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Item 2. Management’s Discussion and Analysis

2023-11-02 compared with 2023-08-03 · 75 added, 70 removed, 142 unchanged (51% of the section changed)

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Critical Accounting Policies and Estimates

Our critical accounting policies involving the more significant estimates and judgments used in the preparation of our financial statements as of July 1, 2023 remain unchanged from December 31, 2022.

Our critical accounting policies involving the more significant estimates and judgments used in the preparation of our financial statements as of September 30, 2023 remain unchanged from December 31, 2022.

Please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 2, 2023 (the "2022 Form 10-K") for details on these critical accounting policies.

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There are no recent accounting standards that impact the unaudited condensed consolidated financial statements.

Results of Operations—For the Fiscal Quarter and Fiscal Year-to-Date Period Ended July 1, 2023, Compared to the Fiscal Quarter and Fiscal Year-to-Date Period Ended July 2, 2022

Results of Operations—For the Fiscal Quarter and Fiscal Year-to-Date Period Ended September 30, 2023, Compared to the Fiscal Quarter and Fiscal Year-to-Date Period Ended October 1, 2022

The following table provides operating information as a percentage of revenues for the periods indicated:

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Ended Fiscal Year-to-Date

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Revenues 100.0 % 100.0 % 100.0 % 100.0 %

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Net income 5.8 % 8.0 % 5.8 % 7.8 %

Fiscal Quarter Ended July 1, 2023, Compared to the Fiscal Quarter Ended July 2, 2022

Revenues increased by $12.9 million, or 8.6%, to $162.0 million for the second quarter of fiscal 2023 from $149.1 million for the second quarter of fiscal 2022.

Utilization decreased to 72% for the second quarter of fiscal 2023 from 77% for the second quarter of fiscal 2022, while consultant headcount grew 12.5% from 863 at the end of the second quarter of fiscal 2022 to 971 at the end of the second quarter of fiscal 2023.

Fiscal Quarter Ended September 30, 2023, Compared to the Fiscal Quarter Ended October 1, 2022

Revenues decreased by $0.8 million, or 0.6%, to $147.6 million for the third quarter of fiscal 2023 from $148.4 million for the third quarter of fiscal 2022.

Utilization decreased to 66% for the third quarter of fiscal 2023 from 74% for the third quarter of fiscal 2022, while consultant headcount grew 11.3% from 911 at the end of the third quarter of fiscal 2022 to 1,014 at the end of the third quarter of fiscal 2023.

Overall, revenues outside of the U.S.

represented approximately 22% and 19% of net revenues for the second quarters of fiscal 2023 and fiscal 2022, respectively.

Revenues derived from fixed-price projects decreased to 17% of net revenues for the second quarter of fiscal 2023 compared with 18% of net revenues for the second quarter of fiscal 2022.

represented approximately 20% and 18% of net revenues for the third quarters of fiscal 2023 and fiscal 2022, respectively.

Revenues derived from fixed-price projects increased to 18% of net revenues for the third quarter of fiscal 2023 compared with 16% of net revenues for the third quarter of fiscal 2022.

The percentage of revenue derived from fixed-price projects depends largely on the proportion of our revenues derived from our management consulting business, which typically has a higher concentration of fixed-price service contracts.

Costs of Services (exclusive of depreciation and amortization).

Costs of services (exclusive of depreciation and amortization) increased by $10.2 million, or 10.0%, to $113.3 million for the second quarter of fiscal 2023 from $103.1 million for the second quarter of fiscal 2022.

The increase in costs of services was due to an increase in employee compensation and fringe benefit costs of $8.6 million primarily as a result of a higher headcount, an increase in client reimbursable expenses of $0.8 million, and an increase in forgivable loan amortization of $0.7 million.

As a percentage of revenues, costs of services (exclusive of depreciation and amortization) increased to 70.0% for the second quarter of fiscal 2023 from 69.1% for the second quarter of fiscal 2022.

Costs of services (exclusive of depreciation and amortization) increased by $3.6 million, or 3.5%, to $105.9 million for the third quarter of fiscal 2023 from $102.3 million for the third quarter of fiscal 2022.

