What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 97 added, 69 removed, 383 unchanged (30% of the section changed)

4 unchanged sentences

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

2021 September 26,

2020 October 2,

2021 September 26,

Revenues $ 136,412 $ 121,762 $ 431,167 $ 370,951

19 unchanged sentences

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

2021 September 26,

2020 October 2,

2021 September 26,

Net income $ 10,945 $ 5,403 $ 33,012 $ 17,802

9 unchanged sentences

Cash and cash equivalents $ 19,665 $ 45,677

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

Accounts receivable, net of allowances of $ 3,915 at October 2, 2021 and $ 3,595 at January 2, 2021

108,035 111,595

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

Unbilled services, net of allowances of $ 1,204 at October 2, 2021 and $ 1,000 at January 2, 2021

65,799 40,881

31 unchanged sentences

25,000,000 shares authorized;

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

7,396,296 and 7,693,497 shares issued and outstanding at October 2, 2021 and January 2, 2021, respectively

Retained earnings 213,367 216,999

7 unchanged sentences

Fiscal Year-to-Date

2021 June 27,

2021 September 26,

OPERATING ACTIVITIES:

Net income $ 33,012 $ 17,802

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

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization 9,657 9,293

12 unchanged sentences

Lease liabilities ( 11,549 ) ( 5,526 )

Net cash used in operating activities ( 36,223 ) ( 44,300 )

Net cash provided by (used in) operating activities 13,903 ( 10,652 )

INVESTING ACTIVITIES:

9 unchanged sentences

Repurchase of common stock ( 39,977 ) ( 8,807 )

Net cash provided by financing activities 5,608 51,745

Net cash provided by (used in) financing activities ( 37,820 ) 25,058

Effect of foreign exchange rates on cash and cash equivalents ( 365 ) ( 195 )

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

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

FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED OCTOBER 2, 2021 (unaudited)

(in thousands, except share data)

27 unchanged sentences

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

Net income — — 10,945 — 10,945

Foreign currency translation adjustment — — — ( 1,028 ) ( 1,028 )

Exercise of stock options 98,310 2,505 — — 2,505

Share-based compensation expense — 1,008 — — 1,008

Restricted shares vestings 11,676 — — — —

Shares repurchased ( 53,012 ) ( 4,822 ) ( 178 ) — ( 5,000 )

Accrued dividends on unvested shares — — ( 43 ) — ( 43 )

Cash dividends paid ($ 0.26 per share)

— — ( 1,933 ) — ( 1,933 )

BALANCE AT OCTOBER 2, 2021 7,396,296 $ 676 $ 213,367 $ ( 9,758 ) $ 204,285

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 27, 2020 (unaudited)

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

(in thousands, except share data)

28 unchanged sentences

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 ($ 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.

29 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.

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.

During the second fiscal quarter, 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)

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.

The purchase price of common stock repurchases is first charged against available paid-in capital (“PIC”) until PIC is exhausted, after which repurchases will be charged to retained earnings.

CRA’s common stock has no par value.

16 unchanged sentences

Fiscal Quarter Ended Fiscal Year-to-Date

Type of Contract July 3,

2021 June 27,

Type of Contract October 2,

2021 September 26,

2020 October 2,

2021 September 26,

Consulting services revenues:

3 unchanged sentences

Fiscal Quarter Ended Fiscal Year-to-Date

Geographic Breakdown July 3,

2021 June 27,

Geographic Breakdown October 2,

2021 September 26,

2020 October 2,

2021 September 26,

Consulting services revenues:

17 unchanged sentences

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

2021 September 26,

2020 October 2,

2021 September 26,

Bad debt expense (recovery), net $ 55 $ 271 $ 44 $ 228

4 unchanged sentences

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

2021 September 26,

2020 October 2,

2021 September 26,

Reimbursable expenses $ 15,727 $ 13,150 $ 49,382 $ 44,395

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 July 3, 2021 and January 2, 2021.

The contract assets balance was immaterial as of October 2, 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.

1 unchanged sentence

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

2021 January 2,

Contract liabilities $ 2,189 $ 5,527

3 unchanged sentences

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

2021 September 26,

2020 October 2,

2021 September 26,

Amounts included in contract liabilities at the beginning of the period $ 1,603 $ 1,766 $ 5,051 $ 3,262

20 unchanged sentences

Goodwill and Intangible Assets

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):

The changes in the carrying amount of goodwill for the fiscal year-to-date period ended October 2, 2021 are summarized as follows (in thousands):

Goodwill $ 161,080

2 unchanged sentences

Foreign currency translation adjustment ( 221 )

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

Goodwill, net at October 2, 2021 (1) $ 88,966

CRA INTERNATIONAL, INC.

1 unchanged sentence

_______________________________

(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 July 3, 2021 or during the fiscal year ended January 2, 2021.

(1) Goodwill, net at October 2, 2021, is comprised of goodwill of $ 160.9 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 using the straight-line method over their expected useful lives.

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

2021 January 2,

October 2, 2021 January 2, 2021

Useful Life (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

Non-competition agreements 5 $ 280 $ ( 262 ) $ 18 $ 280 $ ( 219 ) $ 61

Customer relationships 8,220 12,120

Total cost 8,500 12,400

Accumulated amortization ( 3,880 ) ( 7,292 )

Total intangible assets, net $ 4,620 $ 5,108

Customer relationships 8 to 10

8,220 ( 3,838 ) 4,382 12,120 ( 7,073 ) 5,047

Total $ 8,500 $ ( 4,100 ) $ 4,400 $ 12,400 $ ( 7,292 ) $ 5,108

Amortization expense related to intangible assets was $ 0.2 million and $ 0.7 million for the fiscal quarter and fiscal year-to-date period ended October 2, 2021, respectively, and $ 0.3 million and $ 1.0 million for the fiscal quarter and fiscal year-to-date period ended September 26, 2020, respectively.

There were no impairment losses related to intangible assets during the fiscal year-to-date period ended October 2, 2021 or during the fiscal year ended January 2, 2021.

Accrued Expenses

9 unchanged sentences

Total accrued expenses $ 128,701 $ 136,376

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.

As of October 2, 2021 and January 2, 2021, approximately $ 93.5 million and $ 102.6 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

For the fiscal quarters ended October 2, 2021 and September 26, 2020, CRA’s effective income tax rate (“ETR”) was 14.8 % and 28.2 %, respectively.

The ETR for the third quarter of fiscal 2021 was lower than the third quarter of fiscal 2020 primarily due to an increase in the tax benefit related to the accounting for stock-based compensation.

For the fiscal year-to-date periods ended October 2, 2021 and September 26, 2020, CRA's ETR was 22.0 % and 27.5 %, respectively.

The ETR for the current fiscal year-to-date period was lower than the prior year-to-date period primarily due to an increase in the tax benefit related to the accounting for stock-based compensation, partially offset by the enactment of the U.K.

statutory tax rate increase during the second fiscal quarter whereby the U.K.'s long-term deferred tax liabilities were remeasured.

CRA INTERNATIONAL, INC.

4 unchanged sentences

Deferred taxes that are a consequence of foreign exchange translation resulting from earnings that are no longer considered permanently reinvested are recorded as a component of foreign currency translation adjustments on the condensed consolidated statements of comprehensive income.

For the fiscal quarter ended April 3, 2021, CRA’s U.K.

For the fiscal year-to-date period ended October 2, 2021, CRA’s U.K.

subsidiary distributed approximately £ 12.0 million of both previously taxed and untaxed earnings to CRA’s U.S.

4 unchanged sentences

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 and fiscal year-to-date periods ended July 3, 2021 and June 27, 2020.

The two-class method was more dilutive for the fiscal quarters and fiscal year-to-date periods ended October 2, 2021 and September 26, 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 and fiscal year-to-date periods ended July 3, 2021 and June 27, 2020.

Net earnings allocable to these participating securities were not material for the fiscal quarters and fiscal year-to-date periods ended October 2, 2021 and September 26, 2020.

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

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

2021 September 26,

2020 October 2,

2021 September 26,

Net income, as reported $ 10,945 $ 5,403 $ 33,012 $ 17,802

3 unchanged sentences

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

2021 September 26,

2020 October 2,

2021 September 26,

Basic weighted average shares outstanding 7,375 7,771 7,440 7,780

2 unchanged sentences

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.

For the fiscal quarter and fiscal year-to-date period ended September 26, 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 October 2, 2021.

CRA INTERNATIONAL, INC.

1 unchanged sentence

Fiscal Quarter Ended Fiscal Year-to-Date

2021 June 27,

2021 September 26,

2020 October 2,

2021 September 26,

Anti-dilutive share-based awards excluded — 76,399 — 62,808

Fair Value of Financial Instruments

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

As of October 2, 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

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

As of January 2, 2021, the fair value of CRA’s money market mutual fund share holdings was $ 1.00 per share.

The contingent consideration liability pertained to estimated future contingent consideration payments related to the acquisition of C1 Consulting, LLC, an independent consulting firm, and its wholly-owned subsidiary C1 Associates (collectively, “C1”).

1 unchanged sentence

Fiscal Year-to-Date Period Ended Fiscal Year Ended

July 3, 2021 January 2, 2021

2021 January 2,

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

There was $ 6.0 million in borrowings outstanding under this revolving credit facility as of October 2, 2021.

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

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

As of October 2, 2021, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 4.2 million.

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

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

financial covenants.

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

As of October 2, 2021, CRA was in compliance with the covenants of its credit agreement.

Commitments and Contingencies

As described in the previous note, CRA is party to standby letters of credit with its bank in support of minimum future lease payments under leases for permanent office space.

As described in the previous note, CRA is party to standby letters of credit with its bank in support of minimum future lease payments under certain operating leases for office space.

CRA is subject to legal actions arising in the ordinary course of business.

9 unchanged sentences

Subsequent Events

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.

On November 4, 2021, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.31 per common share, payable on December 10, 2021 to shareholders of record as of November 30, 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