What changed in this filing

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Item 1A. Risk Factors

2023-03-02 compared with 2022-03-03 · 44 added, 48 removed, 298 unchanged (24% of the section changed)

20 unchanged sentences

These competing employers may be able to offer potential employees greater compensation and benefits or more attractive lifestyle choices, career paths, or geographic locations than we can.

Further, there has been an increase in employees leaving their positions throughout our industry, and the market to hire and retain employees has become even more highly competitive.

Competition for these employee consultants has increased our labor costs, and a continuation of this trend could adversely affect our margins and results of operations.

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Our ability to secure new engagements and hire qualified consultants as employees depends heavily on our overall reputation as well as the individual reputations of our employee consultants and principal non-employee experts.

obtain a majority of our revenues from new engagements with existing clients, any client that is dissatisfied with our performance on a single matter could seriously impair our ability to secure new engagements.

Because we obtain a majority of our revenues from new engagements with existing clients, any client that is dissatisfied with our

performance on a single matter could seriously impair our ability to secure new engagements.

Given the frequently high-profile nature of the matters on which we work, including work before and on behalf of government agencies, any factor that diminishes our reputation or the reputations of any of our employee consultants or non-employee experts could make it substantially more difficult for us to compete successfully for both new engagements and qualified consultants.

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We provide our services primarily in connection with significant or complex transactions, disputes, or other matters that are usually adversarial or that involve sensitive client information.

Our engagement by a client may preclude us from accepting engagements with the client's competitors or adversaries because of conflicts between their business interests or positions on disputed issues or other reasons.

Our engagement by a client may preclude us from accepting

engagements with the client's competitors or adversaries because of conflicts between their business interests or positions on disputed issues or other reasons.

Accordingly, the nature of our business limits the number of both potential clients and potential engagements.

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Overall global economic, business, health and political conditions, as well as conditions specific to the industries we or our clients serve, can affect our clients' businesses and financial condition, their demand or ability to pay for our services, and the market for our services.

These conditions, all of which are outside of our control, include but are not limited to merger and acquisition activity levels, the availability, cost and terms of credit, the state of the United States and global financial markets, including the impact of rising inflation rates, the levels of litigation and regulatory and administrative investigations and proceedings, global health crises and pandemics, political developments, including the June 2016 referendum where voters in the United Kingdom ("U.K.") approved an exit from the European Union ("E.U."), commonly referred to as "Brexit," geopolitical unrest or other conflicts in foreign nations, natural disasters and the potential impact such developments, uncertainties or further unrest could have on our clients, on the markets in which we operate and on general economic and business conditions.

In addition, many of our clients are in highly regulated industries, and regulatory and legislative changes affecting these industries could impact the market for our service offerings, render our current service offerings obsolete, or increase the competition among providers of these services.

Although we are not able to predict the positive or negative effects that general changes in global economic, business and political conditions will have on our individual practice areas or our business as a whole, any specific changes in these conditions could have a material adverse impact on our revenues, results of operations and financial condition.

The June 2016 referendum where voters in the United Kingdom ("U.K.") approved an exit from the European Union ("E.U."), commonly referred to as "Brexit," created political, economic, and regulatory uncertainty in the U.K., where our European operations are headquartered.

The impact of Brexit depends on the terms of the U.K.'s withdrawal from the E.U.

Brexit created political, economic, and regulatory uncertainty in the U.K., where our European operations are headquartered.

The impact of Brexit, including the U.K.’s relationship with the E.U.

and other countries, including the U.S., remains unclear.

formally left the E.U.

on January 31, 2020.

entered into a new Trade and Cooperation Agreement (the “TCA”), which was ratified by the U.K.

Parliament on December 31, 2020 and which addresses a range of aspects of the future relationship between the parties.

The TCA addresses, for example, trade in goods and the ability of U.K.

nationals to travel to

on business but defers other issues.

While the TCA provides clarity in some areas, there also remains substantial political, economic, and regulatory uncertainty that may not be fully realized for several years or more.

Brexit could adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to instability in political institutions and regulatory agencies.

This uncertainty may result in new regulatory, tax, operations, and cost challenges to our U.K., European and global operations.

Currency fluctuations caused by or relating to Brexit could adversely affect our financial position.

Such uncertainties may significantly impact our business, as customers of our U.K.-based operations evaluate their business needs in consideration of changing economic conditions or increased international regulatory complexities.

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

The pandemic has adversely impacted global health and the economic environment as the outbreak continues to grow with the introduction of new variants in both the U.S.

and globally.

Such uncertainties may significantly impact our business, as customers of our U.K.-based operations evaluate their business needs in

consideration of changing economic conditions or increased international regulatory complexities.

There can be no assurance that any or all of these events, or others that we cannot anticipate at this time, will not have a material adverse effect on our business, financial condition and results of operations.

Our business and operations may in the future be, adversely affected by epidemics or pandemics such as the COVID-19 pandemic outbreak

We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases.