The increase in costs of services was due to an increase in client reimbursable expenses of $2.9 million, an increase in employee compensation and fringe benefit costs of $0.7 million primarily as a result of a higher headcount, partially offset by a decrease in forgivable loan amortization of $0.1 million.

As a percentage of revenues, costs of services (exclusive of depreciation and amortization) increased to 71.8% for the third quarter of fiscal 2023 from 68.9% for the third quarter of fiscal 2022.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased by $1.8 million, or 6.7%, to $29.8 million for the second quarter of fiscal 2023 from $28.0 million for the second quarter of fiscal 2022.

Within this category of expenses, there was a $0.8 million increase in rent expense, a $0.7 million increase in travel and entertainment, a $0.5 million increase in employee compensation and fringe benefit costs, a $0.5 million increase in bad debt expense, a $0.4 million increase in legal and professional fees, and a $0.3 million increase in software subscription and data services.

Partially offsetting the increase in these expenses was a $1.4 million decrease in commissions to our non-employee experts for the second quarter of fiscal 2023 as compared to the second quarter of fiscal 2022.

As a percentage of revenues, selling, general and administrative expenses decreased to 18.4% for the second quarter of fiscal 2023 from 18.8% for the second quarter of fiscal 2022.

Commissions to our non-employee experts decreased to 2.3% of revenues for the second quarter of fiscal 2023 compared to 3.5% of revenues the second quarter of fiscal 2022.

Selling, general and administrative expenses decreased by $0.3 million, or 1.2%, to $27.9 million for the third quarter of fiscal 2023 from $28.2 million for the third quarter of fiscal 2022.

Within this category of expenses, there was a $1.2 million decrease in commissions to our non-employee experts and a $0.4 million decrease in employee compensation and fringe benefit costs.

Partially offsetting the decrease in these expenses was a $0.2 million increase in rent expense, a $0.2 million increase in travel and entertainment, a $0.2 million increase in bad debt expense, a $0.5 million increase in miscellaneous and other fees, and a $0.2 million increase in software subscription and data services for the third quarter of fiscal 2023 as compared to the third quarter of fiscal 2022.

As a percentage of revenues, selling, general and administrative expenses decreased to 18.9% for the third quarter of fiscal 2023 from 19.0% for the third quarter of fiscal 2022.

Commissions to our non-employee experts decreased to 2.4% of revenues for the third quarter of fiscal 2023 compared to 3.2% of revenues the third quarter of fiscal 2022.

Provision for Income Taxes.

The income tax provision was $4.1 million and the effective tax rate ("ETR") was 30.1% for the second quarter of fiscal 2023 compared to $4.6 million and 28.3% for the second quarter of fiscal 2022.

The ETR for the current fiscal quarter was higher than the prior year fiscal quarter primarily due to an increase in nondeductible meals and entertainment expenses and an increase in the U.K.

The income tax provision was $1.9 million and the effective tax rate ("ETR") was 18.3% for the third quarter of fiscal 2023 compared to $4.0 million and 25.3% for the third quarter of fiscal 2022.

The ETR for the current fiscal quarter was lower than the prior year fiscal quarter primarily due to the release of a valuation allowance in a foreign jurisdiction, partially offset by a decrease in the tax benefit related to share-based compensation, an increase in nondeductible meals and entertainment expenses, and an increase in the U.K.

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.

The ETR for the second quarter of fiscal 2023 was higher than the combined federal and state statutory tax rate primarily due to nondeductible compensation paid to executive officers and nondeductible meals and entertainment expenses.

The ETR for the second quarter of fiscal 2022 was higher than the combined federal and state statutory tax rate primarily due to nondeductible items including compensation paid to executive officers and entertainment expenses, along with an increase in the valuation allowance, partially offset by the U.S.

benefit from foreign-derived intangible income ("FDII").

Net income decreased to $9.5 million for the second quarter of fiscal 2023 from $11.6 million for the second quarter of fiscal 2022.

