What changed in this filing

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Item 1. Financial Statements

2020-10-29 compared with 2020-07-30 · 188 added, 108 removed, 394 unchanged (43% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

Fiscal Year-to-Date

Fiscal Quarter Ended

Fiscal Quarter Ended Fiscal Year-to-Date

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Revenues $ 121,762 $ 115,686 $ 370,951 $ 332,108

Costs of services (exclusive of depreciation and amortization) 88,304 83,805 269,462 233,412

6 unchanged sentences

Provision for income taxes 2,123 952 6,744 4,754

Net income $ 5,403 $ 5,739 $ 17,802 $ 15,984

Net income per share:

Basic $ 0.69 $ 0.74 $ 2.28 $ 2.02

Diluted $ 0.68 $ 0.71 $ 2.23 $ 1.94

Weighted average number of shares outstanding:

Basic 7,771 7,769 7,780 7,903

Diluted 7,934 8,050 7,964 8,205

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Fiscal Year-to-Date

Fiscal Quarter Ended

Fiscal Quarter Ended Fiscal Year-to-Date

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Net income $ 5,403 $ 5,739 $ 17,802 $ 15,984

Other comprehensive income (loss)

5 unchanged sentences

(in thousands, except share data)

September 26,

2020 December 28,

Current assets:

Cash and cash equivalents $ 24,108 $ 25,639

Accounts receivable, net of allowances of $ 3,691 at June 27, 2020 and $ 3,838 at December 28, 2019

Unbilled services, net of allowances of $ 947 at June 27, 2020 and $ 1,503 at December 28, 2019

Accounts receivable, net of allowances of $ 3,126 at September 26, 2020 and $ 3,838 at December 28, 2019

106,175 107,841

Unbilled services, net of allowances of $ 942 at September 26, 2020 and $ 1,503 at December 28, 2019

51,509 36,569

Prepaid expenses and other current assets 8,832 7,277

2 unchanged sentences

Property and equipment, net 64,886 61,295

Goodwill 88,290 88,504

Intangible assets, net 5,449 6,476

2 unchanged sentences

Forgivable loans, net of current portion 58,138 48,390

Other assets 3,122 3,658

Total assets $ 550,177 $ 533,243

LIABILITIES AND SHAREHOLDERS' EQUITY

20 unchanged sentences

25,000,000 shares authorized;

7,779,549 and 7,814,797 shares issued and outstanding at June 27, 2020 and December 28, 2019, respectively

7,739,550 and 7,814,797 shares issued and outstanding at September 26, 2020 and December 28, 2019, respectively

Retained earnings 212,368 200,249

7 unchanged sentences

Fiscal Year-to-Date

September 26,

2020 September 28,

OPERATING ACTIVITIES:

Net income $ 17,802 $ 15,984

Adjustments to reconcile net income to net cash used in operating activities:

3 unchanged sentences

Deferred income taxes 496 117

Share-based compensation expenses

Share-based compensation expense 2,357 2,641

Accounts receivable allowances ( 894 ) ( 160 )

13 unchanged sentences

FINANCING ACTIVITIES:

Issuance of common stock, principally stock options exercises

Issuance of common stock, principally stock option exercises 1,667 2,006

Borrowings under revolving line of credit 77,000 54,000

23 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED JUNE 27, 2020 (unaudited)

FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED SEPTEMBER 26, 2020 (unaudited)

(in thousands, except share data)

Common Stock Retained

Earnings Accumulated

Comprehensive

Shareholders’

Issued Amount

BALANCE AT DECEMBER 28, 2019 7,814,797 $ 9,265 $ 200,249 $ ( 11,763 ) $ 197,751

2 unchanged sentences

Balance at December 29, 2019, as adjusted 7,814,797 $ 9,265 $ 200,046 $ ( 11,763 ) $ 197,548

Net income — — 6,468 — 6,468

Foreign currency translation adjustment — — — ( 2,427 ) ( 2,427 )

7 unchanged sentences

Cash dividends paid to shareholders ($ 0.23 per share)