For example, in March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

In response, many governments have implemented, and continue to implement, "shelter-in-place" restrictions, travel restrictions, and other measures to reduce the spread of COVID-19.

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Although our offices remain open and capable of hosting our colleagues, we have invited them to work wherever they feel most comfortable.

We intend to continue to provide our services to our clients for the duration of the pandemic and related government-imposed restrictions.

However, the timing of projects may be delayed or otherwise disrupted due to the length and severity of restrictions or limitations implemented in the future.

The COVID-19 virus poses the risk that our employees, our non-employee experts, governmental agencies, clients, and parties otherwise engaged in the delivery of our services may be prevented from conducting business activities in the ordinary course for an indefinite period.

A public health epidemic or pandemic, such as the COVID-19 pandemic, poses the risk that our employees, our non‑employee experts, governmental agencies, courts, clients, and parties otherwise engaged in the delivery of our services may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities, or that such epidemic may otherwise interrupt or impair business activities.

The COVID-19 pandemic continues to cause disruption to the global economy, including in the regions in which we and our clients do business.

We continue to monitor the pandemic, and while periodic local increases and decreases in COVID-19 cases are likely, generally the restrictions due to and in response to the pandemic continue to be relaxed in most locations.

However, the COVID-19 pandemic and efforts to manage it, including those by governmental authorities, have had, and could continue to have, an adverse effect on the economy and may have an adverse impact on our business.

This includes, for example, the delay or disruption of the timing of projects due to the length and severity of any restrictions or limitations implemented in the future and the risk that COVID-19 poses our employees, our non-employee experts, governmental agencies, courts, clients, and parties otherwise engaged in the delivery of our services which may prevent them from conducting business activities in the ordinary course for an indefinite period.

Extended shutdowns or other restrictions could also adversely limit our business operations or increase costs.

The spread of COVID-19, which has caused a broad impact globally, may materially affect us economically.

While the potential economic impact brought by the duration of COVID-19 is difficult to assess or predict, a pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and value of our common stock.

The global pandemic of COVID-19 continues to evolve rapidly.

The ultimate impact of COVID-19 or a similar health epidemic or pandemic is highly uncertain and subject to change.

We do not yet know the full extent of potential delays or impacts on our business or the global economy.

As a result, the COVID-19 pandemic may affect our operating and financial results in a manner that is not presently known to us.

Although economic conditions have generally improved since the height of the COVID-19 pandemic, the strength of the economic recovery is uncertain and may vary across industries, clients and from country to country.

The ultimate extent and robustness of any economic recovery from the impact of the pandemic imposes a significant degree of uncertainty and complexity, and may adversely affect our operations and client demand for our services.

Adverse or weakening economic conditions either as a direct or indirect result of the COVID-19 pandemic, may also result in deterioration in the collection of customer accounts receivable, as well as a reduction in sales.

Our results of operations and consequently our business may be adversely affected if we are not able to maintain our current bill rates, compensation costs and/or utilization rate

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Further regulatory or legislative developments may arise from the proposed U.S.

tax reform under the Biden Administration’s “Build Back Better Act” which is proposing a new corporate alternative minimum tax and increased taxation of international

business operations.

tax reform under the Biden Administration’s “Build Back Better Act” which is proposing a new corporate alternative minimum tax and increased taxation of international business operations.

While there is current uncertainty regarding what changes will eventually be enacted, such new laws may affect our operating results and financial conditions.

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act of 2022 that includes, among other provisions, changes to the U.S.

corporate income tax system, including a fifteen percent minimum tax based on "adjusted financial statement income,” and a one percent excise tax on net repurchases of stock after December 31, 2022.

The Company is continuing to evaluate the Inflation Reduction Act and its requirements, as well as the application to its business.

What changes if any to the U.S.

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• fluctuations in interest rates;

• inflation, an economic slowdown, stagflation and/or recessions;

• currency fluctuations;

• collectability of receivables and unbilled work in process.

Because we generate most of our revenues from consulting services that we provide on an hourly fee basis, our revenues in any period are directly related to the number of our employee consultants, their billing rates, and the number of billable hours they work in that period.

they work in that period.

We have a limited ability to increase any of these factors in the short term.

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Fluctuations in the mix between time-and-material contracts, fixed-price contracts and arrangements with fees tied to performance-based criteria may result in fluctuations of revenue and results of operations.

In addition, if we fail to estimate accurately third-party vendor expenses and the resources required for a fixed-price project or fail to satisfy our contractual obligations in a manner consistent with the project budget, we might generate a smaller profit or incur a loss on the project.

In addition, if we fail to accurately estimate third-party vendor expenses and the resources required for a fixed-price project or fail to satisfy our contractual obligations in a manner consistent with the project budget, we might generate a smaller profit or incur a loss on the project.

On occasion, we have had to commit unanticipated additional resources to complete projects, and we may have to take similar action in the future, which could adversely affect our revenues and results of operations.

