• Member relations and marketing, which represents the costs of acquiring new members and the costs of maintaining and renewing existing members, consisting of compensation, including sales commissions and share-based compensation, travel and associated support services.

• General and administrative, consisting of compensation, including share-based compensation, and other costs associated with human resources and recruiting, finance and accounting, legal, management information systems, facilities management, new product development and other administrative functions.

• Depreciation and amortization, consisting of depreciation of our property and equipment, including leasehold improvements, furniture, fixtures and equipment, capitalized software and Web site development costs and the amortization of intangible assets.

We also recognized Restructuring costs in the three months ended March 31, 2009, consisting primarily of severance and related termination benefits, pursuant to a plan of workforce reductions. See Note 8 to the condensed consolidated financial statements.
Critical Accounting Policies
Our accounting policies require us to apply methodologies, estimates and judgments that have a significant impact on the results we report in our financial statements. In our 2008 Annual Report on Form 10-K/A, we have discussed those material policies that we believe are critical and require the use of complex judgment in their application. Recent Accounting Pronouncements
There were no recent accounting pronouncements that had a material effect on our condensed consolidated financial statements for the three months ended March 31, 2009. See Note 3 to the condensed consolidated financial statements for a discussion of recent accounting pronouncements. Results of Operations
The following table sets forth certain operating data as a percentage of total revenues for the periods indicated:

                                                  Three months ended March 31,
                                                    2009                2008
     Revenues                                           100.0 %             100.0 %

     Costs and expenses:
     Cost of services                                    32.6                33.4
     Member relations and marketing                      29.6                30.7
     General and administrative                          13.4                14.5
     Depreciation and amortization                        5.1                 4.0
     Restructuring costs                                  0.8                   -


     Total costs and expenses                            81.5                82.6

     Income from operations                              18.5                17.4
     Other income, net                                    0.1                 0.5


     Income before provision for income taxes            18.6                17.9
     Provision for income taxes                           7.4                 7.2


     Net income                                          11.1 %              10.7 %

Three Months Ended March 31, 2009 and 2008 Contract Value
Contract Value decreased 19.6% to $431.1 million at March 31, 2009 from $535.9 million at March 31, 2008. The decrease is due to reduced program memberships from some of our large corporate members, concentrated mostly in the financial services sector; planned contract value losses from programs that we are consolidating across 2009; and lower renewal rates and new sales due to economic conditions.

Revenues
Revenues decreased 14.9% to $117.4 million for the three months ended March 31, 2009 from $138.0 million for the three months ended March 31, 2008. The decrease of $20.6 million was largely due to the lower deferred revenue balance at December 31, 2008 compared to December 31, 2007. The year-over-year decrease in deferred revenue balances was $59 million, or 18%. The decrease in deferred revenue was due to lower renewal rates and lower new member subscriptions. Costs and expenses
Included in the results of operations and the discussion and analysis of changes below are amounts related to an increase in share-based compensation expense for the three months ended March 31, 2009 relative to the three months ended March 31, 2008. The increase of $1.3 million is due mostly to an adjustment to increase our forfeiture rate in the first quarter of 2008 from 3% to 6%. The net effect of this adjustment was $1.1 million.
Also included is a decrease in facilities expense for comparative periods of $1.8 million. This decrease is due to the consolidation of our Washington D.C. office locations into our new headquarters in the first quarter of 2008. During that period, we incurred additional rent for overlapping lease periods. We also benefited from the strength of the U.S. dollar compared to the British Pound in the first quarter of 2009 versus the first quarter of 2008. The costs and expenses of our UK subsidiary remained consistent when comparing the periods in the local currency but decreased when translated to U.S. dollars due to a reduction in the value of the British Pound versus the U.S. dollar of approximately $0.50. Costs incurred for foreign subsidiaries will fluctuate based upon changes in foreign currency rates in addition to other operational factors.
In the first quarter of 2009, we recognized expense of $0.9 million and paid $3.1 million of restructuring costs. The accrual at March 31, 2009 of $5.5 million is expected to be substantially paid out in 2009. We expect personnel costs to continue to decrease as our 2008 restructuring plan progresses across 2009.
These costs and expenses are allocated to Cost of services, Member relations and marketing and General and administrative expenses in the condensed consolidated statements of income for the three months ended March 31, 2009 and 2008. Cost of services
Cost of services decreased 16.9% to $38.3 million for the three months ended March 31, 2009 from $46.1 million for the three months ended March 31, 2008. The decrease of $7.8 million was primarily due to a reduction in fixed and variable compensation not related to share-based compensation. Costs of services further benefited from decreases in facilities and allocated overhead expenses, decreases in third-party consulting fees and costs to deliver member meetings. These decreases were partially offset by a $0.6 million increase in share-based compensation expense.
Cost of services as a percentage of revenues was 32.6% and 33.4% for the three months ended March 31, 2009 and 2008, respectively. This decrease was mostly due to the percentage decrease in facilities and allocated overhead expense and third-party consulting fees partially offset by the percentage increase in share-based compensation expense.
Cost of services as a percentage of revenues may fluctuate from quarter to quarter due to the timing of the completion and delivery of best practices research studies, the timing of executive education seminars, the introduction of new membership programs and the fixed nature of a portion of the production costs of best practices research studies, as these costs are not significantly affected by growth or reduction in the number of membership subscriptions. Accordingly, Cost of services as a percentage of revenues may not be indicative of future quarterly or annual results. However, because Cost of services includes both fixed and variable components in terms of both amount and timing of expenses incurred, we have some flexibility to manage a portion of these expenses in light of changing market conditions.

Member relations and marketing
Member relations and marketing expense decreased 17.7% to $34.8 million for the three months ended March 31, 2009 from $42.3 million for the three months ended March 31, 2008. The decrease of $7.5 million was primarily due to a decrease in fixed compensation, and to a lesser extent, decreases in facilities and allocated overhead and travel and related costs. These decreases were offset, in part, by variable compensation and fees associated with the implementation of our new customer relationship management software ("CRM").
Member relations and marketing expense as a percentage of revenues was 29.6% and 30.7% for the three months ended March 31, 2009 and 2008, respectively. The decrease as a percentage of revenues was a result of the percentage changes of the factors discussed above.
General and administrative
General and administrative expense decreased 21.5% to $15.7 million for the three months ended March 31, 2009 from $20.0 million for the three months ended March 31, 2008. The decrease of $4.3 million is principally due to decreases in external consulting fees, travel and related costs, facilities and allocated overhead expenses and search and referral fees.
General and administrative expense as a percentage of revenues was 13.4% and 14.5% for the three months ended March 31, 2009 and 2008, respectively. The decrease as a percentage of revenues was due to the relative change in the expense versus the change in revenues.
Depreciation and amortization
Depreciation and amortization expense increased 7.1% to $6.0 million for the three months ended March 31, 2009 from $5.6 million for the three months ended March 31, 2008. The increase in Depreciation and amortization expense of $0.4 million was principally due to additional depreciation expense relating to the leasehold improvements of our Arlington, Virginia headquarters for the full three months compared to two months of service in the first quarter of 2008. This increase was offset by a decrease in amortization expense relating to lower intangible asset values after the impairment charge recorded in the fourth quarter of 2008.
Depreciation and amortization expense as a percentage of revenues was 5.1% and 4.0% for the three months ended March 31, 2009 and 2008, respectively. The percentage increase was primarily due to the relative change in the expense versus the change in revenues.
Restructuring costs
In the first quarter of 2009, we recorded $0.9 million of expense related to restructuring costs. These costs related to headcount reductions and consulting fees associated with the restructuring plan we announced in the fourth quarter of 2008. See Note 8 to the condensed consolidated financial statements. Other income, net
Other income, net decreased 85.7% to $0.1 million for the three months ended March 31, 2009 from $0.7 million for the three months ended March 31, 2008. Other income, net for the three months ended March 31, 2009 was comprised of $0.6 million of interest income and $0.4 million of other income, partially offset by a $0.3 million foreign currency loss, and the impact of the change in fair value of participant accounts in our deferred compensation plan of $0.6 million. Other income, net for the three months ended March 31, 2008 was comprised of interest income of $1.6 million partially offset by a $0.9 million decrease in the fair value of participant accounts in our deferred compensation plan. The period-over-period decrease in Other income, net of $0.6 million was primarily the result of the decreased amount of marketable securities and lower investment returns in a lower interest rate environment.
Other income, net as a percentage of revenues was 0.1% and 0.5% for the three months ended March 31, 2009 and 2008, respectively. The percentage decrease is due to the relative change in the expense versus the change in revenues. See further discussion in the Liquidity and Capital Resources section below. Provision for income taxes
We recorded a Provision for income taxes of $8.7 million and $9.9 million for the three months ended March 31, 2009 and 2008, respectively.