The net income per diluted share was $1.34 per share for the second quarter of fiscal 2023, compared to $1.57 of net income per diluted share for the second quarter of fiscal 2022.

Weighted average diluted shares outstanding decreased by approximately 300,000 shares to approximately 7,080,000 shares for the second quarter of fiscal 2023 from approximately 7,380,000 shares for the second quarter of fiscal 2022.

The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since July 2, 2022, offset in part by the vesting of shares of restricted stock and time-vesting restricted stock units and the exercise of stock options since July 2, 2022.

Fiscal Year-to-Date Period Ended July 1, 2023, Compared to the Fiscal Year-to-Date Period Ended July 2, 2022

Revenues increased by $17.3 million, or 5.8%, to $314.8 million for the fiscal year-to-date period ended July 1, 2023 from $297.5 million for the fiscal year-to-date period ended July 2, 2022.

Utilization decreased to 71% for the fiscal year-to-date period ended July 1, 2023 from 75% for the fiscal year-to-date period ended July 2, 2022, while consultant headcount increased 12.5% from 863 at the end of the second quarter of fiscal 2022 to 971 at the end of the second quarter of fiscal 2023.

The ETR for the third quarter of fiscal 2023 was lower than the combined federal and state statutory tax rate primarily due to the same items noted above.

The ETR for the third quarter of fiscal 2022 was lower than the combined federal and state statutory tax rate primarily due to the tax benefit related to share-based compensation, partially offset by non-deductible compensation paid to executive officers.

Net income decreased to $8.6 million for the third quarter of fiscal 2023 from $11.9 million for the third quarter of fiscal 2022.

The net income per diluted share was $1.21 per share for the third quarter of fiscal 2023, compared to $1.63 of net income per diluted share for the third quarter of fiscal 2022.

Weighted average diluted shares outstanding decreased by approximately 163,000 shares to approximately 7,083,000 shares for the third quarter of fiscal 2023 from approximately 7,246,000 shares for the third quarter of fiscal 2022.

The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since October 1, 2022, offset in part by the vesting of shares of restricted stock and time-vesting restricted stock units and the exercise of stock options since October 1, 2022.

Fiscal Year-to-Date Period Ended September 30, 2023, Compared to the Fiscal Year-to-Date Period Ended October 1, 2022

Revenues increased by $16.5 million, or 3.7%, to $462.4 million for the fiscal year-to-date period ended September 30, 2023 from $445.9 million for the fiscal year-to-date period ended October 1, 2022.

Utilization decreased to 69% for the fiscal year-to-date period ended September 30, 2023 from 75% for the fiscal year-to-date period ended October 1, 2022, while consultant headcount increased 11.3% from 911 at the end of the third quarter of fiscal 2022 to 1,014 at the end of the third quarter of fiscal 2023.

Overall, revenues outside of the U.S.

represented approximately 22% and 20% of net revenues for the fiscal year-to-date periods ended July 1, 2023 and July 2, 2022, respectively.

Revenues derived from fixed-price projects decreased to 17% of net revenues for the fiscal year-to-date period ended July 1, 2023 compared with 19% of net revenues for the fiscal year-to-date period ended July 2, 2022.

represented approximately 22% and 20% of net revenues for the fiscal year-to-date periods ended September 30, 2023 and October 1, 2022, respectively.

Revenues derived from fixed-price projects remained flat at 18% of net revenues for the fiscal year-to-date periods ended September 30, 2023 and October 1, 2022.

Costs of Services (exclusive of depreciation and amortization).

Costs of services (exclusive of depreciation and amortization) increased by $14.1 million, or 6.8%, to $221.2 million for the fiscal year-to-date period ended July 1, 2023 from $207.1 million for the fiscal year-to-date period ended July 2, 2022.

The increase in costs of services was due to an increase of $13.1 million in employee compensation and fringe benefit costs primarily as a result of a higher headcount and an increase in forgivable loan amortization of $2.4 million, partially offset by a decrease in client reimbursable expenses of $1.4 million.

As a percentage of revenues, costs of services (exclusive of depreciation and amortization) increased to 70.3% for the fiscal year-to-date period ended July 1, 2023 from 69.6% for the fiscal year-to-date period ended July 2, 2022.

