What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-06 · 109 added, 75 removed, 343 unchanged (35% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

Fiscal Quarter Ended

2021 March 28,

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

Revenues $ 148,237 $ 123,031 $ 294,755 $ 249,189

18 unchanged sentences

(in thousands)

Fiscal Quarter Ended

2021 March 28,

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

Net income $ 11,566 $ 5,931 $ 22,067 $ 12,399

Other comprehensive income (loss)

Foreign currency translation adjustments ( 111 ) ( 2,427 )

Foreign currency translation adjustments, net of tax ( 136 ) 536 ( 247 ) ( 1,891 )

Comprehensive income $ 11,430 $ 6,467 $ 21,820 $ 10,508

6 unchanged sentences

Cash and cash equivalents $ 13,977 $ 45,677

Accounts receivable, net of allowances of $ 3,789 at April 3, 2021 and $ 3,595 at January 2, 2021

Accounts receivable, net of allowances of $ 3,959 at July 3, 2021 and $ 3,595 at January 2, 2021

113,105 111,595

Unbilled services, net of allowances of $ 1,227 at April 3, 2021 and $ 1,000 at January 2, 2021

Unbilled services, net of allowances of $ 1,430 at July 3, 2021 and $ 1,000 at January 2, 2021

60,789 40,881

21 unchanged sentences

Deferred compensation and other non-current liabilities 12,487 9,188

Facility-related non-current liabilities 2,169 2,113

Non-current portion of lease liabilities 132,488 139,447

8 unchanged sentences

25,000,000 shares authorized;

7,627,591 and 7,693,497 shares issued and outstanding at April 3, 2021 and January 2, 2021, respectively

7,339,322 and 7,693,497 shares issued and outstanding at July 3, 2021 and January 2, 2021, respectively

Retained earnings 204,576 216,999

6 unchanged sentences

(in thousands)

Fiscal Quarter Ended

2021 March 28,

Fiscal Year-to-Date

2021 June 27,

OPERATING ACTIVITIES:

2 unchanged sentences

Depreciation and amortization 6,516 6,049

Facility-related liabilities 17 35

Right-of-use asset amortization 6,437 5,894

2 unchanged sentences

Accounts receivable allowances 351 ( 311 )

Unrealized foreign currency remeasurement gains, net ( 284 ) ( 398 )

Unrealized foreign currency remeasurement (gains) losses, net ( 160 ) 34

Changes in operating assets and liabilities:

16 unchanged sentences

Cash paid for contingent consideration ( 2,357 ) —

Cash paid on dividend equivalents ( 79 ) ( 40 )

Cash dividends paid to shareholders ( 1,982 ) ( 1,796 )

Cash dividends paid ( 3,970 ) ( 3,624 )

Repurchase of common stock ( 34,977 ) ( 3,810 )

16 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE FISCAL QUARTER ENDED APRIL 3, 2021 (unaudited)

FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED JULY 3, 2021 (unaudited)

(in thousands, except share data)

14 unchanged sentences

Accrued dividends on unvested shares — — 5 — 5

Cash paid on dividend equivalents — — ( 79 ) — ( 79 )

Cash dividends paid to shareholders ($ 0.26 per share)

Cash dividends paid ($ 0.26 per share)

— — ( 2,061 ) — ( 2,061 )

BALANCE AT APRIL 3, 2021 7,627,591 $ — $ 219,922 $ ( 8,594 ) $ 211,328

Net income — — 11,566 — 11,566

Foreign currency translation adjustment — — — ( 136 ) ( 136 )

Exercise of stock options 48,562 1,387 — — 1,387

Share-based compensation expense — 980 — — 980

Restricted shares vestings 1,006 — — — —

Shares repurchased ( 337,837 ) ( 382 ) ( 24,953 ) — ( 25,335 )

Accrued dividends on unvested shares — — ( 50 ) — ( 50 )