— — ( 1,796 ) — ( 1,796 )

BALANCE AT MARCH 28, 2020 7,756,425 $ 5,871 $ 204,679 $ ( 14,190 ) $ 196,360

Net income — — 5,931 — 5,931

Foreign currency translation adjustment — — — 536 536

4 unchanged sentences

Cash dividends paid to shareholders ($ 0.23 per share)

— — ( 1,788 ) — ( 1,788 )

BALANCE AT JUNE 27, 2020 7,779,549 $ 7,085 $ 208,784 $ ( 13,654 ) $ 202,215

Net income — — 5,403 — 5,403

Foreign currency translation adjustment — — — 1,589 1,589

Exercise of stock options 57,219 1,098 — — 1,098

Share-based compensation expense — 906 — — 906

Restricted shares vestings 12,936 — — — —

Shares repurchased ( 110,154 ) ( 4,997 ) — — ( 4,997 )

Accrued dividends on unvested shares — — ( 31 ) — ( 31 )

Cash dividends paid to shareholders ($ 0.23 per share)

— — ( 1,788 ) — ( 1,788 )

BALANCE AT SEPTEMBER 26, 2020 7,739,550 $ 4,092 $ 212,368 $ ( 12,065 ) $ 204,395

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED JUNE 29, 2019 (unaudited)

FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED SEPTEMBER 28, 2019 (unaudited)

(in thousands, except share data)

Common Stock Retained

Earnings Accumulated

Comprehensive

Shareholders’

Issued Amount

BALANCE AT DECEMBER 29, 2018 8,010,480 $ 22,837 $ 186,229 $ ( 12,594 ) $ 196,472

Net income — — 4,665 — 4,665

Foreign currency translation adjustment — — — 712 712

7 unchanged sentences

Cash dividends paid to shareholder ($ 0.20 per share)

— — ( 1,616 ) — ( 1,616 )

BALANCE AT MARCH 30, 2019 8,005,898 $ 20,537 $ 189,235 $ ( 11,882 ) $ 197,890

Net income — — 5,580 — 5,580

Foreign currency translation adjustment — — — ( 653 ) ( 653 )

4 unchanged sentences

Cash dividends paid to shareholders ($ 0.20 per share)

— — ( 1,580 ) — ( 1,580 )

BALANCE AT JUNE 29, 2019 7,829,310 $ 14,224 $ 193,191 $ ( 12,535 ) $ 194,880

Net income — — 5,739 — 5,739

Foreign currency translation adjustment — — — ( 1,488 ) ( 1,488 )

Exercise of stock options 21,224 480 — — 480

Share-based compensation expense — 882 — — 882

Restricted shares vestings 14,754 — — — —

Shares repurchased ( 157,402 ) ( 6,558 ) — — ( 6,558 )

Accrued dividends on unvested shares — — ( 37 ) — ( 37 )

Cash dividends paid to shareholders ($ 0.20 per share)

— — ( 1,546 ) — ( 1,546 )

BALANCE AT SEPTEMBER 28, 2019 7,707,886 $ 9,028 $ 197,347 $ ( 14,023 ) $ 192,352

See accompanying notes to the condensed consolidated financial statements.

27 unchanged sentences

Actual results may differ from those estimates if CRA’s assumptions based on past experience or other assumptions do not turn out to be substantially accurate.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Common Stock and Equity

1 unchanged sentence

Under CRA’s share repurchase program, the Company repurchases its common stock in open market purchases (including through any Rule 10b5-1 plan adopted by CRA) or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations.

The purchase price is first charged against available paid-in capital ("PIC") until PIC is exhausted, wherein purchases will be charged to retained earnings.

The purchase price is first charged against available paid-in capital (“PIC”) until PIC is exhausted, wherein purchases will be charged to retained earnings.

CRA’s common stock has no par value.