Costs of services (exclusive of depreciation and amortization) increased by $17.7 million, or 5.7%, to $327.1 million for the fiscal year-to-date period ended September 30, 2023 from $309.4 million for the fiscal year-to-date period ended October 1, 2022.

The increase in costs of services was due to an increase of $13.8 million in employee compensation and fringe benefit costs primarily as a result of a higher headcount, an increase in forgivable loan amortization of $2.3 million, and an increase in client reimbursable expenses of $1.5 million.

As a percentage of revenues, costs of services (exclusive of depreciation and amortization) increased to 70.7% for the fiscal year-to-date period ended September 30, 2023 from 69.4% for the fiscal year-to-date period ended October 1, 2022.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased by $4.4 million, or 8.3%, to $58.2 million for the fiscal year-to-date period ended July 1, 2023 from $53.8 million for the fiscal year-to-date period ended July 2, 2022.

Within this category of expenses, there was a $2.0 million increase in travel and entertainment, a $1.2 million increase in rent expense, a $1.1 million increase in employee compensation and fringe benefit costs, a $1.0 million increase in miscellaneous and other costs, a $0.8 million increase in software subscription and data services, and a $0.7 million increase in bad debt expense.

Partially offsetting the increase in these expenses was a $2.4 million decrease in commissions to our non-employee experts for the fiscal year-to-date period ended July 1, 2023 as compared to the fiscal year-to-date period ended July 2, 2022.

As a percentage of revenues, selling, general and administrative expenses increased to 18.5% for the fiscal year-to-date period ended July 1, 2023 from 18.1% for the fiscal year-to-date period ended July 2, 2022.

Commissions to our non-employee experts decreased to 2.3% of revenues for the fiscal year-to-date period ended July 1, 2023 compared to 3.3% of revenues for the fiscal year-to-date period ended July 2, 2022.

Selling, general and administrative expenses increased by $4.1 million, or 5.0%, to $86.1 million for the fiscal year-to-date period ended September 30, 2023 from $82.0 million for the fiscal year-to-date period ended October 1, 2022.

Within this category of expenses, there was a $2.2 million increase in travel and entertainment, a $1.5 million increase in rent expense, a $1.1 million increase in software subscription and data services, a $0.8 million increase in bad debt expense, a $0.8 million increase in training and marketing expenses, $0.7 million increase in employee compensation and fringe benefit costs, and a $0.6 million increase in miscellaneous and other costs.

Partially offsetting the increase in these expenses was a $3.6 million decrease in commissions to our non-employee experts for the fiscal year-to-date period ended September 30, 2023 as compared to the fiscal year-to-date period ended October 1, 2022.

As a percentage of revenues, selling, general and administrative expenses increased to 18.6% for the fiscal year-to-date period ended September 30, 2023 from 18.4% for the fiscal year-to-date period ended October 1, 2022.

Commissions to our non-employee experts decreased to 2.4% of revenues for the fiscal year-to-date period ended September 30, 2023 compared to 3.3% of revenues for the fiscal year-to-date period ended October 1, 2022.

Provision for Income Taxes.

The income tax provision was $7.8 million and the ETR was 29.7% for the fiscal year-to-date period ended July 1, 2023, compared to $8.7 million and 27.4% for the fiscal year-to-date period ended July 2, 2022.

The ETR for the current fiscal year-to-date period was higher than the prior fiscal year-to-date period 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 U.K.

The income tax provision was $9.7 million and the ETR was 26.4% for the fiscal year-to-date period ended September 30, 2023, compared to $12.7 million and 26.7% for the fiscal year-to-date period ended October 1, 2022.

The ETR for the current fiscal year-to-date period was lower than the prior fiscal year-to-date period primarily due to the release of a valuation allowance in a foreign jurisdiction, partially offset by a decrease in the tax benefit related to share-based compensation, an increase in nondeductible meals and entertainment expenses, and an increase in the U.K.

statutory rate from 19% to 25% effective April 1, 2023 with a blended rate of 23.5% for the fiscal year.