Cash dividends paid ($ 0.26 per share)

— — ( 1,909 ) — ( 1,909 )

BALANCE AT JULY 3, 2021 7,339,322 $ 1,985 $ 204,576 $ ( 8,730 ) $ 197,831

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE FISCAL QUARTER ENDED MARCH 28, 2020 (unaudited)

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

(in thousands, except share data)

16 unchanged sentences

Accrued dividends on unvested shares — — 1 — 1

Cash paid on dividend equivalents — — ( 40 ) — ( 40 )

Cash dividends paid to shareholders ($ 0.23 per share)

Cash dividends paid ($ 0.23 per share)

— — ( 1,836 ) — ( 1,836 )

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

Exercise of stock options 22,611 418 — — 418

Share-based compensation expense — 796 — — 796

Restricted shares vestings 513 — — — —

Accrued dividends on unvested shares — — ( 38 ) — ( 38 )

Cash dividends paid ($ 0.23 per share)

— — ( 1,788 ) — ( 1,788 )

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

See accompanying notes to the condensed consolidated financial statements.

18 unchanged sentences

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended January 2, 2021 included in CRA’s Annual Report on Form 10-K filed with the SEC on March 4, 2021 (the “2020 Form 10-K”).

Certain prior period amounts have been reclassified to conform to the current period presentation.

These reclassifications had no effect on previously reported results of operations, financial position, or cash flows.

The preparation of financial statements in conformity with GAAP requires management to make significant estimates and judgments that affect the reported amounts of assets and liabilities, as well as the related disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of consolidated revenues and expenses during the reporting period.

7 unchanged sentences

The Company repurchases its common stock under its share repurchase program 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.

On March 8, 2021, CRA commenced a modified "Dutch auction" self-tender offer to purchase up to $ 25.0 million in value of shares of its common stock, as further described in Note 11.

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

During the fiscal quarter ended July 3, 2021, CRA repurchased shares of its common stock through a modified "Dutch auction" self-tender offer, as further described in Note 11.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

to retained earnings.

As of April 3, 2021, PIC was exhausted.

The purchase price of repurchases 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.

15 unchanged sentences

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

Fiscal Quarter Ended

Type of Contract April 3,

2021 March 28,

Fiscal Quarter Ended Fiscal Year-to-Date

Type of Contract July 3,

2021 June 27,

Consulting services revenues

2 unchanged sentences

Total $ 148,237 $ 123,031 $ 294,755 $ 249,189

Fiscal Quarter Ended

Geographic Breakdown April 3,

2021 March 28,

Fiscal Quarter Ended Fiscal Year-to-Date

Geographic Breakdown July 3,

2021 June 27,

Consulting services revenues

3 unchanged sentences

Total $ 148,237 $ 123,031 $ 294,755 $ 249,189

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 specific price concessions and

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

those expected to be extended to CRA customers estimated by CRA's historical realization rates.

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 specific 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.

6 unchanged sentences

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

Fiscal Quarter Ended

2021 March 28,

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

Bad debt expense (recovery), net $ 2 $ ( 102 ) $ ( 11 ) $ ( 43 )

3 unchanged sentences

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

Fiscal Quarter Ended

2021 March 28,

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

Reimbursable expenses $ 17,176 $ 14,815 $ 33,655 $ 31,245

1 unchanged sentence

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 April 3, 2021 and January 2, 2021.

The contract assets balance was immaterial as of July 3, 2021 and January 2, 2021.

When consideration is received, or such consideration is unconditionally due from a customer prior to transferring consulting services to the customer under the terms of a contract, a contract liability is recorded.

6 unchanged sentences

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 Quarter Ended

2021 March 28,

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

Amounts included in contract liabilities at the beginning of the period $ 2,220 $ 2,940 $ 5,057 $ 3,250

1 unchanged sentence

Forgivable Loans

In order to attract and retain highly skilled professionals, CRA may issue forgivable loans to employees and non-employee experts, certain of which loans may be denominated in local currencies.