Our effective income tax rate remained steady at 40.0% for the three months ended March 31, 2009 and 2008, respectively. Liquidity and Capital Resources
Cash flows generated from operating activities are our primary source of liquidity. We believe that existing cash, cash equivalents and marketable securities balances and operating cash flows will be sufficient to support operations, capital expenditures, and the payment of dividends, as well as potential share repurchases during the next 12 months. We had cash, cash equivalents and marketable securities of $103.3 million at March 31, 2009. Cash flows from operating activities
We generated net cash flows from operating activities of $43.6 million and $83.9 million for the three months ended March 31, 2009 and 2008, respectively. The decrease in cash flow from operations is primarily due to a $19 million decrease in deferred revenues resulting from lower renewal and new member sales rates in the first quarter of 2009 versus the first quarter of 2008. Accounts payable and accrued expenses decreased $13.1 million in comparison. This decrease is due mostly to the payment of the restructuring costs and higher tax payments.
Membership subscriptions, which principally are annually renewable agreements, are generally payable by members at the beginning of the contract term. We made income tax payments of $8.1 million and $6.4 million in the three months ended March 31, 2009 and 2008, respectively and expect to continue making tax payments in future periods.
Cash flows from investing activities
Our cash management, acquisition and capital expenditure strategies affect cash flows from investing activities. For the three months ended March 31, 2009, net cash flows provided by investing activities were $11.1 million. For the three months ended March 31, 2008, net cash flows used in investing activities were $23.9 million.
For the three months ended March 31, 2009, maturities and sales of marketable securities generated $12.8 million compared with $0.8 million for the same period in the prior year. We invested $1.5 million in the first quarter of 2009 compared to $24.7 million for capital expenditures, including furniture, fixtures and equipment, leasehold improvements and computer equipment in the first quarter of 2008.
We estimate that capital expenditures to support our infrastructure will be approximately $10.0 million in 2009.
Cash flows from financing activities
Net cash flows used in financing activities were $14.7 million and $52.2 million for the three months ended March 31, 2009 and 2008, respectively. The $37.5 million decrease in cash flows used in financing activities is primarily the result of the decrease in the amount spent on the purchase of treasury shares of $37.6 million.
Commitments and contingencies
At March 31, 2009, we had outstanding letter of credit agreements totaling $6.2 million to provide security deposits for certain office space leases. The letters of credit expire in the period from September 2009 through March 2010 but will automatically extend for another year from their expiration dates unless we terminate them. To date, no amounts have been drawn on these agreements.
In May 2009, the Board of Directors declared a second quarter cash dividend of $0.10 per share for stockholders of record on June 15, 2009, which will be payable on June 30, 2009.

Contractual obligations
There have been no material changes to the contractual obligations tables as disclosed in Amendment No. 1 to our 2008 Annual Report on Form 10-K/A. We have operating lease obligations that relate primarily to our office leases that expire on various dates through 2028. The operating lease obligations generally include scheduled rent increases.
Off-Balance Sheet Arrangements
At March 31, 2009 and December 31, 2008, we had no off-balance sheet financing or other arrangements with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of facilitating off-balance sheet financing or other debt arrangements or for other contractually narrow or limited purposes.
Forward-looking statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are based on management's beliefs, current expectations and information currently available to management. These statements are contained throughout this Quarterly Report on Form 10-Q, including under the section entitled ''Management's Discussion and Analysis of Financial Condition and Results of Operations.'' Forward-looking statements frequently contain words such as "believes," "expects," "anticipates," "intends," "plans, "will," "estimates," "forecasts," "projects" and other words of similar meaning. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts, financial results or financial condition. Forward-looking statements include information concerning our possible or assumed results of operations, business strategies, financing plans, competitive position and potential growth opportunities.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those set forth in the forward-looking statements. One must carefully consider any such statement and should understand that many factors could cause actual results to differ materially from the forward-looking statements. Factors that could cause actual results to differ materially from those indicated by forward-looking statements include, among others, our dependence on renewals of our membership-based services, the sale of additional programs to existing members and our ability to attract new members, the potential that our new products will not be successful or are delayed, our potential failure to adapt to member needs and demands and to anticipate or adapt to market trends, our potential inability to attract and retain a significant number of highly skilled employees, continued consolidation in the financial services industry or sustained economic distress, which may limit our business with such companies, fluctuations in operating results, our potential inability to protect our intellectual property rights, our potential exposure to litigation related to the content of our products, our potential exposure to loss of revenue resulting from our service guarantee, 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 relating to share-based compensation expense under FAS 123(R), the potential effects of changes in foreign currency and marketplace conditions, possible volatility of our stock price, general economic conditions and future financial performance of members and industries. One should carefully evaluate such forward-looking statements in light of factors, including risk factors, described in the Company's filings with the Securities and Exchange Commission, especially on Forms 10-K, 10-Q and 8-K. In Item 1A. "Risk Factors" of Amendment No. 1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008, as filed on April 23, 2009, the Company discusses in more detail various important factors that could cause actual results to differ from expected or historic results. One should understand that it is not possible to predict or identify all such factors. Consequently, the reader should not consider any such list to be a complete statement of all potential risks or uncertainties. All forward-looking statements contained in this Quarterly Report on Form 10-Q are qualified by these cautionary statements and are made only as of the date this Quarterly Report on Form 10-Q is filed. We undertake no obligation, other than as required by law, to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There has been no material change in the Company's assessment of its sensitivity to market risk since its presentation set forth in Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," in its Annual Report on Form 10-K/A for the year ended December 31, 2008.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures In connection with the preparation of the amendment to our Annual Report on Form 10-K, our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act")), including the remedial actions discussed below, and have concluded that as of March 31, 2009, our disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting During the quarter ended March 31, 2009, we identified a material weakness in our internal control over financial reporting as of December 31, 2008 with respect to our process of reviewing operating leases, in that we did not have effective internal controls to determine the appropriate accounting for rental escalations. As previously disclosed in Amendment No. 1 to our 2008 Annual Report on Form 10-K, as a result of this material weakness, we modified our control procedures with respect to the review and documentation for leases entered into, which remediated the related internal control weakness. This change materially affected our internal control over financial reporting with respect to our process for reviewing operating leases.