All shares repurchased have been retired.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Recent Accounting Standards Adopted

26 unchanged sentences

The amendment requires entities to use a forward-looking “expected loss” model for most financial instruments, including accounts receivable, unbilled services, and loans, that is based on historical information, current information, and reasonable and supportable forecasts.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As a result of adopting the new standard, CRA recognized a cumulative increase to allowances for accounts receivable and unbilled services and a reduction to the fiscal 2020 opening balance of retained earnings of $ 0.2 million.

6 unchanged sentences

2018-13”) on December 29, 2019.

The ASU eliminates, adds, and modifies certain disclosure requirements for fair value measurements from ASC 820.

The ASU eliminates,

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

adds, and modifies certain disclosure requirements for fair value measurements from ASC 820.

Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurement.

20 unchanged sentences

CRA plans to adopt the amendments during the first fiscal quarter of 2021.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fair Value of Financial Instruments

The following tables show CRA’s financial instruments as of June 27, 2020 and December 28, 2019 that are measured and recorded in the condensed consolidated financial statements at fair value on a recurring basis (in thousands):

June 27, 2020

The following tables show CRA’s financial instruments as of September 26, 2020 and December 28, 2019 that are measured and recorded in the condensed consolidated financial statements at fair value on a recurring basis (in thousands):

September 26, 2020

Quoted Prices in Active

Markets for Identical

Significant Other

Significant Unobservable

Assets or Liabilities

Observable Inputs

Assets or Liabilities Significant Other

Observable Inputs Significant Unobservable

Level 1 Level 2 Level 3

Money market mutual funds $ 150 $ — $ —

Total Assets $ 150 $ — $ —

Contingent consideration liability $ — $ — $ 13,480

Total Liabilities $ — $ — $ 13,480

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 28, 2019

1 unchanged sentence

Markets for Identical

Significant Other

Significant Unobservable

Assets or Liabilities

Observable Inputs

Assets or Liabilities Significant Other

Observable Inputs Significant Unobservable

Level 1 Level 2 Level 3

Money market mutual funds $ 150 $ — $ —

Total Assets $ 150 $ — $ —

Contingent consideration liability $ — $ — $ 11,579

4 unchanged sentences

The significant unobservable inputs used in the fair value measurement of the contingent consideration liability are CRA’s measures of the estimated payouts based on internally generated revenue projections, expected volatility of the revenue projections, and discount rates.

The fair value of the contingent consideration liability was determined using a Monte Carlo simulation.

The fair value of the contingent consideration liability had been determined using a Monte Carlo simulation in prior fiscal quarters.

In the current fiscal quarter, the fair value was estimated using an accrual method that approximates the fair value, as the end of the measurement period occurs during the first quarter of fiscal 2021.

The fair value of the contingent consideration liability is reassessed on a quarterly basis by CRA using additional information as it becomes available, and any change in the fair value estimates are recorded in costs of services (exclusive of depreciation and amortization) on the condensed consolidated statements of operations.

2 unchanged sentences

Fiscal Year-to-Date

Fiscal Year Ended

June 27, 2020

December 28, 2019

Period Ended Fiscal Year Ended

September 26, 2020 December 28, 2019

Beginning balance $ 11,579 $ 6,197

Remeasurement of acquisition-related contingent consideration 921 3,285

Accretion 980 2,097

Ending balance $ 13,480 $ 11,579

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Revenue Recognition

2 unchanged sentences

In general, project costs are classified in costs of services and are based on the direct salary of CRA’s employee consultants on the engagement, plus all direct expenses incurred to complete the project, including any amounts billed to CRA by its non-employee experts.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Disaggregation of Revenue

The following tables disaggregate CRA’s revenue by type of contract and geographic location (in thousands):

Fiscal Year-to-Date

Fiscal Quarter Ended

Type of Contract

Fiscal Quarter Ended Fiscal Year-to-Date

Type of Contract September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Consulting services revenues:

Fixed Price $ 26,197 $ 30,057 $ 85,968 $ 76,622

Time-and-materials 95,565 85,629 284,983 255,486

Fiscal Year-to-Date

Fiscal Quarter Ended

Geographic Breakdown

Total $ 121,762 $ 115,686 $ 370,951 $ 332,108

Fiscal Quarter Ended Fiscal Year-to-Date

Geographic Breakdown September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Consulting services revenues:

1 unchanged sentence

United Kingdom 20,358 17,116 57,355 53,027

Other 5,287 6,353 17,323 15,860

Total $ 121,762 $ 115,686 $ 370,951 $ 332,108

Reserves for Variable Consideration and Credit Risk

Revenues from CRA's consulting services are recorded at the net transaction price, which includes estimates of variable consideration for which reserves are established.