In order to attract and retain highly skilled professionals, CRA may issue forgivable loans to employees and non-employee experts, certain of which may be denominated in local currencies.

A portion of these loans is collateralized.

2 unchanged sentences

The following table presents forgivable loan activity for the respective periods (in thousands):

Fiscal Quarter Ended Fiscal Year Ended

Fiscal Year-to-Date

Period Ended Fiscal Year Ended

2021 January 2,

1 unchanged sentence

Advances 4,530 42,418

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

Reclassifications from accrued expenses or to other assets (1) — ( 9,713 )

Amortization ( 12,656 ) ( 26,628 )

6 unchanged sentences

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the fiscal quarter ended April 3, 2021 are summarized as follows (in thousands):

The changes in the carrying amount of goodwill for the fiscal year-to-date period ended July 3, 2021 are summarized as follows (in thousands):

Goodwill $ 161,080

2 unchanged sentences

Foreign currency translation adjustment 56

Goodwill, net at April 3, 2021 (1) $ 89,278

_______________________________

(1) Goodwill, net at April 3, 2021, is comprised of goodwill of $ 161.2 million and accumulated impairment of $ 71.9 million.

Goodwill, net at July 3, 2021 (1) $ 89,243

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

_______________________________

(1) Goodwill, net at July 3, 2021, is comprised of goodwill of $ 161.1 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 quarter ended April 3, 2021 or during the fiscal year ended January 2, 2021.

There were no impairment losses related to intangible assets during the fiscal quarter ended July 3, 2021 or during the fiscal year ended January 2, 2021.

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

16 unchanged sentences

Total accrued expenses $ 99,443 $ 136,376

As of April 3, 2021, and January 2, 2021, approximately $ 50.3 million and $ 102.6 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

For the fiscal quarters ended April 3, 2021 and March 28, 2020, CRA’s effective income tax rate (“ETR”) was 24.4 % and 29.4 %, respectively.

The ETR for the first quarter of fiscal 2021 was lower than the prior year due to an increase in the tax benefit related to the accounting for stock-based compensation as well as the impact of higher pre-tax earnings in the first quarter of fiscal 2021, which diluted the permanent unfavorable differences, primarily related to the impact of the deductibility of compensation paid to executive officers, with respect to the full-year estimated ETR.

As of July 3, 2021, and January 2, 2021, approximately $ 67.5 million and $ 102.6 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

For the fiscal quarters ended July 3, 2021 and June 27, 2020, CRA’s effective income tax rate (“ETR”) was 25.8 % and 24.6 %, respectively.

The ETR for the second quarter of fiscal 2021 was higher than the prior year primarily due to the prior year's tax impact of increased forecasted profit as compared to the fiscal quarter ended March 28, 2020, that was non-recurring in the current year.

The rate was also higher this year as a result of the remeasurement of the U.K.'s long-term deferred tax liabilities stemming from the enactment of a U.K.

statutory tax rate increase offset by an increase in the tax benefit related to the accounting for stock-based compensation.

For the fiscal year-to-date periods ended July 3, 2021 and June 27, 2020, CRA's ETR was 25.1 % and 27.2 %, respectively.

The ETR for the current fiscal year-to-date period was lower than the prior year due in part to the higher year-to-date profit to dilute the tax impact of non-deductible items resulting primarily from limitations on the deductibility of compensation paid to executive officers.

The rate was also lower due to an increase in the tax benefit related to the accounting for stock-based compensation partially offset by the impact of U.K.

statutory tax rate increase.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the fourth quarter of fiscal 2020, CRA considered the operating needs of the United Kingdom ("U.K.") subsidiary, as well as the tax implications of no longer asserting indefinite reinvestment with respect to the U.K.

