both the strength of our
franchise and the value of our recurring revenue platform.
“This combination of solid growth and margin expansion with our
attractive business model also resulted in strong cash flows and a net
leverage profile well within our target range. Accordingly, we are
pleased to announce robust enhancements to our dividend and share
repurchase program, even as we retain the ability to make strategic
investments in growth.”
OUTLOOK FOR 2015
The Company’s 2015 annual guidance is as follows: Adjusted revenue of
$960 to $985 million, revenue of $959 to $984 million (reflecting a
constant currency revenue growth in the range of 8% to 11%), capital
expenditures of $32 to $34 million, Non-GAAP diluted earnings per share
of $3.55 to $3.90, an Adjusted EBITDA margin between 25.5% and 26.0%,
and depreciation and amortization expense of $68 to $70 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 2015 revenue to reflect the impact of the deferred revenue fair value
adjustment is approximately $1 million. This guidance assumes an average
exchange rate of 1.55 USD to the British Pound, 1.20 USD to the Euro,
and 0.81 USD to the Australian Dollar.
Beginning with the first quarter of 2015, the Company will adjust its
non-GAAP financial measures to exclude the impact of net non-operating
foreign currency gains (losses) included in other income (expense).
These items primarily result from the remeasurement of foreign currency
cash balances held by CEB US and subsidiaries with the USD as their
functional currency, USD cash balances held by subsidiaries with a
functional currency other than the USD, certain intercompany notes, and
the balance sheets of non-US subsidiaries whose functional currency is
the USD. In 2014, excluding the impact of net non-operating foreign
currency gains, Adjusted EBITDA and Non-GAAP diluted earnings per share
would have been $8.6 million and $0.22 lower, respectively.
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 fourth quarter of 2014 to $186.4 million from
$170.6 million in the same period of 2013, an increase of 9.2%. Adjusted
revenue increased 9.6% (10.6% increase on a constant currency basis) in
the fourth quarter of 2014 to $187.0 million from $170.6 million in the
same period of 2013. Adjusted EBITDA in the fourth quarter of 2014 was
$63.1 million compared to $48.7 million in the same period of 2013, an
increase of 29.8% (24.7% increase on a constant currency basis).
Adjusted EBITDA margin in the fourth quarter of 2014 was 33.8% of
segment Adjusted revenue compared to 28.5% in the fourth quarter of 2013.
Revenue increased in 2014 to $701.6 million from $634.3 million in 2013,
an increase of 10.6%. Adjusted revenue increased 11.2% (11.5% increase
on a constant currency basis) in 2014 to $705.1 million from $634.3
million in 2013. Adjusted EBITDA in 2014 was $199.5 million compared to
$173.5 million in 2013, an increase of 14.9% (13.9% increase on a
constant currency basis). Adjusted EBITDA margin in 2014 was 28.3% of
segment Adjusted revenue compared to 27.4% in 2013.
Contract Value at December 31, 2014 increased 11.9% to $683.5 million
compared to $610.8 million at December 31, 2013. Wallet retention rate
at December 31, 2014 was 99% compared to 97% at December 31, 2013.
Contract Value per member institution was $96.7 thousand at December 31,
2014 compared to $95.1 thousand at December 31, 2013.
SHL Talent Measurement Segment
Revenue increased in the fourth quarter of 2014 to $53.7 million from
$52.8 million in the same period of 2013, an increase of 1.7%. Adjusted
revenue increased 0.4% (5.2% increase on a constant currency basis) in
the fourth quarter of 2014 to $54.1 million from $53.9 million in the
same period of 2013. Adjusted EBITDA in the fourth quarter of 2014 was
$13.0 million compared to $9.1 million in the same period of 2013, an
increase of 43.5% (28.5% increase on a constant currency basis).
Adjusted EBITDA margin in the fourth quarter of 2014 was 24.0% of
segment Adjusted revenue compared to 16.8% in the fourth quarter of 2013.
Revenue increased in 2014 to $207.4 million from $185.8 million in 2013,
an increase of 11.7%. Adjusted revenue increased 7.3% (8.0% increase on
a constant currency basis) in 2014 to $209.9 million from $195.7 million
in 2013. Adjusted EBITDA in 2014 was $38.3 million compared to $32.6
million in 2013, an increase of 17.5% (13.6% increase on a constant
currency basis). Adjusted EBITDA margin in 2014 was 18.2% of segment
Adjusted revenue compared to 16.6% in 2013.
Wallet retention rate at December 31, 2014 was 103% compared to 101% at
December 31, 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.
QUARTERLY DIVIDEND
The Company announces that its Board of Directors has approved a cash
dividend on its common stock for the first quarter of 2015 of $0.375 per
share, an increase of 42.9% compared to the dividend paid in the fourth
quarter of 2014. The Company will fund its dividend payments with cash
on hand and cash generated from operations. The dividend is payable on
March 31, 2015 to stockholders of record on March 16, 2015.
SHARE REPURCHASE
In the fourth quarter of 2014, the Company repurchased approximately
189,000 shares of its common stock at a total cost of $13.3 million.
These purchases were made pursuant to the Company’s existing stock
repurchase authorization which expired on December 31, 2014.