Variable consideration reserves are based on actual price concessions and those expected to be extended to CRA customers as well as CRA's historical realization rates and are recorded as a component of the allowances for accounts receivable and unbilled services.

CRA’s accounts receivable and unbilled services consist of receivables from a broad range of clients in a variety of industries located through the U.S.

Variable consideration reserves are based on actual price concessions and those expected to be extended to CRA customers estimated by CRA's historical realization rates.

Reserves for variable consideration are recorded as a component of the allowances for accounts receivable and unbilled services on the condensed consolidated balance sheets.

CRA’s accounts receivable and unbilled services consist of receivables from a broad range of clients in a variety of industries located throughout the U.S.

and other countries.

5 unchanged sentences

Comparative periods and their respective disclosures prior to the adoption of ASC 326 have not been adjusted.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Under ASC 326, CRA maintains allowances for accounts receivable and unbilled services for estimated losses resulting from clients’ failure to make required payments.

4 unchanged sentences

Expenses associated with these allowances were reported as a component of selling, general and administrative expenses on the condensed consolidated statements of operations.

Additions to the allowances for accounts receivable and unbilled services related to reserves for variable consideration are as follows (in thousands):

Fiscal Year-to-Date

Fiscal Quarter Ended

Additions to reserves for variable consideration

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Adjustments to the allowances for accounts receivable and unbilled services related to reserves for credit risk are as follows (in thousands):

Fiscal Year-to-Date

Fiscal Year Ended

June 27, 2020

December 28, 2019

Period Ended Fiscal Year Ended

September 26, 2020 December 28, 2019

Beginning balance $ 370 $ 639

4 unchanged sentences

The following table presents CRA's bad debt expense, net of recoveries of previously written off allowances (in thousands):

Fiscal Year-to-Date

Fiscal Quarter Ended

Fiscal Quarter Ended Fiscal Year-to-Date

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Bad debt expense (recovery), net $ 271 $ 142 $ 228 $ 173

3 unchanged sentences

The following expenses are subject to reimbursement (in thousands):

Fiscal Year-to-Date

Fiscal Quarter Ended

Fiscal Quarter Ended Fiscal Year-to-Date

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Reimbursable expenses $ 13,150 $ 13,978 $ 44,395 $ 38,991

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Contract Balances from Contracts with Customers

CRA defines contract assets as assets for which it has recorded revenue because it determines that it is probable that it will earn a performance-based or contingent fee, but is not yet entitled to receive a fee, because certain events, such as completion of the measurement period or client approval, must occur.

The contract assets balance was immaterial as of June 27, 2020 and December 28, 2019.

The contract assets balance was immaterial as of September 26, 2020 and December 28, 2019.

The timing of revenue recognition, billings, and cash collections results in billed receivables, unbilled services and contract liabilities on the condensed consolidated balance sheet.

5 unchanged sentences

The following table presents the closing balances of CRA’s contract liabilities (in thousands):

June 27, 2020

December 28, 2019

September 26, 2020 December 28, 2019

Balance at the end of the period $ 2,201 $ 4,007

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CRA recognized the following revenue that was included in the contract liabilities balance as of the opening of the respective period or for performance obligations satisfied in previous periods (in thousands):

Fiscal Year-to-Date

Fiscal Quarter Ended

Fiscal Quarter Ended Fiscal Year-to-Date

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Revenue recognized for amounts included in contract liabilities at the beginning of the period $ 1,766 $ 2,405 $ 3,262 $ 4,900