6 unchanged sentences

Deferred income taxes or foreign withholding taxes, estimated to be $ 0.4 million, have not been recorded for other jurisdictions as those earnings are considered to be permanently reinvested.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Net Income Per Share

1 unchanged sentence

CRA calculates diluted earnings per share using the more dilutive of either the two-class method or treasury stock method.

The two-class method was more dilutive for the fiscal quarters ended April 3, 2021 and March 28, 2020.

The two-class method was more dilutive for the fiscal quarters and fiscal year-to-date periods ended July 3, 2021 and June 27, 2020.

Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all the net earnings for the period had been distributed.

CRA's participating securities consist of unvested share-based payment awards that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders.

Net earnings allocable to these participating securities were not material for the fiscal quarters ended April 3, 2021 and March 28, 2020.

Net earnings allocable to these participating securities were not material for the fiscal quarters and fiscal year-to-date periods ended July 3, 2021 and June 27, 2020.

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

Fiscal Quarter Ended

2021 March 28,

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

Net income, as reported $ 11,566 $ 5,931 $ 22,067 $ 12,399

2 unchanged sentences

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

Fiscal Quarter Ended

2021 March 28,

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

Basic weighted average shares outstanding 7,320 7,764 7,473 7,784

1 unchanged sentence

Diluted weighted average shares outstanding 7,539 7,920 7,685 7,979

For the fiscal quarters ended April 3, 2021 and March 28, 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 13,826 and 73,647 shares, respectively.

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

The following table presents 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.

For the fiscal quarter and fiscal year-to-date period ended June 27, 2020, the share-based awards each period were anti-dilutive because their exercise price exceeded the average market price over the respective period.

There were no anti-dilutive shares for the fiscal quarter and fiscal year-to-date period ended July 3, 2021.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

Anti-dilutive share-based awards excluded — 106,018 — 44,069

Fair Value of Financial Instruments

As of April 3, 2021, CRA did no t have any financial instruments measured at fair value on a recurring basis.

As of July 3, 2021, CRA did not have any financial instruments measured at fair value on a recurring basis.

The following table presents CRA’s financial instruments recorded in the condensed consolidated financial statements at January 2, 2021, which are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

5 unchanged sentences

Total Liabilities $ — $ — $ 14,620

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The fair value of CRA’s money market mutual fund share holdings was $ 1.00 per share.

1 unchanged sentence

The following table summarizes the changes in the contingent consideration liabilities (in thousands):

Fiscal Quarter Ended Fiscal Year Ended

April 3, 2021 January 2, 2021

Fiscal Year-to-Date Period Ended Fiscal Year Ended

July 3, 2021 January 2, 2021

Beginning balance $ 14,620 $ 11,579

7 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 was $ 40.0 million in borrowings outstanding under this revolving credit facility as of April 3, 2021.

There was $ 45.0 million in borrowings outstanding under this revolving credit facility as of July 3, 2021.

There were no borrowings outstanding under this facility as of January 2, 2021.

As of April 3, 2021, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 4.7 million.

As of July 3, 2021, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 4.4 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 April 3, 2021, CRA was in compliance with the covenants of its credit agreement.

As of July 3, 2021, CRA was in compliance with the covenants of its credit agreement.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Commitments and Contingencies

7 unchanged sentences

The self-tender offer expired on April 5, 2021.

On April 8, 2021, CRA paid $ 25.0 million to repurchase 337,837 shares at a purchase price of $ 74.00 per share.

On April 8, 2021, CRA paid $ 25.3 million, including transaction costs, to repurchase 337,837 shares at a purchase price of $ 74.00 per share.

The purchase price and transaction costs were funded from the revolving credit facility and cash on hand.

The repurchased shares were retired.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Subsequent Events

On May 6, 2021, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.26 per common share, payable on June 11, 2021 to shareholders of record as of May 25, 2021.

On August 5, 2021, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.26 per common share, payable on September 10, 2021 to shareholders of record as of August 31, 2021.

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