What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-03 · 112 added, 197 removed, 329 unchanged (48% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

Fiscal Quarter Ended Fiscal Year-to-Date

2022 October 2,

2021 October 1,

2022 October 2,

Fiscal Quarter Ended

2023 April 2,

Revenues $ 152,845 $ 148,382

18 unchanged sentences

(in thousands)

Fiscal Quarter Ended Fiscal Year-to-Date

2022 October 2,

2021 October 1,

2022 October 2,

Fiscal Quarter Ended

2023 April 2,

Net income $ 8,918 $ 11,426

6 unchanged sentences

(in thousands, except share data)

2022 January 1,

2023 December 31,

Current assets:

45 unchanged sentences

(in thousands)

Fiscal Year-to-Date Period Ended

2022 October 2,

Fiscal Quarter Ended

2023 April 2,

OPERATING ACTIVITIES:

Net income $ 8,918 $ 11,426

Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of effect of acquired business:

Adjustments to reconcile net income to net cash used in operating activities, net of effect of acquired businesses:

Depreciation and amortization 2,943 2,976

12 unchanged sentences

Lease liabilities ( 4,402 ) ( 4,028 )

Net cash provided by (used in) operating activities ( 35,015 ) 13,903

Net cash used in operating activities ( 70,051 ) ( 61,838 )

INVESTING ACTIVITIES:

6 unchanged sentences

Repayments under revolving line of credit ( 5,000 ) —

Payments for debt issuance costs ( 1,008 ) —

Tax withholding payments reimbursed by shares ( 1,873 ) ( 897 )

Cash paid for contingent consideration — ( 2,357 )

Cash dividends paid ( 2,702 ) ( 2,377 )

Repurchase of common stock ( 20,577 ) ( 4,956 )

Net cash provided by (used in) financing activities 9,260 ( 37,820 )

Net cash provided by financing activities 74,848 52,111

Effect of foreign exchange rates on cash and cash equivalents 407 ( 716 )

Net decrease in cash and cash equivalents ( 42,037 ) ( 26,012 )

Net increase (decrease) in cash and cash equivalents 4,072 ( 22,428 )

Cash and cash equivalents at beginning of period 31,447 66,130

2 unchanged sentences

Increase (decrease) in accounts payable and accrued expenses for property and equipment $ 23 $ ( 211 )

Excise tax on share repurchases $ ( 173 ) $ —

Right-of-use assets obtained in exchange for lease obligations $ — $ 1,210

Restricted common stock issued for contingent consideration $ — $ 2,250

Supplemental cash flow information:

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED OCTOBER 1, 2022 (unaudited)

FOR THE FISCAL QUARTER ENDED APRIL 1, 2023 (unaudited)

(in thousands, except share data)

4 unchanged sentences

Issued Amount

BALANCE AT JANUARY 1, 2022 7,362,703 $ — $ 215,784 $ ( 9,950 ) $ 205,834

BALANCE AT DECEMBER 31, 2022 7,149,884 $ 1,743 $ 224,392 $ ( 14,981 ) $ 211,154

Net income — — 8,918 — 8,918

5 unchanged sentences

Shares repurchased ( 180,881 ) ( 810 ) ( 19,767 ) — ( 20,577 )

Accrued excise tax on shares repurchased — — ( 173 ) — ( 173 )

Accrued dividends on unvested shares — — 45 — 45

2 unchanged sentences

BALANCE AT APRIL 1, 2023 6,997,933 $ — $ 210,713 $ ( 13,929 ) $ 196,784

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

Net income — — 11,877 — 11,877

Foreign currency translation adjustment — — — ( 3,806 ) ( 3,806 )

Exercise of stock options 19,476 419 — — 419

Share-based compensation expense — 1,489 — — 1,489

Restricted shares vesting 9,843 — — — —

Redemption of vested employee restricted shares for tax withholding ( 291 ) ( 27 ) — — ( 27 )

Shares repurchased ( 51,524 ) ( 852 ) ( 4,148 ) — ( 5,000 )

Accrued dividends on unvested shares — — ( 39 ) — ( 39 )

Cash dividends paid ($ 0.31 per share)

— — ( 2,224 ) — ( 2,224 )

BALANCE AT OCTOBER 1, 2022 7,108,853 $ 1,029 $ 218,434 $ ( 18,788 ) $ 200,675

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 OCTOBER 2, 2021 (unaudited)

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

(in thousands, except share data)

7 unchanged sentences

Foreign currency translation adjustment — — — ( 1,172 ) ( 1,172 )

Issuance of restricted common stock for contingent consideration 40,039 2,250 — — 2,250

Exercise of stock options 14,552 341 — — 341

7 unchanged sentences

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

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

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 vesting 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.