1 unchanged sentence

Forgivable Loans

Forgivable loan activity for the fiscal year-to-date period ended June 27, 2020 and the fiscal year ended December 28, 2019 is as follows (in thousands):

Forgivable loan activity for the fiscal year-to-date period ended September 26, 2020 and the fiscal year ended December 28, 2019 is as follows (in thousands):

Fiscal Year-to-Date

Fiscal Year Ended

June 27, 2020

December 28, 2019

Period Ended Fiscal Year Ended

September 26, 2020 December 28, 2019

Beginning balance $ 55,141 $ 40,294

Advances 38,478 35,166

Repayments — ( 1,173 )

Reclassification from accrued expenses / to other assets ( 9,713 ) ( 1,734 )

Amortization ( 19,517 ) ( 17,700 )

Effects of foreign currency translation ( 214 ) 288

2 unchanged sentences

Non-current portion of forgivable loans $ 58,138 $ 48,390

At June 27, 2020 and December 28, 2019, CRA had no other loans to current or former employees included in other assets on the condensed consolidated balance sheet.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

At September 26, 2020 and December 28, 2019, CRA had no other loans to current or former employees included in other assets on the condensed consolidated balance sheet.

The principal amount of forgivable loans and accrued interest is forgiven by CRA over the term of the loans, provided that the employee or non-employee expert continues employment or affiliation with CRA and complies with certain contractual requirements.

1 unchanged sentence

The allowances are determined per specific borrower and are based on their financial condition and related facts and circumstances, including consideration of collateral.

For the fiscal year-to-date period ended June 27, 2020 and the fiscal year ended December 28, 2019, no allowances or write-offs of these loans were recorded.

For the fiscal year-to-date period ended September 26, 2020 and the fiscal year ended December 28, 2019, no allowances or write-offs of these loans were recorded.

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill during the fiscal year ended December 28, 2019 and the fiscal year- to-date period ended June 27, 2020, are as follows (in thousands):

The changes in the carrying amount of goodwill during the fiscal year ended December 28, 2019 and the fiscal year- to-date period ended September 26, 2020, are as follows (in thousands):

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Balance at December 28, 2019

Goodwill $ 164,921

Accumulated goodwill impairment ( 76,417 )

1 unchanged sentence

Foreign currency translation adjustment and other (1) ( 214 )

Goodwill, net at June 27, 2020 (2)

Goodwill, net at September 26, 2020 (2) $ 88,290

_______________________________

(1) During the fiscal quarter ended March 28, 2020, goodwill and accumulated goodwill impairment were reduced by $ 4.5 million as a result of the dissolution and final liquidation of GNU123 Liquidating Corporation.

Goodwill, net at June 27, 2020, is comprised of goodwill of $ 159.8 million and accumulated impairment of $ 71.9 million.

(2) Goodwill, net at September 26, 2020, is comprised of goodwill of $ 160.2 million and accumulated impairment of $ 71.9 million.

Intangible assets that are separable from goodwill and have determinable useful lives are valued separately and amortized over their expected useful lives.

There were no impairment losses related to intangible assets during the fiscal year-to-date periods ended June 27, 2020 or June 29, 2019.

There were no impairment losses related to intangible assets during the fiscal year-to-date periods ended September 26, 2020 or September 28, 2019.

The components of acquired identifiable intangible assets are as follows (in thousands):

June 27, 2020

December 28, 2019

September 26, 2020 December 28, 2019

Non-competition agreements $ 280 $ 324

Customer relationships 12,120 12,120

Total cost 12,400 12,444

Accumulated amortization ( 6,951 ) ( 5,968 )

Total intangible assets, net $ 5,449 $ 6,476

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accrued Expenses

Accrued expenses consist of the following (in thousands):

June 27, 2020

December 28, 2019

September 26, 2020 December 28, 2019

Compensation and related expenses $ 92,200 $ 99,993

4 unchanged sentences

Accrued leasehold improvements 441 2,166

Other 3,277 3,473

Total accrued expenses $ 103,952 $ 121,301

As of June 27, 2020, and December 28, 2019, approximately $ 47.8 million and $ 81.2 million, respectively, of accrued bonuses for the fiscal quarter ended June 27, 2020 and the fiscal year ended December 28, 2019 were included above in “Compensation and related expenses.”