On February 2, 2015, the Company’s Board of Directors approved a new
$100 million stock repurchase program, which is authorized through
December 31, 2016. 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 program 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, Non-GAAP diluted earnings
per share, and constant currency financial information, 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 income (loss) before loss from
discontinued operations, net of provision for income taxes; provision
for income taxes; interest expense, net; gain on cost method investment;
debt extinguishment costs; depreciation and amortization; the impact of
the deferred revenue fair value adjustment; acquisition related costs;
impairment loss; restructuring costs; share-based compensation; costs
associated with exit activities; 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 income (loss) 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; restructuring costs; debt extinguishment
costs; share-based compensation; amortization of acquisition related
intangibles; costs associated with exit activities; and gain on
acquisition.
“Non-GAAP diluted earnings per share” refers to diluted earnings (loss)
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; restructuring costs; debt extinguishment costs;
share-based compensation; amortization of acquisition related
intangibles; costs associated with exit activities; 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,
restructuring costs, 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.
CEB is a global company that reports financial information in USD.
Foreign currency exchange rate fluctuations affect the amounts reported
from translating its foreign revenues and expenses into USD. These rate
fluctuations can have a significant effect on our reported operating
results. As a supplement to our reported operating results, we present
constant currency financial information, which is a non-GAAP financial
measure. We use constant currency financial information to provide a
framework to assess how our business performed excluding the effects of
changes in foreign currency translation rates. Management believes this
information is useful to investors to facilitate comparison of operating
results and better identify trends in our businesses. To calculate
Adjusted revenue on a constant currency basis, Adjusted revenue in the
current period for amounts recorded in currencies other than the USD is
translated into USD at the average exchange rates in effect during the
comparable period of the prior year (rather than the actual exchange
rates in effect during the current year period). To calculate Adjusted
EBITDA on a constant currency basis, Adjusted EBITDA in the current
period for amounts recorded in currencies other than the USD is
translated into USD at the average exchange rates in effect during the
comparable period of the prior year (rather than the actual exchange
rates in effect during the current year period). In addition, Adjusted
EBITDA on a constant currency basis excludes the net non-operating
foreign currency gains (losses) included in other income (expense).
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.
With respect to our 2015 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 2015 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.
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 2015 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, 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 February 4, 2015, and we undertake no obligation to
update any forward-looking statements, whether as a result of new
information, future events, or otherwise.
INVESTOR DAY
CEB will hold its annual Investor Day for institutional investors and
sell-side analysts at its Waterview headquarters in Arlington, Virginia
on June 18, 2015. At the Investor Day, members of our senior leadership
team will review the Company’s business portfolio, strategy for growth,
and financial performance. The Investor Day is by invitation only and
registration is required. It will also be webcast live via the Internet
on the Company’s web site and a replay will be available following the
event.
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.
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THE CORPORATE EXECUTIVE BOARD COMPANY
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Financial Highlights and Other Operating Statistics
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Selected Percentage Changes
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Three Months Ended December 31,
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Selected Percentage Changes
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Year Ended December 31,
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2014
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2013
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2014
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2013
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Financial Highlights:
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(In thousands, except per share data)
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Revenue
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7.5
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%
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$
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240,102
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$
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223,436
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10.8
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%
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$
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908,974
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$
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820,053
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Adjusted revenue
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7.4
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%
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$
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241,171
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$
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224,524
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10.2
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%
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$
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914,980
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$
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829,967
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Net income
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127.0
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%
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$
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28,555
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$
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12,578
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60.1
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%
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$
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51,172
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$
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31,971
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Adjusted net income
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49.2
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%
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$
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42,955
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$
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28,796
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16.4
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%
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$
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122,640
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$
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105,383
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Adjusted EBITDA
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31.9
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%
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$
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76,150
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$
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57,729
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15.4
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%
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$
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237,729
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$
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206,091
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Adjusted EBITDA margin
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31.6
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%
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25.7
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%
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26.0
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%
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24.8
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%
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Diluted earnings per share
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127.0
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%
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$
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0.84
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$
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0.37
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59.6
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%
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$
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1.50
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$
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0.94
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Non-GAAP diluted earnings per share
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51.2
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%
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$
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1.27
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$
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0.84
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16.1
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%
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$
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3.60
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$
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3.10
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Other Operating Statistics:
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CEB segment Contract Value (in thousands) (1)
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11.9
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%
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$
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683,451
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$
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610,830
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CEB segment Member institutions (2)
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9.9
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%
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7,056
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6,418
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CEB segment Contract Value per member institution (2)
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$
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96,702
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$
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95,078
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CEB segment Wallet retention rate (3)
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99
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%
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97
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%
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SHL Talent Measurement segment Wallet retention rate (4)
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103
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%
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101
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%
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(1)
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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 does not include
the impact of PDRI.
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(2)
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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.”
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(3)
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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.