4 unchanged sentences

CRA International, Inc.

(“CRA” or the “Company”) is a worldwide leading consulting services firm that applies advanced analytic techniques and in-depth industry knowledge to complex engagements for a broad range of clients.

(together with its wholly-owned subsidiaries, “CRA” or the “Company”) is a worldwide leading consulting services firm that applies advanced analytic techniques and in-depth industry knowledge to complex engagements for a broad range of clients.

CRA offers services in two broad areas:

4 unchanged sentences

The unaudited condensed consolidated financial statements include the accounts of CRA International, Inc.

and its wholly-owned subsidiaries (collectively the “Company”), which require consolidation after the elimination of intercompany accounts and transactions.

and its wholly-owned subsidiaries, which require consolidation after the elimination of intercompany accounts and transactions.

These financial statements have been prepared in accordance with the rules and regulations of the U.S.

3 unchanged sentences

Results of operations for the interim periods presented herein are not necessarily indicative of results of operations for a full year.

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended January 1, 2022 included in CRA’s Annual Report on Form 10-K filed with the SEC on March 3, 2022 (the “2021 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.

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 31, 2022 included in CRA’s Annual Report on Form 10-K filed with the SEC on March 2, 2023 (the “2022 Form 10-K”).

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.

Estimates in these condensed consolidated financial statements include, but are not limited to, allowances for accounts receivable and unbilled services, revenue recognition on fixed-price contracts, variable consideration to be included in the transaction price of revenue contracts, the useful life of long-lived assets, measurement of operating lease right-of-use (“ROU”) assets and liabilities, share-based compensation, valuation of acquired intangible assets, goodwill, accrued and deferred income taxes, valuation allowances on deferred tax assets, accrued incentive compensation, and certain other accrued expenses.

Estimates in these condensed consolidated financial statements include, but are not limited to, allowances for accounts receivable and unbilled services, revenue recognition on fixed-price contracts, variable consideration to be included in the transaction price of revenue contracts, the useful life of long-lived assets, measurement of operating lease right-of-use (“ROU”) assets and liabilities, share-based compensation, valuation of acquired intangible assets, valuation of contingent consideration liabilities, goodwill, accrued and deferred income taxes, valuation allowances on deferred tax assets, accrued incentive compensation, and certain other accrued expenses.

These items are monitored and analyzed by CRA for changes in facts and circumstances, and material changes in these estimates could occur in the future.

2 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 .

Business Combinations

CRA accounts for business acquisitions using the acquisition method of accounting, which requires assets acquired and liabilities assumed to be measured and recorded at their estimated fair values as of the acquisition date, with certain exceptions.

The purchase price is determined as the fair value of consideration transferred.

Goodwill is recognized for the excess of consideration transferred over the net value of assets acquired and liabilities assumed.

The operating results of each acquired company is included in CRA's consolidated financial statements beginning on the date of acquisition.

Fair value measurements require extensive use of estimates and assumptions, including estimates of future cash flows to be generated by the acquired assets.

The useful lives of identifiable intangible assets acquired in a business acquisition are

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

Recent Accounting Standards

Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued Accounting Standards Update ("ASU") No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08") .

The ASU requires that an acquirer recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606") at the acquisition date as if the acquirer had originated the contracts rather than adjust them to fair value.

CRA elected to early adopt ASU 2021-08 on the first day of fiscal 2022.

The adoption of the new standard had no impact on CRA's financial position, results of operations, cash flows, or disclosures on the date of transition.