CRA’s effective income tax rates were 24.6 % and 29.8 % for the fiscal quarters ended June 27, 2020 and June 29, 2019, respectively.

The effective tax rate for the second quarter of fiscal 2020 was lower than the prior year due to increases in the tax benefit related to foreign-derived intangible income and the accounting for stock-based compensation, a decrease in non-deductible meals and entertainment, and the true-up of the estimated annual run rate driven by an increase in forecasted profit as a result of strong earnings in the second quarter.

The effective tax rate for the second quarter of fiscal 2020 was lower than the combined federal and state statutory tax rate due to the same drivers, partially offset by non-deductible items resulting from the limitations on the deductibility of compensation paid to executive officers and the deductibility of meals and entertainment.

The effective tax rate for the second quarter of fiscal 2019 was higher than the combined federal and state statutory tax rate primarily due to non-deductible items resulting from limitations on the deductibility of compensation paid to executive officers and the deductibility of meals and entertainment.

CRA’s effective income tax rates were 27.2 % and 27.1 % for the fiscal year-to-date periods ended June 27, 2020 and June 29, 2019, respectively.

The effective tax rate for the fiscal year-to-date period ended June 27, 2020 was comparable to the prior year.

The effective tax rates for both fiscal year-to-date periods were the same as the combined federal and state statutory tax rate but included the effect of offsetting adjustments primarily driven by the tax benefit on stock-based compensation and non-deductible items resulting from limitations on the deductibility of compensation paid to executive officers and the deductibility of meals and entertainment.

CRA has not provided for deferred income taxes or foreign withholding taxes on undistributed earnings and other basis differences that may exist from its foreign subsidiaries as of June 27, 2020, because such earnings are considered to be indefinitely reinvested.

As of September 26, 2020, and December 28, 2019, approximately $ 71.3 million and $ 81.2 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

For the fiscal quarters ended September 26, 2020 and September 28, 2019, CRA’s effective income tax rate (“ETR”) was 28.2 % and 14.2 %, respectively.

The difference in the ETR for the third quarter of fiscal 2020 from CRA's annual ETR for the fiscal year ended December 28, 2019, was primarily due to remeasuring the U.S.

deferred tax assets and liabilities based on

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

expected fiscal 2020 state apportionment, as well as the release of tax reserves recorded in the prior year that were nonrecurring in the current year.

Partially offsetting this increase was a decrease in non-deductible meals and entertainment and a larger tax benefit related to the accounting for stock-based compensation.

For the fiscal year-to-date periods ended September 26, 2020 and September 28, 2019, CRA’s ETR was 27.5 % and 22.9 %, respectively.

The difference in the ETR for fiscal year-to-date period ended September 26, 2020 from CRA's annual ETR for the fiscal year ended December 28, 2019, was primarily due to remeasuring the U.S.

deferred tax assets and liabilities based on expected fiscal 2020 state apportionment, as well as the release of tax reserves recorded in the prior year that were nonrecurring in the current year-to-date period.

As of September 26, 2020, CRA has not provided for deferred income taxes or foreign withholding taxes on undistributed earnings and other basis differences that may exist from its foreign subsidiaries, as such earnings are considered to be indefinitely reinvested.

CRA does not rely on these unremitted earnings as a source of funds for its domestic business as it expects to have sufficient cash flow in the U.S.

1 unchanged sentence

operational and strategic needs.

If CRA were to repatriate its foreign earnings that are indefinitely reinvested, it would accrue substantially no additional tax expense.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Net Income Per Share

4 unchanged sentences

Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards.

Net earnings allocable to these participating securities were not material for the fiscal quarters and fiscal year-to-date periods ended June 27, 2020 and June 29, 2019.

Net earnings allocable to these participating securities were not material for the fiscal quarters and fiscal year-to-date periods ended September 26, 2020 and September 28, 2019.

