What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 78 added, 70 removed, 377 unchanged (28% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

Fiscal Quarter Ended

2022 April 3,

Fiscal Quarter Ended Fiscal Year-to-Date

Revenues $ 149,102 $ 148,237 $ 297,484 $ 294,755

18 unchanged sentences

(in thousands)

Fiscal Quarter Ended

2022 April 3,

Fiscal Quarter Ended Fiscal Year-to-Date

Net income $ 11,643 $ 11,566 $ 23,069 $ 22,067

8 unchanged sentences

Current assets:

Cash $ 43,702 $ 66,130

Cash and cash equivalents $ 15,621 $ 66,130

Accounts receivable, net of allowances of $ 3,282 and $ 3,256 , respectively

43 unchanged sentences

(in thousands)

Fiscal Quarter Ended

2022 April 3,

Fiscal Year-to-Date Ended

OPERATING ACTIVITIES:

18 unchanged sentences

Purchases of property and equipment ( 2,067 ) ( 1,170 )

Consideration paid for acquisition ( 10,639 ) —

Consideration paid for acquisition, net ( 10,185 ) —

Net cash used in investing activities ( 12,252 ) ( 1,170 )

11 unchanged sentences

Cash and cash equivalents at beginning of period 66,130 45,677

Cash at end of period $ 43,702 $ 31,629

Cash and cash equivalents at end of period $ 15,621 $ 13,977

Noncash investing and financing activities:

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE FISCAL QUARTER ENDED APRIL 2, 2022 (unaudited)

FOR THE FISCAL YEAR-TO-DATE ENDED JULY 2, 2022 (unaudited)

(in thousands, except share data)

16 unchanged sentences

BALANCE AT APRIL 2, 2022 7,339,985 $ — $ 220,347 $ ( 11,122 ) $ 209,225

Net income — — 11,643 — 11,643

Foreign currency translation adjustment — — — ( 3,860 ) ( 3,860 )

Share-based compensation expense — 1,041 — — 1,041

Restricted shares vesting 3,630 — — — —

Redemption of vested employee restricted shares for tax withholding ( 921 ) ( 78 ) — — ( 78 )

Shares repurchased ( 211,345 ) ( 963 ) ( 16,711 ) — ( 17,674 )

Accrued dividends on unvested shares — — ( 52 ) — ( 52 )

Cash dividends paid ($ 0.31 per share)

— — ( 2,259 ) — ( 2,259 )

BALANCE AT JULY 2, 2022 7,131,349 $ — $ 212,968 $ ( 14,982 ) $ 197,986

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

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

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

(in thousands, except share data)

17 unchanged sentences

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 vesting 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.

35 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

estimated based on the expected period that the Company will receive substantially all the projected future benefits from the intangible asset.

estimated based on the expected period that the Company will receive substantially all projected future benefits from the intangible asset.

Transaction expenses directly related to acquisitions are expensed as incurred and are included in selling, general and administrative expenses on the condensed consolidated statements of operations.

9 unchanged sentences

Business Acquisition

On February 28, 2022, CRA acquired substantially all the business assets and assumed certain liabilities of Welch Consulting, Ltd.

On February 28, 2022, CRA acquired substantially all business assets and assumed certain liabilities of Welch Consulting, Ltd.

(“Welch Consulting”), a Texas limited partnership.

6 unchanged sentences

The acquisition has been accounted for as a business combination, and the results of operations have been included in the accompanying condensed consolidated financial statements from the date of acquisition.

The operating results of the acquired business for the fiscal quarter ended April 2, 2022 were not material to CRA's consolidated operating results.

On the date of acquisition, right-of-use assets and lease liabilities were recorded in accordance with ASC Topic 842, Leases .

5 unchanged sentences

The final purchase price allocation may be different from the preliminary estimate reported as CRA receives additional information and completes its analysis of transaction-related activities, the impact of which is not expected to be material to CRA’s results of operations for fiscal 2022.

The following table presents the preliminary assets acquired and liabilities assumed as of April 2, 2022 (in thousands):

The following table presents the preliminary assets acquired and liabilities assumed as of July 2, 2022 (in thousands):

CRA INTERNATIONAL, INC.

21 unchanged sentences

Net assets acquired $ 10,685

For the acquired assets and assumed liabilities, CRA initially paid $ 10.6 million in cash, the amount of which was based on the estimates of certain net working capital items.

Subsequent to the acquisition date, certain net working capital items were adjusted.

These adjustments are reflected in the assets acquired and liabilities assumed in the table above.

Additional adjustment to the purchase consideration may be due to or from Welch Consulting.

Per the terms of the Asset Purchase Agreement, $ 0.5 million was to be withheld from the closing payment and paid to Welch Consulting within one year of the date of acquisition, subject to the satisfaction of certain assurances provided by Welch Consulting.

For the acquired assets and assumed liabilities, CRA has paid $ 10.2 million, net, as of July 2, 2022, the amount of which was based on adjusted estimates of certain net working capital items.