Business Acquisition

7 unchanged sentences

The non-employee expert did not and will not receive compensation or a portion of the purchase price as part of the transaction.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

2 unchanged sentences

All other tangible assets and identifiable intangible assets acquired and liabilities assumed were recorded at their fair value as of the date of acquisition.

The current values of assets acquired and liabilities assumed are preliminary and based on the best available information.

Certain items, such as the working capital adjustments, intangible assets, and goodwill, may be subject to change as additional information is received.

The allocation of the purchase price will be finalized as soon as practicable, but not later than one year from the date of acquisition.

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 October 1, 2022 (in thousands):

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Welch Consulting's results of operations have been included in the accompanying condensed consolidated statements of operations from the date of acquisition.

The following table is the final allocation of the purchase price to the estimated fair value of assets acquired and liabilities assumed (in thousands):

Assets Acquired

19 unchanged sentences

Net assets acquired $ 10,559

For the acquired assets and assumed liabilities, CRA has paid $ 10.2 million, net, as of October 1, 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 is treated as post-transaction compensation expense as incurred.

The intangible assets acquired are comprised of customer relationships, the fair value of which was determined using a multi-period excess earning method.

For the acquired assets and assumed liabilities, CRA has paid $ 10.6 million, net, as of April 1, 2023, the amount of which was based on adjusted estimates of certain net working capital items.

The intangible assets acquired are comprised of customer relationships, the fair value of which was determined using a multi-period excess earnings method.

The customer relationships intangible is being amortized over a ten-year life on a straight-line basis, which approximates the expected pattern of economic benefit from this asset.

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 year-to-date period ended October 1, 2022 and are included in selling, general and administrative expenses on the condensed consolidated statements of operations.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

On November 29, 2022, CRA acquired substantially all of the business assets and assumed certain liabilities of bioStrategies Group, Inc.

(“bSG”), a Chicago-based consulting firm focused on developing commercial strategies for healthcare products and technologies.

The acquisition expands CRA’s business opportunities, expertise, and market presence with the addition of 17 colleagues with an office in Chicago, Illinois.

The acquisition of bSG is not significant to our condensed consolidated financial statements for the quarter ended April 1, 2023.

Revenues and Allowances

1 unchanged sentence

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)

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.

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.

Disaggregation of Revenue

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

Fiscal Quarter Ended Fiscal Year-to-Date

Type of Contract October 1,

2022 October 2,

2021 October 1,

2022 October 2,

Fiscal Quarter Ended

Type of Contract April 1,

2023 April 2,

Consulting services revenues:

2 unchanged sentences

Total $ 152,845 $ 148,382

Fiscal Quarter Ended Fiscal Year-to-Date

Geographic Breakdown October 1,

2022 October 2,

2021 October 1,

2022 October 2,

Fiscal Quarter Ended

Geographic Breakdown April 1,

2023 April 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 Fiscal Year-to-Date

2022 October 2,

2021 October 1,

2022 October 2,

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal Quarter Ended

2023 April 2,

Bad debt expense (recovery), net $ — $ ( 121 )

3 unchanged sentences

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

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal Quarter Ended Fiscal Year-to-Date

2022 October 2,

2021 October 1,

2022 October 2,

Fiscal Quarter Ended

2023 April 2,

Reimbursable expenses $ 13,981 $ 16,204

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 October 1, 2022 and January 1, 2022.

The contract assets balance was immaterial as of April 1, 2023 and December 31, 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.

1 unchanged sentence

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

2022 January 1,

2023 December 31,

Contract liabilities $ 3,790 $ 6,977

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 Fiscal Year-to-Date

2022 October 2,

2021 October 1,

2022 October 2,

Fiscal Quarter Ended

2023 April 2,

Amounts included in contract liabilities at the beginning of the period $ 5,139 $ 6,543

8 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal Year-to-Date Period Ended Fiscal Year Ended

2022 January 1,

Fiscal Quarter Ended Fiscal Year Ended

2023 December 31,

Beginning balance $ 56,456 $ 48,591

10 unchanged sentences

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the fiscal year-to-date period ended October 1, 2022 are summarized as follows (in thousands):

The changes in the carrying amount of goodwill for the fiscal quarter ended April 1, 2023 are summarized as follows (in thousands):

Goodwill $ 164,815

Accumulated goodwill impairment ( 71,893 )

Goodwill, net at January 1, 2022 88,936

Goodwill, net at December 31, 2022 92,922

Additions due to acquisitions 358

Foreign currency translation adjustment 298

Goodwill, net at October 1, 2022 $ 89,036

Goodwill at October 1, 2022, is comprised of goodwill of $ 160.9 million and accumulated impairment of $ 71.9 million.