The following table presents a reconciliation from net income to the net income available to common shareholders (in thousands):

Fiscal Year-to-Date

Fiscal Quarter Ended

Fiscal Quarter Ended Fiscal Year-to-Date

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Net income, as reported $ 5,403 $ 5,739 $ 17,802 $ 15,984

2 unchanged sentences

The following table presents a reconciliation of basic to diluted weighted average shares of common stock outstanding (in thousands):

Fiscal Year-to-Date

Fiscal Quarter Ended

Fiscal Quarter Ended Fiscal Year-to-Date

September 26,

2020 September 28,

2019 September 26,

2020 September 28,

Basic weighted average shares outstanding 7,771 7,769 7,780 7,903

1 unchanged sentence

Diluted weighted average shares outstanding 7,934 8,050 7,964 8,205

For the fiscal quarter and fiscal year-to-date period ended June 27, 2020, the anti-dilutive share-based awards that were excluded from the calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding amounted to 106,018 and 44,069 shares, respectively.

For the fiscal quarter and fiscal year-to-date period ended June 29, 2019, the anti-dilutive share-based awards that were excluded from the calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding amounted to 45,200 and 31,378 shares, respectively.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the fiscal quarter and fiscal year-to-date periods ended September 26, 2020, the anti-dilutive share-based awards that were excluded from the calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding amounted to 76,399 and 62,808 shares, respectively.

For the fiscal quarter and fiscal year-to-date periods ended September 28, 2019, the anti-dilutive share-based awards that were excluded from the calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding amounted to 63,164 and 47,169 shares, respectively.

These share-based awards each period were anti-dilutive because their exercise price exceeded the average market price over the respective period.

3 unchanged sentences

CRA may repay any borrowings under the revolving credit facility at any time, but any borrowings must be repaid no later than October 24, 2022.

There were $ 59.0 million in borrowings outstanding under this revolving credit facility as of June 27, 2020.

There were $ 38.0 million in borrowings outstanding under this revolving credit facility as of September 26, 2020.

There were no outstanding borrowings under this facility as of December 28, 2019.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of June 27, 2020, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 4.4 million.

As of September 26, 2020, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 4.7 million.

Under the credit agreement, CRA must comply with various financial and non-financial covenants.

Compliance with these financial covenants is tested on a fiscal quarterly basis.

As of June 27, 2020 and December 28, 2019, CRA was in compliance with the covenants of its credit agreement.

As of September 26, 2020 and December 28, 2019, CRA was in compliance with the covenants of its credit agreement.

Commitments and Contingencies

4 unchanged sentences

However, the outcome of such legal actions is inherently unpredictable and subject to inherent uncertainties.

While CRA has not experienced a material adverse impact to its business, financial condition or results of operations from the COVID-19 pandemic to date, there continues to be uncertainty about client demand for the Company’s services, the worldwide economy and consequently, the financial results for the current fiscal quarter and fiscal year-to-date period ended June 27, 2020, may not be indicative of the results to be expected for the full fiscal year.

Consequently, the financial results for the current fiscal quarter and fiscal year-to-date periods ended September 26, 2020, may not be indicative of the results to be expected for the full fiscal year.

The timing of ongoing projects and new project originations may be delayed or otherwise disrupted due to the length and severity of current business closures and other restrictions implemented in response to COVID-19, which may impact the timing and amount of future revenues.

The magnitude of any impact on CRA's business and its duration is uncertain and cannot be reasonably estimated at this time.

CRA is not aware of any specific events or circumstances that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of July 30, 2020, the issuance date of this Quarterly Report on Form 10-Q.

CRA is not aware of any specific events or circumstances that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of October 29, 2020, the issuance date of this Quarterly Report on Form 10-Q.

Subsequent Events

On July 30, 2020, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.23 per common share, payable on September 14, 2020 to shareholders of record as of August 25, 2020.

On October 29, 2020, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.26 per common share, payable on December 11, 2020 to shareholders of record as of November 24, 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements