Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies

Note 18. Commitments and Contingencies

Operating leases

The Company leases office facilities that expire on various dates through 2028. Generally, the leases carry renewal provisions and rental escalations and require the Company to pay executory costs such as taxes and insurance.

In May 2010, the Company amended and restated the sublease agreement entered into in June 2009 with a third party to exercise the extension clause contained in the original sublease from October 2021 through January 2028, which terminates with the Company’s existing lease in January 2028. The Company also sublet additional space from November 2011 through January 2028 and from October 2014 through January 2028. The amended and restated sublease also contains an expansion option for additional square footage, which may be exercised at the subtenant’s discretion, from October 2014 through January 2028. The subtenant will be required to pay its pro rata portion of any increases in building operating expenses and real estate taxes.

In October 2012, the Company entered into a lease agreement for 108,800 square feet in Arlington, Virginia. The Company expects that these actions will increase its aggregate rent expense by approximately $3.0 million for the year ended December 31, 2013 and by approximately $5.0 million for each year thereafter through the end of the lease period. Total lease payments over the non-cancelable 10 year 7 month term ending on December 31, 2023, including escalations, will be approximately $56.0 million. The lease agreement contains a one-time expansion right in 2013 for an additional contiguous floor of 21,760 square feet at the same terms and conditions and a renewal option to extend the lease for an additional four or five year period. CEB will be required to pay its pro rata portion of any increases in building operating expenses and real estate taxes in excess of the 2013 base year.

In November 2012, the Company entered into an agreement to extend a current sublease for one floor of its corporate headquarters and sublease one additional floor. The extension and sublease will begin on January 1, 2014 for a five year period.

Future minimum rental payments under non-cancelable operating leases and future minimum receipts under subleases, excluding executory costs, are as follows at December 31, 2012 (in thousands):

	Payments Due and Sublease Receipts by Period at December 31, 2012
	Total			YE 2013			YE 2014			YE 2015			YE 2016			YE 2017			Thereafter
Operating lease obligations	$	637,980		$	44,101		$	47,471		$	47,300		$	47,535		$	46,032		$	405,541
Subleases receipts		(277,390	)		(14,562	)		(17,591	)		(19,178	)		(19,638	)		(20,111	)		(186,310	)
Total net lease obligations	$	360,590		$	29,539		$	29,880		$	28,122		$	27,897		$	25,921		$	219,231

Rent expense, net of sublease income, was $24.2 million, $22.2 million, and $25.2 million in 2012, 2011, and 2010, respectively.

Other

At December 31, 2012, the Company had outstanding letters of credit totaling $8.3 million to provide security deposits for certain office space leases. The letters of credit expire in the period from January 2013 through December 2013, but will automatically extend for another year from their expiration dates unless the Company terminates them. To date, no amounts have been drawn on these agreements.

From time to time, the Company is subject to litigation related to normal business operations. The Company vigorously defends itself in litigation and is not currently a party to, and the Company’s property is not subject to, any legal proceedings likely to materially affect the Company’s operating results.

The Company continues to evaluate potential tax exposure relating to sales and use, payroll, income and property tax laws, and regulations for various states in which the Company sells or supports its goods and services. Accruals for potential contingencies are recorded by the Company when it is probable that a liability has been incurred, and the liability can be reasonably estimated. As additional information becomes available, changes in the estimates of the liability are reported in the period that those changes occur. The Company accrued a liability of $5.8 million at December 31, 2012 and $3.0 million at December 31, 2011 relating to certain sales and use tax regulations for states in which the Company sells or supports its goods and services. The liability at December 31, 2012 includes $2.6 million recorded in the preliminary purchase price allocation for SHL.