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

Goodwill, net at April 1, 2023 $ 93,578

Goodwill at April 1, 2023, is comprised of goodwill of $ 165.5 million and accumulated impairment of $ 71.9 million.

There were no impairment losses related to goodwill during the fiscal quarter ended April 1, 2023 or during the fiscal year ended December 31, 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):

October 1, 2022 January 1, 2022

April 1, 2023 December 31, 2022

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

Non-competition agreements 5 $ — $ — $ — $ 280 $ ( 275 ) $ 5

Customer relationships 10

13,800 ( 5,569 ) 8,231 13,800 ( 5,212 ) 8,588

Total $ 12,370 $ ( 4,902 ) $ 7,468 $ 8,500 $ ( 4,319 ) $ 4,181

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

As a result of the Welch Consulting acquisition, CRA recognized

There were no impairment losses related to intangible assets during the fiscal quarter ended April 1, 2023 or during the fiscal year ended December 31, 2022.

As a result of the Welch Consulting acquisition, CRA recognized approximately $ 4.2 million of intangible assets related to customer relationships in the first quarter of fiscal 2022.

As a result of the bSG acquisition, CRA recognized approximately $ 1.4 million of intangible assets related to customer relationships in the fourth

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

approximately $ 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 $ 0.9 million for the fiscal quarter and fiscal year-to-date period ended October 1, 2022, respectively, and $ 0.2 million and $ 0.7 million for the fiscal quarter and fiscal year-to-date period ended October 2, 2021, respectively.

quarter of fiscal 2022.

Amortization expense related to intangible assets was $ 0.4 million and $ 0.2 million for the fiscal quarters ended April 1, 2023 and April 2, 2022, respectively.

Accrued Expenses

Accrued expenses consist of the following (in thousands):

2022 January 1,

2023 December 31,

Compensation and related expenses $ 83,706 $ 138,728

3 unchanged sentences

Total accrued expenses $ 104,413 $ 155,864

As of October 1, 2022 and January 1, 2022, approximately $ 89.1 million and $ 118.9 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

For the fiscal quarters ended October 1, 2022 and October 2, 2021, CRA’s effective income tax rate (“ETR”) was 25.3 % and 14.8 %, respectively.

The ETR for the third quarter of fiscal 2022 was higher than the third quarter of fiscal 2021 primarily due to a decrease in the tax benefit related to share-based compensation and foreign-derived intangible income, and higher nondeductible compensation paid to executive officers.

For the fiscal year-to-date periods ended October 1, 2022 and October 2, 2021, CRA's ETR was 26.7 % and 22.0 %, 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 and foreign-derived intangible income, 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 that did not recur in the current period.

As of April 1, 2023 and December 31, 2022, approximately $ 49.5 million and $ 116.1 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

For the fiscal quarters ended April 1, 2023 and April 2, 2022, CRA’s effective income tax rate (“ETR”) was 29.2 % and 26.4 %, respectively.

The ETR for the first quarter of fiscal 2023 was higher than the first quarter of fiscal 2022 primarily due to a decrease in the tax benefit related to share-based compensation, an increase in nondeductible meals and entertainment expenses, and an increase in the UK statutory rate from 19% to 25% effective April 1, 2023, with a blended rate of 23.5% for the fiscal year.

The increase in the tax impact of the meals expense is a result of the expiration of the relief provided by The Consolidated Appropriations Act, 2021, whereby the deduction for business meals from restaurants was 100% during 2021 and 2022 and reverted back to 50% in 2023.

In fiscal 2020, as a result of both a qualitative and quantitative analysis, certain amounts of previously taxed and untaxed post fiscal 2018 U.K.

1 unchanged sentence

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.

During the current fiscal year-to-date period, deferred taxes of $ 0.2 million have been recorded as a consequence of foreign exchange translation.

During the fiscal quarter ended April 1, 2023, deferred taxes have been assessed as immaterial related to foreign exchange translation and not recorded.

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.

2 unchanged sentences

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.

The Company had net share repurchases of $ 17.3 million for the fiscal quarter ended April 1, 2023 resulting in a tax payable of $ 0.2 million.

As the Company's issued and outstanding common stock on the condensed consolidated balance sheet is classified as permanent equity, the excise tax is treated as a specific incremental cost directly attributable to the repurchase.

As such, the excise tax is charged against the gross proceeds and recorded within equity with an offsetting excise tax liability recognized.

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 October 1, 2022 and October 2, 2021.

The two-class method was more dilutive for the fiscal quarters ended April 1, 2023 and April 2, 2022.

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

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 October 1, 2022 and October 2, 2021.

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 1, 2023 and April 2, 2022.

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

Fiscal Quarter Ended Fiscal Year-to-Date

2022 October 2,

2021 October 1,

2022 October 2,

Fiscal Quarter Ended

2023 April 2,

Net income — basic $ 8,918 $ 11,426

7 unchanged sentences

Diluted $ 1.23 $ 1.52

For the fiscal quarter and fiscal year-to-date period ended October 1, 2022, 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 997 and 249 shares, respectively.

There were no anti-dilutive share-based awards for the fiscal quarter and fiscal year-to-date period ended October 2, 2021.

For the fiscal quarter ended April 1, 2023, 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 196 shares.

There were no anti-dilutive share-based awards for the fiscal quarter ended April 2, 2022.

Fair Value of Financial Instruments

As of October 1, 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.

CRA had no contingent consideration obligation during the fiscal year-to-date period ended October 1, 2022.

CRA paid the contingent consideration liability in the first 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):

Fiscal Year Ended

The following tables show CRA's financial instruments recorded in the condensed consolidated financial statements as of April 1, 2023 and the consolidated financial statements as of December 31, 2022, which are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

April 1, 2023

Level 1 Level 2 Level 3

Money market mutual funds $ — $ — $ —

Total Assets $ — $ — $ —

Contingent consideration liability $ — $ — $ 1,077

Total Liabilities $ — $ — $ 1,077

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2022

Level 1 Level 2 Level 3

Money market mutual funds $ — $ — $ —

Total Assets $ — $ — $ —

Contingent consideration liability $ — $ — $ 1,056

Total Liabilities $ — $ — $ 1,056

The contingent consideration liability pertains to estimated future contingent consideration payments related to the acquisition of bSG, an independent consulting firm.

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

Fiscal Quarter Ended Fiscal Year Ended

April 1, 2023 December 31, 2022

Beginning balance $ 1,056 $ —

Acquisition-related contingent consideration — 1,056

Accretion 21 —

1 unchanged sentence

Ending balance $ 1,077 $ 1,056

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Credit Agreement

CRA was a party to an amended and restated credit agreement (the "Initial Credit Agreement") that provided CRA with a $ 175.0 million revolving credit facility that included a $ 15.0 million sublimit for the issuance of letters of credit.

The Initial Credit Agreement was scheduled to mature on October 24, 2022;

CRA was permitted to repay any borrowings at any time prior to the maturity date.

CRA was required to comply with various financial and non-financial covenants under the Initial Credit Agreement.

On August 19, 2022, CRA refinanced its revolving credit facility under the Initial Credit Agreement by entering into a Credit Agreement (the "Credit Agreement") with Bank of America, N.A., as swingline lender, a letter of credit issuing bank and administrative agent, and with Citizens Bank, N.A., as a letter of credit issuing bank.

CRA is party to a Credit Agreement, dated as of August 19, 2022 (the "Credit Agreement") with Bank of America, N.A., as swingline lender, a letter of credit issuing bank and administrative agent, and with Citizens Bank, N.A., as a letter of credit issuing bank.

The Credit Agreement provides CRA with a $ 250.0 million revolving credit facility, 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.

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The revolving credit facility includes a $ 25.0 million sublimit for the issuance of letters of credit.

Concurrent with CRA's entry into the Credit Agreement, the Company terminated the Initial Credit Agreement and repaid in full all outstanding indebtedness under the Initial Credit Agreement of approximately $ 50.0 million.

Also, letters of credit in the aggregate amount of approximately $ 4.4 million that had been issued under the Initial Credit Agreement were deemed to be issued and outstanding under the new revolving credit facility.

In connection with the Credit Agreement, the Company incurred debt issuance costs from the lenders and third-parties of $ 1.0 million.

CRA may use the proceeds of the revolving credit loans under the Credit Agreement for general corporate purposes and may repay any borrowings under the revolving credit facility at any time, but any borrowings must be repaid no later than August 19, 2027.

Borrowings under the revolving credit facility bear interest at a rate per annum equal to one of the following rates, at CRA's election, plus an applicable margin as described below:

(i) in the case of borrowings in U.S.

dollars by the Company, the Base Rate (as defined in the Credit Agreement), (ii) in the case of borrowings in U.S.

dollars, a rate based on Term SOFR (as defined in the Credit Agreement) for the applicable interest period, (iii) in the case of borrowings in Euros, EURIBOR (as defined in the Credit Agreement) for the applicable interest period, (iv) in the case of borrowings in Pounds Sterling, a daily rate based on SONIA (as defined in the Credit Agreement), (v) in the case of borrowings in Canadian Dollars, CDOR (as defined in the Credit Agreement) for the applicable interest period, (vi) in the case of borrowings in Swiss Francs, a daily rate based on SARON (as defined in the Credit Agreement), or (vii) in the case of borrowings in any other Alternate Currency (as defined in the Credit Agreement), the relevant daily or term rate determined as provided in the Credit Agreement.

The applicable margin on borrowings based on the Base Rate varies within a range of 0.25 % to 1.00 % depending on CRA's consolidated net leverage ratio, and the applicable margin on borrowings based on any of the other rates described above varies within a range of 1.25 % to 2.00 % depending on CRA's consolidated net leverage ratio.

CRA is required to pay a fee on the amount available to be drawn under any letter of credit issued under the revolving credit facility at a rate per annum that varies between 1.25 % and 2.00 % depending on CRA's consolidated net leverage ratio.

In addition, CRA is required to pay a fee on the unused portion of the revolving credit facility at a rate per annum that varies between 0.175 % and 0.250 % depending on CRA's consolidated net leverage ratio.

There was $ 100.0 million in borrowings outstanding under the revolving credit facility as of April 1, 2023 and no borrowings outstanding as of December 31, 2022.

As of April 1, 2023, the amount available under the revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 5.7 million.

Under the Credit Agreement, CRA must comply with various financial and non-financial covenants.

The primary financial covenants consist of a maximum consolidated net leverage ratio and a minimum consolidated interest coverage ratio.

The primary financial covenants consist of a maximum consolidated net leverage ratio of 3.0 to 1 and a minimum consolidated interest coverage ratio of 2.5 to 1.

The primary non-financial covenants include, but are not limited to, restrictions on CRA's ability to incur future indebtedness, engage in acquisitions or dispositions, pay dividends or repurchase capital stock, and enter into business combinations.

Any indebtedness outstanding under the revolving credit facility may become immediately due upon the occurrence of stated events of default, including CRA's failure to pay principal, interest or fees, or upon the breach of any covenant.

As of October 1, 2022, CRA was in compliance with the covenants of the Credit Agreement.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

There was $ 45.0 million in borrowings outstanding under the revolving credit facility as of October 1, 2022 and no borrowings outstanding as of January 1, 2022.

As of October 1, 2022, the amount available under the revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 4.4 million.

Any indebtedness outstanding under the revolving credit facility may become immediately due upon

the occurrence of stated events of default, including CRA's failure to pay principal, interest or fees, or upon the breach of any covenant.

As of April 1, 2023, CRA was in compliance with the covenants of the Credit Agreement.

Commitments and Contingencies

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

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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Subsequent Events

On November 3, 2022, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.36 per common share, payable on December 9, 2022 to shareholders of record as of November 29, 2022.

On May 4, 2023, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.36 per common share, payable on June 9, 2023 to shareholders of record as of May 30, 2023.

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