Additional adjustments to the purchase consideration may be due to or from Welch Consulting.

Per the terms of the Asset Purchase Agreement, $ 0.5 million was withheld from the closing payment and will be paid to Welch Consulting within one year of the date of acquisition, subject to the satisfaction of certain assurances provided by Welch Consulting.

In addition, CRA issued $ 7.9 million of forgivable loans and agreed to provide other deferred compensation to key employees and a non-employee expert, which will be treated as post-transaction compensation expense as incurred.

2 unchanged sentences

The Company also recorded $ 2.4 million of goodwill, all of which is expected to be deductible for tax purposes.

Transaction related expenses, which are principally legal and accounting service fees, amounted to $ 0.2 million for the fiscal quarter ended April 2, 2022 and are included in selling, general and administrative expenses on the condensed consolidated statements of operations.

Transaction related expenses, which are principally legal and accounting service fees, amounted to $ 0.2 million for the fiscal year-to-date period ended July 2, 2022 and are included in selling, general and administrative expenses on the condensed consolidated statements of operations.

Revenues and Allowances

The contracts CRA enters into and operates under specify whether the projects are billed on a time-and-materials or a fixed-price basis.

Time-and-materials contracts are typically used for litigation, regulatory, and financial consulting projects

Time-and-materials contracts are typically used for litigation, regulatory, and financial consulting projects while fixed-price contracts are principally used for management consulting projects.

In general, project costs are classified in

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

while fixed-price contracts are principally used for management consulting projects.

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.

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.

Disaggregation of Revenue

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

Fiscal Quarter Ended

Type of Contract April 2,

2022 April 3,

Fiscal Quarter Ended Fiscal Year-to-Date

Type of Contract July 2,

Consulting services revenues:

2 unchanged sentences

Total $ 149,102 $ 148,237 $ 297,484 $ 294,755

Fiscal Quarter Ended

Geographic Breakdown April 2,

2022 April 3,

Fiscal Quarter Ended Fiscal Year-to-Date

Geographic Breakdown July 2,

Consulting services revenues:

10 unchanged sentences

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

Fiscal Quarter Ended

2022 April 3,

Fiscal Quarter Ended Fiscal Year-to-Date

Bad debt expense (recovery), net $ ( 141 ) $ 2 $ ( 262 ) $ ( 11 )

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal Quarter Ended

2022 April 3,

Fiscal Quarter Ended Fiscal Year-to-Date

Reimbursable expenses $ 16,441 $ 17,176 $ 32,645 $ 33,655

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 2, 2022 and January 1, 2022.

The contract assets balance was immaterial as of July 2, 2022 and January 1, 2022.

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.

4 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

2022 April 3,

Fiscal Quarter Ended Fiscal Year-to-Date

Amounts included in contract liabilities at the beginning of the period $ 3,331 $ 2,220 $ 7,656 $ 5,057

8 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal Quarter Ended Fiscal Year Ended

Fiscal Year-to-Date Period Ended Fiscal Year Ended

2022 January 1,

11 unchanged sentences

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the fiscal quarter ended April 2, 2022 are summarized as follows (in thousands):

The changes in the carrying amount of goodwill for the fiscal-year-to-date period ended July 2, 2022 are summarized as follows (in thousands):

Goodwill $ 160,829

3 unchanged sentences

Foreign currency translation adjustment ( 1,382 )

Goodwill, net at April 2, 2022 $ 90,959

Goodwill at April 2, 2022, is comprised of goodwill of $ 162.9 million and accumulated impairment of $ 71.9 million.

There were no impairment losses related to goodwill during the fiscal quarter ended April 2, 2022 or during the fiscal year ended January 1, 2022.

Goodwill, net at July 2, 2022 $ 89,963

Goodwill at July 2, 2022, is comprised of goodwill of $ 161.9 million and accumulated impairment of $ 71.9 million.

There were no impairment losses related to goodwill during the fiscal year-to-date period ended July 2, 2022 or during the fiscal year ended January 1, 2022.

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):

April 2, 2022 January 1, 2022

July 2, 2022 January 1, 2022

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

3 unchanged sentences

Total $ 12,370 $ ( 4,593 ) $ 7,777 $ 8,500 $ ( 4,319 ) $ 4,181

There were no impairment losses related to intangible assets during the fiscal quarter ended April 2, 2022 or during the fiscal year ended January 1, 2022.

As a result of the Welch Consulting acquisition, CRA recognized approximately $ 4.2 million

There were no impairment losses related to intangible assets during the fiscal year-to-date period ended July 2, 2022 or during the fiscal year ended January 1, 2022.

As a result of the Welch Consulting acquisition, CRA recognized approximately

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

of intangible assets related to customer relationships in the fiscal quarter ended April 2, 2022.

Amortization expense related to intangible assets was $ 0.2 million and $ 0.3 million for the fiscal quarters ended April 2, 2022 and April 3, 2021, respectively.

$ 4.2 million of intangible assets related to customer relationships in the first quarter of fiscal 2022.

Amortization expense related to intangible assets was $ 0.3 million and $ 0.6 million for the fiscal quarter and fiscal year-to-date period ended July 2, 2022, respectively, and $ 0.2 million and $ 0.5 million for the fiscal quarter and fiscal year-to-date period ended July 3, 2021, respectively.

Accrued Expenses

6 unchanged sentences

Total accrued expenses $ 102,081 $ 156,314

As of April 2, 2022 and January 1, 2022, approximately $ 49.9 million and $ 118.9 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

For the fiscal quarters ended April 2, 2022 and April 3, 2021, CRA’s effective income tax rate (“ETR”) was 26.4 % and 24.4 %, respectively.

The ETR for the first quarter of fiscal 2022 was higher than the first quarter of fiscal 2021 due to a decrease in the tax benefit related to share-based compensation, the establishment of a valuation allowance in a foreign jurisdiction, and higher state taxes and nondeductible compensation paid to executive officers.

As of July 2, 2022 and January 1, 2022, approximately $ 61.3 million and $ 118.9 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

For the fiscal quarters ended July 2, 2022 and July 3, 2021, CRA’s effective income tax rate (“ETR”) was 28.3 % and 25.8 %, respectively.

The ETR for the second quarter of fiscal 2022 was higher than the second quarter of fiscal 2021 primarily due to a decrease in the tax benefit related to share-based compensation, an increase in the valuation allowance, and higher nondeductible compensation paid to executive officers, partially offset by the remeasurement of the U.K.'s long-term deferred tax liabilities in the second quarter of fiscal 2021 stemming from the enactment of U.K.’s statutory rate increase.

For the fiscal year-to-date periods ended July 2, 2022 and July 3, 2021, CRA's ETR was 27.4 % and 25.1 %, respectively.

The ETR for the current fiscal year-to-date period was higher than the prior year-to-date period primarily due to a decrease in the tax benefit related to share-based compensation, an increase in the valuation allowance, and higher nondeductible compensation paid to executive officers, partially offset by the impact of the U.K.

statutory rate increase in the second quarter of fiscal 2021.

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.

5 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 ended April 2, 2022 and April 3, 2021.

The two-class method was more dilutive for the fiscal quarters ended July 2, 2022 and July 3, 2021.

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 2, 2022 and April 3, 2021.

Net earnings allocable to these participating securities were not material for the fiscal quarters ended July 2, 2022 and July 3, 2021.

CRA INTERNATIONAL, INC.

1 unchanged sentence

The following table presents the calculation of basic and diluted net income per share (in thousands, except per share data):

Fiscal Quarter Ended

2022 April 3,

Fiscal Quarter Ended Fiscal Year-to-Date

Net income — basic $ 11,643 $ 11,566 $ 23,069 $ 22,067

7 unchanged sentences

Diluted $ 1.57 $ 1.53 $ 3.09 $ 2.86

Certain share-based awards 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 (in thousands):

Fiscal Quarter Ended

2022 April 3,

Anti-dilutive share-based awards excluded — 14

Anti-dilutive share-based awards are excluded from the calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding.

There were no anti-dilutive share-based awards for the fiscal quarters and fiscal year-to-date periods ended July 2, 2022 and July 3, 2021.

Fair Value of Financial Instruments

As of April 2, 2022 and January 1, 2022, CRA did not have any financial instruments measured at fair value on a recurring basis.

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”).

CRA had no contingent consideration obligation during the fiscal quarter ended April 2, 2022.

CRA paid the contingent consideration liability in the first quarter of fiscal 2021.

As of July 2, 2022 and January 1, 2022, CRA did not have any financial instruments measured at fair value on a recurring basis.

CRA had no contingent consideration obligation during the fiscal year-to-date period ended July 2, 2022.

CRA paid the contingent consideration liability in the second quarter of fiscal 2021.

The following table summarizes the changes in the contingent consideration liability for the fiscal year ended January 1, 2022 (in thousands):

4 unchanged sentences

Ending balance $ —

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Credit Agreement

1 unchanged sentence

CRA may use the proceeds of the revolving credit facility to provide working capital and for other general corporate purposes.

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, the maturity date.

There was $ 60.0 million in borrowings outstanding under this revolving credit facility as of April 2, 2022.

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, the maturity

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

There was $ 70.0 million in borrowings outstanding under this revolving credit facility as of July 2, 2022.

There were no borrowings outstanding under this facility as of January 1, 2022.

As of April 2, 2022, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 4.4 million.

As of July 2, 2022, 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 reviewed on a fiscal quarterly basis.

As of April 2, 2022, CRA was in compliance with the covenants of its credit agreement.

As of July 2, 2022, CRA was in compliance with the covenants of its credit agreement.

Commitments and Contingencies

5 unchanged sentences

Subsequent Events

On May 5, 2022, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.31 per common share, payable on June 10, 2022 to shareholders of record as of May 31, 2022.

On August 4, 2022, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.31 per common share, payable on September 9, 2022 to shareholders of record as of August 30, 2022.

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