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(4)
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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
|
|
Consolidated Statements of Operations
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Revenue (1)
|
|
|
$
|
240,102
|
|
|
|
$
|
223,436
|
|
|
|
$
|
908,974
|
|
|
|
$
|
820,053
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services (5)
|
|
|
|
83,196
|
|
|
|
|
77,775
|
|
|
|
|
323,633
|
|
|
|
|
294,576
|
|
|
Member relations and marketing (5)
|
|
|
|
66,448
|
|
|
|
|
65,155
|
|
|
|
|
267,831
|
|
|
|
|
238,070
|
|
|
General and administrative (5)
|
|
|
|
25,468
|
|
|
|
|
27,011
|
|
|
|
|
111,085
|
|
|
|
|
102,530
|
|
|
Acquisition related costs (2)
|
|
|
|
112
|
|
|
|
|
4,433
|
|
|
|
|
2,964
|
|
|
|
|
11,477
|
|
|
Impairment loss
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
39,700
|
|
|
|
|
22,600
|
|
|
Restructuring costs
|
|
|
|
1,830
|
|
|
|
|
—
|
|
|
|
|
1,830
|
|
|
|
|
—
|
|
|
Depreciation and amortization
|
|
|
|
16,700
|
|
|
|
|
15,311
|
|
|
|
|
68,286
|
|
|
|
|
60,087
|
|
|
Total costs and expenses
|
|
|
|
193,754
|
|
|
|
|
189,685
|
|
|
|
|
815,329
|
|
|
|
|
729,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
|
46,348
|
|
|
|
|
33,751
|
|
|
|
|
93,645
|
|
|
|
|
90,713
|
|
|
Other income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and other (3)
|
|
|
|
6,184
|
|
|
|
|
(201
|
)
|
|
|
|
10,030
|
|
|
|
|
(998
|
)
|
|
Interest expense
|
|
|
|
(4,538
|
)
|
|
|
|
(4,990
|
)
|
|
|
|
(18,410
|
)
|
|
|
|
(22,586
|
)
|
|
Gain on cost method investment
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
6,585
|
|
|
|
|
—
|
|
|
Debt extinguishment costs
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(6,691
|
)
|
|
Other income (expense), net
|
|
|
|
1,646
|
|
|
|
|
(5,191
|
)
|
|
|
|
(1,795
|
)
|
|
|
|
(30,275
|
)
|
|
Income before provision for income taxes
|
|
|
|
47,994
|
|
|
|
|
28,560
|
|
|
|
|
91,850
|
|
|
|
|
60,438
|
|
|
Provision for income taxes
|
|
|
|
19,439
|
|
|
|
|
15,982
|
|
|
|
|
40,678
|
|
|
|
|
28,467
|
|
|
Net income
|
|
|
$
|
28,555
|
|
|
|
$
|
12,578
|
|
|
|
$
|
51,172
|
|
|
|
$
|
31,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
$
|
0.85
|
|
|
|
$
|
0.37
|
|
|
|
$
|
1.52
|
|
|
|
$
|
0.95
|
|
|
Diluted earnings per share
|
|
|
$
|
0.84
|
|
|
|
$
|
0.37
|
|
|
|
$
|
1.50
|
|
|
|
$
|
0.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
33,556
|
|
|
|
|
33,616
|
|
|
|
|
33,666
|
|
|
|
|
33,543
|
|
|
Diluted
|
|
|
|
33,870
|
|
|
|
|
34,018
|
|
|
|
|
34,039
|
|
|
|
|
33,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Adjusted Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services
|
|
|
|
34.5
|
%
|
|
|
|
34.6
|
%
|
|
|
|
35.4
|
%
|
|
|
|
35.5
|
%
|
|
Member relations and marketing
|
|
|
|
27.6
|
%
|
|
|
|
29.0
|
%
|
|
|
|
29.3
|
%
|
|
|
|
28.7
|
%
|
|
General and administrative
|
|
|
|
10.6
|
%
|
|
|
|
12.0
|
%
|
|
|
|
12.1
|
%
|
|
|
|
12.4
|
%
|
|
Depreciation and amortization
|
|
|
|
6.9
|
%
|
|
|
|
6.8
|
%
|
|
|
|
7.5
|
%
|
|
|
|
7.2
|
%
|
|
Operating profit
|
|
|
|
19.2
|
%
|
|
|
|
15.0
|
%
|
|
|
|
10.2
|
%
|
|
|
|
10.9
|
%
|
|
Adjusted EBITDA (4)
|
|
|
|
31.6
|
%
|
|
|
|
25.7
|
%
|
|
|
|
26.0
|
%
|
|
|
|
24.8
|
%
|
|
|
(1)
|
Net of a $1.1 million and $6.0 million reduction to reflect the
impact of the deferred revenue fair value adjustment in the three
months and year ended December 31, 2014, respectively, and $1.1
million and $9.9 million in the three months and year ended
December 31, 2013, respectively.
|
(2)
|
Acquisition related costs in the three months and year ended
December 31, 2014 primarily relate to transaction and integration
costs associated with the acquisitions of KnowledgeAdvisors and
Talent Neuron. Acquisition related costs in the three months and
year ended December 31, 2013 primarily relate to integration costs
associated with the SHL acquisition.
|
(3)
|
Interest income and other in the three months ended December 31,
2014 includes $5.5 million of net non-operating foreign currency
gains, $0.1 million of interest income and $0.3 million of other
income and a $0.3 million increase in the fair value of deferred
compensation plan assets. Interest income and other in the three
months ended December 31, 2013 includes a $0.7 million increase in
the fair value of deferred compensation plan assets and interest
income of $0.1 million, which are more than offset by $0.7 million
of net non-operating foreign currency losses and $0.3 million of
other expense. Interest income and other in the year ended
December 31, 2014 includes a $0.7 million increase in the fair
value of deferred compensation plan assets, $8.6 million of net
non-operating foreign currency gains, $0.4 million of interest
income and $0.3 million of other income. Interest income and other
in the year ended December 31, 2013 includes a $2.1 million
increase in the fair value of deferred compensation plan assets
and $0.3 million of interest income, which are more than offset by
$3.3 million of net non-operating foreign currency losses and $0.1
million of other expense.
|
(4)
|
See “Non-GAAP Financial Measures” for further explanation.
|
(5)
|
The Company adjusted its allocation of certain costs in the three
months ended December 31, 2014. To conform to the current period
presentation, the Company reclassified prior period amounts,
including the previously reported 2014 quarterly amounts, included
in the year ended December 31, 2014. The reclassification did not
have an impact on total costs and expenses or operating profit.
|
|
|
|
|
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
|
|
Segment Operating Results
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Adjusted Revenue (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEB segment
|
|
|
$
|
187,046
|
|
|
|
$
|
170,636
|
|
|
|
$
|
705,110
|
|
|
|
$
|
634,302
|
|
|
SHL Talent Measurement segment
|
|
|
|
54,125
|
|
|
|
|
53,888
|
|
|
|
|
209,870
|
|
|
|
|
195,665
|
|
|
|
|
|
$
|
241,171
|
|
|
|
$
|
224,524
|
|
|
|
$
|
914,980
|
|
|
|
$
|
829,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEB segment
|
|
|
$
|
63,136
|
|
|
|
$
|
48,658
|
|
|
|
$
|
199,464
|
|
|
|
$
|
173,537
|
|
|
SHL Talent Measurement segment
|
|
|
|
13,014
|
|
|
|
|
9,071
|
|
|
|
|
38,265
|
|
|
|
|
32,554
|
|
|
|
|
|
$
|
76,150
|
|
|
|
$
|
57,729
|
|
|
|
$
|
237,729
|
|
|
|
$
|
206,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin (1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEB segment
|
|
|
|
33.8
|
%
|
|
|
|
28.5
|
%
|
|
|
|
28.3
|
%
|
|
|
|
27.4
|
%
|
|
SHL Talent Measurement segment
|
|
|
|
24.0
|
%
|
|
|
|
16.8
|
%
|
|
|
|
18.2
|
%
|
|
|
|
16.6
|
%
|
|
Consolidated
|
|
|
|
31.6
|
%
|
|
|
|
25.7
|
%
|
|
|
|
26.0
|
%
|
|
|
|
24.8
|
%
|
|
|
(1)
|
See “Non-GAAP Financial Measures” for further explanation.
|
(2)
|
Net non-operating foreign currency gains (losses) included in
Other income were $5.5 million and $8.6 million in the three
months and year ended December 31, 2014 and $(0.7) million and
$(3.3) million in the three months and year ended December 31,
2013, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
114,934
|
|
|
|
$
|
119,554
|
|
Accounts receivable, net (1)
|
|
|
|
283,069
|
|
|
|
|
271,264
|
|
Deferred income taxes, net
|
|
|
|
19,834
|
|
|
|
|
17,524
|
|
Deferred incentive compensation
|
|
|
|
25,779
|
|
|
|
|
24,472
|
|
Prepaid expenses and other current assets
|
|
|
|
21,245
|
|
|
|
|
29,355
|
|
Total current assets
|
|
|
|
464,861
|
|
|
|
|
462,169
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes, net
|
|
|
|
909
|
|
|
|
|
1,230
|
|
Property and equipment, net
|
|
|
|
112,524
|
|
|
|
|
106,854
|
|
Goodwill
|
|
|
|
441,207
|
|
|
|
|
442,775
|
|
Intangible assets, net
|
|
|
|
260,383
|
|
|
|
|
309,692
|
|
Other non-current assets
|
|
|
|
77,500
|
|
|
|
|
60,955
|
|
Total assets
|
|
|
$
|
1,357,384
|
|
|
|
$
|
1,383,675
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
$
|
89,696
|
|
|
|
$
|
85,294
|
|
Accrued incentive compensation
|
|
|
|
65,731
|
|
|
|
|
61,498
|
|
Deferred revenue (2)
|
|
|
|
452,679
|
|
|
|
|
416,367
|
|
Deferred income taxes, net
|
|
|
|
190
|
|
|
|
|
969
|
|
Debt – current portion
|
|
|
|
15,269
|
|
|
|
|
10,274
|
|
Total current liabilities
|
|
|
|
623,565
|
|
|
|
|
574,402
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
|
34,563
|
|
|
|
|
48,553
|
|
Other liabilities
|
|
|
|
122,832
|
|
|
|
|
115,424
|
|
Debt – long term
|
|
|
|
490,287
|
|
|
|
|
505,554
|
|
Total liabilities
|
|
|
|
1,271,247
|
|
|
|
|
1,243,933
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity
|
|
|
|
86,137
|
|
|
|
|
139,742
|
|
Total liabilities and stockholders’ equity
|
|
|
$
|
1,357,384
|
|
|
|
$
|
1,383,675
|
|
|
(1)
|
Includes accounts receivable, net of $61.7 million and $59.3
million at December 31, 2014 and 2013, respectively, related to
the SHL Talent Measurement segment.
|
(2)
|
Includes deferred revenue of $67.4 million and $59.1 million at
December 31, 2014 and 2013, respectively, related to the SHL
Talent Measurement segment.
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
|
Consolidated Statements of Cash Flows
|
(In thousands)
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
(Unaudited)
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
51,172
|
|
|
|
$
|
31,971
|
|
Adjustments to reconcile net income to net cash flows provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Impairment loss
|
|
|
|
39,700
|
|
|
|
|
22,600
|
|
Debt extinguishment costs
|
|
|
|
—
|
|
|
|
|
6,691
|
|
Exit costs
|
|
|
|
—
|
|
|
|
|
1,007
|
|
Restructuring costs
|
|
|
|
1,830
|
|
|
|
|
—
|
|
Gain on cost method investment
|
|
|
|
(6,585
|
)
|
|
|
|
—
|
|
Depreciation and amortization
|
|
|
|
68,286
|
|
|
|
|
60,087
|
|
Amortization of credit facility issuance costs
|
|
|
|
2,614
|
|
|
|
|
2,775
|
|
Deferred income taxes
|
|
|
|
(21,394
|
)
|
|
|
|
(12,266
|
)
|
Share-based compensation
|
|
|
|
15,632
|
|
|
|
|
12,547
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
|
(3,665
|
)
|
|
|
|
(4,331
|
)
|
Net foreign currency remeasurement (gain) loss
|
|
|
|
(3,910
|
)
|
|
|
|
1,474
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
(12,482
|
)
|
|
|
|
(29,690
|
)
|
Deferred incentive compensation
|
|
|
|
(1,582
|
)
|
|
|
|
(4,343
|
)
|
Prepaid expenses and other current assets
|
|
|
|
9,060
|
|
|
|
|
(8,173
|
)
|
Other non-current assets
|
|
|
|
(4,784
|
)
|
|
|
|
(5,017
|
)
|
Accounts payable and accrued liabilities
|
|
|
|
3,034
|
|
|
|
|
10,228
|
|
Accrued incentive compensation
|
|
|
|
5,053
|
|
|
|
|
7,252
|
|
Deferred revenue
|
|
|
|
33,466
|
|
|
|
|
48,488
|
|
Other liabilities
|
|
|
|
6,699
|
|
|
|
|
7,409
|
|
Net cash flows provided by operating activities
|
|
|
|
182,144
|
|
|
|
|
148,709
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
(35,201
|
)
|
|
|
|
(27,026
|
)
|
Cost method and other investments
|
|
|
|
(8,567
|
)
|
|
|
|
(11,213
|
)
|
Acquisition of businesses, net of cash acquired
|
|
|
|
(58,902
|
)
|
|
|
|
—
|
|
Net cash flows used in investing activities
|
|
|
|
(102,670
|
)
|
|
|
|
(38,239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from credit facility
|
|
|
|
—
|
|
|
|
|
5,000
|
|
Payments of credit facility
|
|
|
|
(10,752
|
)
|
|
|
|
(32,002
|
)
|
Proceeds from the exercise of common stock options
|
|
|
|
—
|
|
|
|
|
1,098
|
|
Proceeds from the issuance of common stock under the employee stock
purchase plan
|
|
|
|
1,244
|
|
|
|
|
910
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
|
3,665
|
|
|
|
|
4,331
|
|
Purchase of treasury shares
|
|
|
|
(29,168
|
)
|
|
|
|
(2,751
|
)
|
Credit facility issuance costs
|
|
|
|
—
|
|
|
|
|
(4,156
|
)
|
Withholding of shares to satisfy minimum employee tax withholding
for equity awards
|
|
|
|
(7,332
|
)
|
|
|
|
(7,055
|
)
|
Payment of dividends
|
|
|
|
(35,319
|
)
|
|
|
|
(30,189
|
)
|
Net cash flows used in financing activities
|
|
|
|
(77,662
|
)
|
|
|
|
(64,814
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates on cash
|
|
|
|
(6,432
|
)
|
|
|
|
1,199
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
|
(4,620
|
)
|
|
|
|
46,855
|
|
Cash and cash equivalents, beginning of year
|
|
|
|
119,554
|
|
|
|
|
72,699
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
114,934
|
|
|
|
$
|
119,554
|
|
|
|
|
|
|
|
|
|
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 December 31, 2014
|
|
|
Three Months Ended December 31, 2013
|
|
|
|
CEB
|
|
|
|
SHL
|
|
|
Total
|
|
|
CEB
|
|
|
SHL
|
|
|
|
Total
|
Revenue
|
|
|
$
|
186,384
|
|
|
|
$
|
53,718
|
|
|
$
|
240,102
|
|
|
$
|
170,636
|
|
|
$
|
52,800
|
|
|
$
|
223,436
|
Impact of the deferred revenue fair value adjustment
|
|
|
|
662
|
|
|
|
|
407
|
|
|
|
1,069
|
|
|
|
—
|
|
|
|
1,088
|
|
|
|
1,088
|
Adjusted revenue
|
|
|
$
|
187,046
|
|
|
|
$
|
54,125
|
|
|
$
|
241,171
|
|
|
$
|
170,636
|
|
|
$
|
53,888
|
|
|
$
|
224,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2014
|
|
|
Year Ended December 31, 2013
|
|
|
|
CEB
|
|
|
|
SHL
|
|
|
Total
|
|
|
|
CEB
|
|
|
SHL
|
|
|
|
Total
|
Revenue
|
|
|
$
|
701,573
|
|
|
|
$
|
207,401
|
|
|
$
|
908,974
|
|
|
$
|
634,302
|
|
|
$
|
185,751
|
|
|
$
|
820,053
|
Impact of the deferred revenue fair value adjustment
|
|
|
|
3,537
|
|
|
|
|
2,469
|
|
|
|
6,006
|
|
|
|
—
|
|
|
|
9,914
|
|
|
|
9,914
|
Adjusted revenue
|
|
|
$
|
705,110
|
|
|
|
$
|
209,870
|
|
|
$
|
914,980
|
|
|
$
|
634,302
|
|
|
$
|
195,665
|
|
|
$
|
829,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
Three Months Ended December 31, 2014
|
|
|
|
Three Months Ended December 31, 2013
|
|
|
|
|
CEB
|
|
|
SHL
|
|
|
Total
|
|
|
|
CEB
|
|
|
SHL
|
|
|
|
Total
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
$
|
28,555
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
12,578
|
|
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
19,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,982
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
|
|
4,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,913
|
|
Other (income) expense, net
|
|
|
|
|
|
|
|
|
|
|
|
(6,060
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
278
|
|
Operating profit (loss)
|
|
|
$
|
45,142
|
|
|
$
|
1,206
|
|
|
|
46,348
|
|
|
|
$
|
35,639
|
|
|
$
|
(1,888
|
)
|
|
|
|
33,751
|
|
Other income (expense), net
|
|
|
|
3,669
|
|
|
|
2,391
|
|
|
|
6,060
|
|
|
|
|
80
|
|
|
|
(358
|
)
|
|
|
|
(278
|
)
|
Depreciation and amortization
|
|
|
|
8,655
|
|
|
|
8,045
|
|
|
|
16,700
|
|
|
|
|
7,100
|
|
|
|
8,211
|
|
|
|
|
15,311
|
|
Impact of the deferred revenue fair value adjustment
|
|
|
|
662
|
|
|
|
407
|
|
|
|
1,069
|
|
|
|
|
—
|
|
|
|
1,088
|
|
|
|
|
1,088
|
|
Acquisition related costs
|
|
|
|
112
|
|
|
|
—
|
|
|
|
112
|
|
|
|
|
2,864
|
|
|
|
1,569
|
|
|
|
|
4,433
|
|
Restructuring costs
|
|
|
|
1,154
|
|
|
|
676
|
|
|
|
1,830
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Share-based compensation
|
|
|
|
3,742
|
|
|
|
289
|
|
|
|
4,031
|
|
|
|
|
2,975
|
|
|
|
449
|
|
|
|
|
3,424
|
|
Adjusted EBITDA
|
|
|
$
|
63,136
|
|
|
$
|
13,014
|
|
|
$
|
76,150
|
|
|
|
$
|
48,658
|
|
|
$
|
9,071
|
|
|
|
$
|
57,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
|
|
|
33.8
|
%
|
|
|
24.0
|
%
|
|
|
31.6
|
%
|
|
|
|
28.5
|
%
|
|
|
16.8
|
%
|
|
|
|
25.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
|
Reconciliation of Non-GAAP Financial Measures (Continued)
|
(In thousands, except per share data)
|
|
Adjusted EBITDA (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2014
|
|
|
Year Ended December 31, 2013
|
|
|
|
|
CEB
|
|
|
SHL
|
|
|
|
Total
|
|
|
CEB
|
|
|
SHL
|
|
|
|
Total
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
$
|
51,172
|
|
|
|
|
|
|
|
|
|
|
|
$
|
31,971
|
|
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
40,678
|
|
|
|
|
|
|
|
|
|
|
|
|
28,467
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
18,046
|
|
|
|
|
|
|
|
|
|
|
|
|
22,337
|
|
Gain on cost method investment
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,585
|
)
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
Debt extinguishment costs
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
6,691
|
|
Other (income) expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,666
|
)
|
|
|
|
|
|
|
|
|
|
|
|
1,247
|
|
Operating profit (loss)
|
|
|
$
|
98,108
|
|
|
$
|
(4,463
|
)
|
|
|
|
93,645
|
|
|
$
|
103,322
|
|
|
$
|
(12,609
|
)
|
|
|
|
90,713
|
|
Other income (expense), net
|
|
|
|
6,239
|
|
|
|
3,427
|
|
|
|
|
9,666
|
|
|
|
431
|
|
|
|
(1,678
|
)
|
|
|
|
(1,247
|
)
|
Depreciation and amortization
|
|
|
|
33,707
|
|
|
|
34,579
|
|
|
|
|
68,286
|
|
|
|
28,356
|
|
|
|
31,731
|
|
|
|
|
60,087
|
|
Impact of the deferred revenue fair value adjustment
|
|
|
|
3,537
|
|
|
|
2,469
|
|
|
|
|
6,006
|
|
|
|
—
|
|
|
|
9,914
|
|
|
|
|
9,914
|
|
Acquisition related costs
|
|
|
|
2,964
|
|
|
|
—
|
|
|
|
|
2,964
|
|
|
|
7,691
|
|
|
|
3,786
|
|
|
|
|
11,477
|
|
Impairment loss
|
|
|
|
39,700
|
|
|
|
—
|
|
|
|
|
39,700
|
|
|
|
22,600
|
|
|
|
—
|
|
|
|
|
22,600
|
|
Restructuring costs
|
|
|
|
1,154
|
|
|
|
676
|
|
|
|
|
1,830
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Share-based compensation
|
|
|
|
14,055
|
|
|
|
1,577
|
|
|
|
|
15,632
|
|
|
|
11,137
|
|
|
|
1,410
|
|
|
|
|
12,547
|
|
Adjusted EBITDA
|
|
|
$
|
199,464
|
|
|
$
|
38,265
|
|
|
|
$
|
237,729
|
|
|
$
|
173,537
|
|
|
$
|
32,554
|
|
|
|
$
|
206,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
|
|
|
28.3
|
%
|
|
|
18.2
|
%
|
|
|
|
26.0
|
%
|
|
|
27.4
|
%
|
|
|
16.6
|
%
|
|
|
|
24.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
Net income
|
|
|
|
|
|
$
|
28,555
|
|
|
|
|
$
|
12,578
|
|
|
|
|
|
$
|
51,172
|
|
|
|
|
$
|
31,971
|
Impact of the deferred revenue fair value adjustment (1)
|
|
|
|
|
|
|
694
|
|
|
|
|
|
795
|
|
|
|
|
|
|
3,964
|
|
|
|
|
|
7,193
|
Acquisition related costs (1)
|
|
|
|
|
|
|
67
|
|
|
|
|
|
2,918
|
|
|
|
|
|
|
1,856
|
|
|
|
|
|
7,500
|
Impairment loss (2)
|
|
|
|
|
|
|
3,433
|
|
|
|
|
|
4,199
|
|
|
|
|
|
|
31,386
|
|
|
|
|
|
22,600
|
Gain on cost method investment (1)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
(3,944
|
)
|
|
|
|
|
—
|
Restructuring costs (1)
|
|
|
|
|
|
|
1,167
|
|
|
|
|
|
—
|
|
|
|
|
|
|
1,167
|
|
|
|
|
|
—
|
Debt extinguishment costs (1)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
4,001
|
Share-based compensation (1)
|
|
|
|
|
|
|
2,478
|
|
|
|
|
|
2,145
|
|
|
|
|
|
|
9,719
|
|
|
|
|
|
7,765
|
Amortization of acquisition related intangibles (1)
|
|
|
|
|
|
|
6,561
|
|
|
|
|
|
6,161
|
|
|
|
|
|
|
27,320
|
|
|
|
|
|
24,353
|
Adjusted net income
|
|
|
|
|
|
$
|
42,955
|
|
|
|
|
$
|
28,796
|
|
|
|
|
|
$
|
122,640
|
|
|
|
|
$
|
105,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
|
Reconciliation of Non-GAAP Financial Measures (Continued)
|
(In thousands, except per share data)
|
|
Non-GAAP Earnings per Diluted Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
2014
|
|
|
|
|
2013
|
Diluted earnings per share
|
|
|
|
|
$
|
0.84
|
|
|
|
|
$
|
0.37
|
|
|
|
|
|
$
|
1.50
|
|
|
|
|
$
|
0.94
|
Impact of the deferred revenue fair value adjustment (1)
|
|
|
|
|
|
0.02
|
|
|
|
|
|
0.02
|
|
|
|
|
|
|
0.12
|
|
|
|
|
|
0.21
|
Acquisition related costs (1)
|
|
|
|
|
|
—
|
|
|
|
|
|
0.09
|
|
|
|
|
|
|
0.05
|
|
|
|
|
|
0.22
|
Impairment loss (2)
|
|
|
|
|
|
0.10
|
|
|
|
|
|
0.12
|
|
|
|
|
|
|
0.92
|
|
|
|
|
|
0.66
|
Gain on cost method investment (1)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
(0.12
|
)
|
|
|
|
|
—
|
Restructuring costs (1)
|
|
|
|
|
|
0.04
|
|
|
|
|
|
—
|
|
|
|
|
|
|
0.04
|
|
|
|
|
|
—
|
Debt extinguishment costs (1)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
0.12
|
Share-based compensation (1)
|
|
|
|
|
|
0.07
|
|
|
|
|
|
0.06
|
|
|
|
|
|
|
0.29
|
|
|
|
|
|
0.23
|
Amortization of acquisition related intangibles (1)
|
|
|
|
|
|
0.20
|
|
|
|
|
|
0.18
|
|
|
|
|
|
|
0.80
|
|
|
|
|
|
0.72
|
Non-GAAP diluted earnings per share
|
|
|
|
|
$
|
1.27
|
|
|
|
|
$
|
0.84
|
|
|
|
|
|
$
|
3.60
|
|
|
|
|
$
|
3.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjustments are net of the annual estimated income tax effect using
statutory rates based on the relative amounts allocated to each
jurisdiction in the applicable period. The following income tax
rates were used: 34% in 2014 and 27% in 2013 for the deferred
revenue fair value adjustment; 37% in 2014 and 34% in 2013 for
acquisition related costs; 40% in 2014 for the gain on cost method
investment; 36% in 2014 for restructuring costs; 40% in 2013 for
debt extinguishment costs; 38% in 2014 and 2013 for share-based
compensation; and 30% in 2014 and 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
second quarter of 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
$3.4 million of the income tax effect associated with the
non-deductible goodwill impairment loss was reflected in the income
tax provision in the three months ended December 31, 2014 to bring
the full year adjustment to $31.4 million.
|
|
|
|
|
|
|
|
|
|
Constant Currency
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2014
|
|
|
Year Ended December 31, 2014
|
|
|
|
CEB
|
|
|
SHL
|
|
|
Total
|
|
|
CEB
|
|
|
SHL
|
|
|
Total
|
Adjusted revenue
|
|
|
$
|
187,046
|
|
|
|
$
|
54,125
|
|
|
|
$
|
241,171
|
|
|
|
$
|
705,110
|
|
|
|
$
|
209,870
|
|
|
|
$
|
914,980
|
|
Currency exchange rate fluctuations
|
|
|
|
1,663
|
|
|
|
|
2,568
|
|
|
|
|
4,231
|
|
|
|
|
1,821
|
|
|
|
|
1,454
|
|
|
|
|
3,275
|
|
Constant currency Adjusted revenue
|
|
|
$
|
188,709
|
|
|
|
$
|
56,693
|
|
|
|
$
|
245,402
|
|
|
|
$
|
706,931
|
|
|
|
$
|
211,324
|
|
|
|
$
|
918,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
63,136
|
|
|
|
$
|
13,014
|
|
|
|
$
|
76,150
|
|
|
|
$
|
199,464
|
|
|
|
$
|
38,265
|
|
|
|
$
|
237,729
|
|
Currency exchange rate fluctuations
|
|
|
|
673
|
|
|
|
|
1,033
|
|
|
|
|
1,706
|
|
|
|
|
3,031
|
|
|
|
|
2,481
|
|
|
|
|
5,512
|
|
Net non-operating foreign currency (gains) losses
|
|
|
|
(3,146
|
)
|
|
|
|
(2,390
|
)
|
|
|
|
(5,536
|
)
|
|
|
|
(4,892
|
)
|
|
|
|
(3,750
|
)
|
|
|
|
(8,642
|
)
|
Constant currency Adjusted EBITDA
|
|
|
$
|
60,663
|
|
|
|
$
|
11,657
|
|
|
|
$
|
72,320
|
|
|
|
$
|
197,603
|
|
|
|
$
|
36,996
|
|
|
|
$
|
234,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE CORPORATE EXECUTIVE BOARD COMPANY
|
Reconciliation of Non-GAAP Financial Measures (Continued)
|
(In thousands, except per share data)
|
|
Other Information
|
|
As previously disclosed, beginning with the first quarter of 2015,
the Company will adjust its non-GAAP financial measures to exclude
the impact of pretax net non-operating foreign currency gains
(losses) included in other income (expense). The table below
reflects the amount of pretax net non-operating foreign currency
gains (losses) that were included in the Company’s 2013 and 2014
reported results:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2014
|
|
|
Year Ended December 31, 2013
|
|
|
|
CEB
|
|
|
SHL
|
|
|
Total
|
|
|
CEB
|
|
|
SHL
|
|
|
Total
|
Q1
|
|
|
$
|
(387
|
)
|
|
|
$
|
(490
|
)
|
|
|
$
|
(877
|
)
|
|
|
$
|
288
|
|
|
|
$
|
(240
|
)
|
|
|
$
|
48
|
|
Q2
|
|
|
|
(1,693
|
)
|
|
|
|
(341
|
)
|
|
|
|
(2,034
|
)
|
|
|
|
(659
|
)
|
|
|
|
547
|
|
|
|
|
(112
|
)
|
Q3
|
|
|
|
3,826
|
|
|
|
|
2,191
|
|
|
|
|
6,017
|
|
|
|
|
(883
|
)
|
|
|
|
(1,687
|
)
|
|
|
|
(2,570
|
)
|
Q4
|
|
|
|
3,146
|
|
|
|
|
2,390
|
|
|
|
|
5,536
|
|
|
|
|
(503
|
)
|
|
|
|
(177
|
)
|
|
|
|
(680
|
)
|
|
|
|
$
|
4,892
|
|
|
|
$
|
3,750
|
|
|
|
$
|
8,642
|
|
|
|
$
|
(1,757
|
)
|
|
|
$
|
(1,557
|
)
|
|
|
$
|
(3,314
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The income tax effect associated with the net non-operating
foreign currency gains in 2014 was $1.2 million after excluding
the non-taxable component of $4.0 million. Thus, the after-tax
amount of the net non-operating foreign currency gains in 2014 was
$7.4 million, or $0.22 per diluted share.
|
|
Copyright Business Wire 2015