Revenue generated from fixed-price contracts was approximately 24% of our total revenues for the year ended January 1, 2022.

Revenue generated from fixed-price contracts was approximately 19% of our total revenues for the year ended December 31, 2022.

There can be no assurance that we will continue to declare cash dividends at all or in any particular amounts

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Although we anticipate paying regular quarterly dividends on our common stock for the foreseeable future, the declaration of dividends is subject to the discretion of our Board of Directors, and is restricted by applicable state law limitations on distributions to shareholders.

As a result, the amount, if any, of the dividends to be paid by us in the future depends upon a number of factors, including but not limited to our available cash on hand, anticipated cash needs, overall financial condition, and future prospects for earnings and cash flows, as well as other factors considered relevant by our Board of Directors.

considered relevant by our Board of Directors.

In addition, our Board of Directors may also suspend the payment of dividends at any time.

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• currency fluctuations that could adversely affect our financial position and operating results;

• adverse social, political and economic conditions, such as inflation, rising interest rates and risk of global or regional recession;

• unexpected changes in trading policies, regulatory requirements, tariffs, and other barriers;

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laws and regulations related to our foreign operations;

• less stable political and economic environments;

• political developments, geopolitical unrest or other conflicts or natural disasters in foreign nations;

• civil disturbances or other catastrophic events that reduce business activity.

5 unchanged sentences

The fluctuation in foreign currency markets can both increase and decrease our overall revenue and expenses for any fiscal period, and therefore has a resulting negative impact on our reported results of operations and on our ability to predict our future results and earnings accurately.

Additionally, global economic events, including Brexit, have caused and may continue to cause significant volatility in currency exchange rate fluctuations.

Additionally, global economic events, including Brexit, have caused and may continue to cause significant volatility

in currency exchange rate fluctuations.

The impact of Brexit on currency exchange rates and the significance of the resulting fluctuations in the exchange rate of the British Pound may not be fully realized for several years or more.

Revenue generated

from our U.K.-based operations was approximately 15% (which includes currency exchange effects) of our total revenues for the year ended January 1, 2022.

Revenue generated from our U.K.-based operations was approximately 15% (which includes currency exchange effects) of our total revenues for the year ended December 31, 2022.

We currently do not hedge our exposure to current foreign currency exchange risks by engaging in foreign exchange hedging transactions, though we may do so in the future.

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We rely on our cash and cash equivalents, cash flows from operations and borrowings under our credit agreement to fund our short-term and anticipated long-term operating activities.

We currently have a revolving credit facility with our bank for up to $175.0 million.

We currently have a revolving credit facility with our bank for up to $250.0 million, which may be decreased at CRA's option to $200.0 million during the period from July 16th in a year through January 15th in the next year.

Additionally, for the period from January 16th to July 15th of each calendar year, CRA may elect to not increase the revolving credit facility to $250.0 million.

The amounts available under this revolving credit facility are constrained by various financial covenants and reduced by certain letters of credit outstanding.

At February 24, 2023, we had no borrowings outstanding under the credit agreement and approximately $195.6 million available for future borrowings, after consideration of outstanding letters of credit.

Our loan agreement with the bank will mature on October 24, 2022.

We expect to extend or refinance our revolving credit agreement prior to maturity, but there can be no assurance that we will be able to do so on favorable terms or at all.

Our ability to refinance our indebtedness will depend on our ability to generate cash from operations, which may be subject to general economic, financial, competitive and other factors that are beyond our control.

If we are not able to extend or replace this source of capital, it could adversely affect our ability to obtain further financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures.

Our loan agreement with the bank will mature on August 19, 2027.

The degree to which we are leveraged could adversely affect our ability to obtain further financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures.

Our ability to secure short-term and long-term debt or equity financing in the future will also depend on several factors, including our future profitability, the levels of our debt and equity, restrictions under our existing or any future revolving credit facility, and the overall credit and equity market environments.

As LIBOR is phased out, we will need to agree to a replacement index rate to be used under our credit agreement, which may have an adverse effect on our financial condition

At present LIBOR is expected to be published only on a limited basis for certain LIBOR tenors in U.S.

dollars through June 30, 2023, after which LIBOR reference rates will no longer be provided.

Our credit agreement, which is set to mature on October 24, 2022, does not specify a particular replacement index rate (or related margin) when LIBOR becomes unavailable.

The credit agreement permits the administrative agent and us to select a replacement rate (which may include a rate based on the Secured Overnight Financing Rate, or SOFR, and the related spread adjustment) consistent with relevant regulatory guidance and general market practice and permits the administrative agent to implement conforming changes to our credit agreement determined by it to be appropriate and consistent with general practice.

We expect to amend our credit facility to provide a market-based replacement index rate and margin prior to the time when LIBOR is no longer available.

Any replacement rate could result in an increase in our interest expense.

Item 1B —Unresolved Staff Comments

1 unchanged sentence

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-K

Item 1A. Risk Factors