The ETR for the current fiscal year-to-date period was higher than the combined federal and state statutory tax rate primarily due to nondeductible compensation paid to executive officers and nondeductible meals and entertainment expenses, partially offset by the tax benefit related to share-based compensation.

The ETR for the fiscal year-to-date period ended July 2, 2022 was approximately the same as the combined federal and state statutory tax rate and included offsetting items primarily related to the tax benefit for share-based compensation and nondeductible compensation paid to executive officers.

Net income decreased by $4.7 million to $18.4 million for the fiscal year-to-date period ended July 1, 2023 from $23.1 million for the fiscal year-to-date period ended July 2, 2022.

The diluted net income per share was $2.56 for the fiscal year-to-date period ended July 1, 2023, compared to diluted net income per share of $3.09 for the fiscal year-to-date period ended July 2, 2022.

Weighted average diluted shares outstanding decreased by approximately 276,000 to approximately 7,166,000 shares for the fiscal year-to-date period ended July 1, 2023 from approximately 7,442,000 shares for the fiscal year-to-date period ended July 2, 2022.

The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since July 2, 2022, offset in part by the vesting of restricted stock and time-vesting restricted stock units and the exercise of stock options since July 2, 2022.

The ETR for the current fiscal year-to-date period was approximately the same as the combined federal and state statutory tax rate and included offsetting items related to the release of a valuation allowance in a foreign jurisdiction, the tax benefit for share-based compensation, nondeductible meals and entertainment expenses, and nondeductible compensation paid to executive officers.

The ETR for the fiscal year-to-date period ended October 1, 2022 was approximately the same as the combined federal and state statutory tax rate and included offsetting items primarily related to the tax benefit for share-based compensation and nondeductible compensation paid to executive officers.

Net income decreased by $7.9 million to $27.0 million for the fiscal year-to-date period ended September 30, 2023 from $34.9 million for the fiscal year-to-date period ended October 1, 2022.

The diluted net income per share was $3.78 for the fiscal year-to-date period ended September 30, 2023, compared to diluted net income per share of $4.72 for the fiscal year-to-date period ended October 1, 2022.

Weighted average diluted shares outstanding decreased by approximately 238,000 to approximately 7,138,000 shares for the fiscal year-to-date period ended September 30, 2023 from approximately 7,376,000 shares for the fiscal year-to-date period ended October 1, 2022.

The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since October 1, 2022, offset in

part by the vesting of restricted stock and time-vesting restricted stock units and the exercise of stock options since October 1, 2022.

Liquidity and Capital Resources

Fiscal Year-to-Date Period Ended July 1, 2023

Fiscal Year-to-Date Period Ended September 30, 2023

We believe that our current cash and cash equivalents, cash generated from operations, and amounts available under our revolving credit facility will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months.

During the fiscal year-to-date period ended July 1, 2023, cash and cash equivalents decreased by $17.2 million.

During the fiscal year-to-date period ended September 30, 2023, cash and cash equivalents decreased by $3.8 million.

We completed the period with cash and cash equivalents of $27.6 million.

The principal drivers of the decrease of cash and cash equivalents was payment of a significant portion of our fiscal 2022 performance bonuses in the first and second quarters of fiscal 2023, the repurchase of shares, and the payment of dividends, offset by net borrowings of $80.0 million.

During the fiscal year-to-date period ended July 1, 2023, working capital (defined as current assets less current liabilities) decreased by $16.0 million to $15.7 million.

The decrease in working capital was principally due to an increase in borrowings of $80.0 million and a decrease in cash and cash equivalents of $17.2 million.

Partially offsetting these decreases to working capital was a decrease in accrued expenses of $48.7 million, an increase in accounts receivable and unbilled services of $18.1 million, a decrease in accounts payable of $4.7 million, a decrease in deferred revenue and other liabilities of $3.0 million, an increase in prepaid expenses and other current assets of $2.5 million, an increase in the current portion of our forgivable loans of $2.5 million, and a decrease in the current portion of deferred compensation of $2.2 million.

At July 1, 2023, $4.9 million of our cash and cash equivalents was held within the U.S.

The principal drivers of the decrease of cash and cash equivalents were payment of a significant portion of our fiscal 2022 performance bonuses in the first and second quarters of fiscal 2023, the repurchase of shares, and the payment of dividends, offset by net borrowings of $32.0 million.

During the fiscal year-to-date period ended September 30, 2023, working capital (defined as current assets less current liabilities) decreased by $7.3 million to $24.5 million.

The decrease in working capital was principally due to an increase in borrowings of $32.0 million, a decrease in cash and cash equivalents of $3.8 million, and a decrease in accounts receivable and unbilled services of $1.7 million.

Partially offsetting these decreases to working capital was a decrease in accrued expenses of $17.9 million, a decrease in deferred revenue and other liabilities of $4.1 million, a decrease in accounts payable of $2.9 million, an increase in prepaid expenses and other current assets of $4.6 million, an increase in the current portion of our forgivable loans of $0.8 million, and a decrease in the current portion of deferred compensation of $0.1 million.

At September 30, 2023, $3.0 million of our cash and cash equivalents was held within the U.S.

We have sufficient sources of liquidity in the U.S., including cash flow from operations and availability on our revolving credit facility to fund U.S.

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Sources and Uses of Cash.

During the fiscal year-to-date period ended July 1, 2023, net cash used in operating activities was $65.0 million.

Net income was $18.4 million for the fiscal year-to-date period ended July 1, 2023.

Uses of cash for operating activities included a $8.9 million decrease in lease liabilities, a net increase of $16.4 million in accounts receivable and unbilled receivables, and a $3.2 million increase in prepaid expenses and other current assets.

Other uses of cash included a decrease in accounts payable, accrued expenses, and other liabilities of $69.7 million, primarily due to the payment of a significant portion of our fiscal 2022 performance bonuses and performance awards, and an increase in forgivable loans for the period of $4.4 million, which was primarily driven by $17.0 million of forgivable loan issuances, net of repayments, offset by $12.6 million of forgivable loan amortization.

During the fiscal year-to-date period ended September 30, 2023, net cash used in operating activities was $0.1 million.

Net income was $27.0 million for the fiscal year-to-date period ended September 30, 2023.

Uses of cash for operating activities included a $13.2 million decrease in lease liabilities and a $4.0 million increase in prepaid expenses and other current assets.

Other uses of cash included a decrease in accounts payable, accrued expenses, and other liabilities of $36.8 million, primarily due to the payment of a significant portion of our fiscal 2022 performance bonuses and performance awards, and an increase in forgivable loans for the period of $2.3 million, which was primarily driven by $20.7 million of forgivable loan issuances, net of repayments, offset by $18.4 million of forgivable loan amortization, partially offsetting these uses of cash was a net decrease of $1.6 million in accounts receivable and unbilled receivables.

Cash used in operations included incentive cash award expense of $6.1 million, non-cash depreciation and amortization expense of $8.8 million, right-of-use amortization of $10.6 million, and share-based compensation expenses of $3.0 million.

During the fiscal year-to-date period ended July 1, 2023, net cash used in investing activities was $1.9 million, which included $0.6 million of net consideration paid for the acquisitions of Welch Consulting and bSG, and $1.3 million for capital expenditures, primarily related to purchases of computer equipment.

During the fiscal year-to-date period ended July 1, 2023, net cash provided by financing activities was $49.2 million, primarily as a result of net borrowings under the revolving credit facility of $80.0 million.

During the fiscal year-to-date period ended September 30, 2023, net cash used in investing activities was $2.6 million, which included $2.0 million for capital expenditures, primarily related to purchases of computer equipment, and $0.6 million of net consideration paid for the acquisitions of Welch Consulting and bSG.

During the fiscal year-to-date period ended September 30, 2023, net cash used in financing activities was $1.4 million, primarily as a result of net borrowings under the revolving credit facility of $32.0 million.

Offsetting these increases in cash provided by financing activities were repurchases of common stock of $23.6 million, payment of cash dividends of $7.8 million, and tax withholding payments reimbursed by restricted shares on vesting of $2.0 million.

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Certain of our operating leases have terms that impose asset retirement obligations due to office modifications or the periodic redecoration of the premises, which are included in other liabilities on our condensed consolidated balance sheets and are recorded at a value based on their estimated discounted cash flows.

We do not expect to incur asset retirement obligation or redecoration obligation costs over the next twelve months.

At July 1, 2023, the remainder of our asset retirement obligations and redecoration obligations are approximately $2.8 million and are expected to be paid between fiscal year 2026 and fiscal year 2031 when the underlying leases terminate or when the respective lease agreement requires redecoration.

At September 30, 2023, we expect to incur asset retirement obligation or redecoration obligation costs over the next twelve months of $0.1 million.

The remainder of our asset retirement obligations and redecoration obligations are approximately $2.7 million and are expected to be paid between fiscal year 2026 and fiscal year 2031 when the underlying leases terminate or when the respective lease agreement requires redecoration.

We expect to satisfy these lease and related obligations as they become due from cash generated from operations.

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

There was $80.0 million in borrowings outstanding under the revolving credit facility as of July 1, 2023 and no borrowings outstanding as of December 31, 2022.

As of July 1, 2023, the amount available under the revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $4.4 million.

There was $32.0 million in borrowings outstanding under the revolving credit facility as of September 30, 2023 and no borrowings outstanding as of December 31, 2022.

As of September 30, 2023, the amount available under the revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $4.5 million.

We 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.

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

As of September 30, 2023, CRA was in compliance with the covenants of the Credit Agreement.

Forgivable Loans

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At the annual meeting of our shareholders held on July 13, 2023, our shareholders approved amendments to our Amended and Restated 2006 Equity Incentive Plan (as so amended, the “Plan”) which, among other things, (i) increased the maximum number of shares issuable under the Plan by 500,000 shares of our common stock, no par value, (ii) limited the term of any stock appreciation right to ten years, (iii) made other minor revisions to further clarify the terms of the Plan and (iv) included certain amendments to the French Sub-plan which is part of the Plan.

In 2009, the compensation committee of our Board of Directors adopted our long-term incentive program, (the "LTIP"), as a framework for equity grants made under our 2006 equity incentive plan to our senior corporate leaders, practice leaders, and key revenue generators.

In 2009, the compensation committee of our Board of Directors adopted our long-term incentive program, (the "LTIP"), as a framework for equity grants made under our 2006 Equity Plan to our senior corporate leaders, practice leaders, and key revenue generators.

The equity awards granted under the LTIP include stock options, time-vesting restricted stock units, and performance-vesting restricted stock units.

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We may repurchase shares under this program in open market purchases (including through any Rule 10b5-1 plan adopted by us) or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations.

During the fiscal quarter and fiscal year-to-date period ended July 1, 2023, we repurchased and retired 31,090 shares and 211,971 shares, respectively, under our share repurchase program at an average price per share of $96.49 and $111.23, respectively.

During the fiscal quarter and fiscal year-to-date period ended July 2, 2022, we repurchased and retired 211,345 shares and 268,010 shares under our share repurchase program at an average price per share of $83.63 and $84.44, respectively.

As of July 1, 2023, we had approximately $19.3 million available for future repurchases under our share repurchase program.

During the fiscal quarter ended September 30, 2023, we did not repurchase any shares under this share repurchase program.

For the fiscal year-to-date period ended September 30, 2023, we repurchased and retired 211,971 shares under our share repurchase program at an average price per share of $111.23.

During the fiscal quarter and fiscal year-to-date period ended October 1, 2022, we repurchased and retired 51,524 shares and 319,534 shares under our share repurchase program at an average price per share of $97.04 and $86.47, respectively.

As of September 30, 2023, we had approximately $19.3 million available for future repurchases under our share repurchase program.

We plan to finance future repurchases with available cash, cash from future operations, and borrowings available under our revolving credit facility.

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Although we anticipate paying regular quarterly dividends on our common stock for the foreseeable future, the declaration, timing and amounts of any such dividends remain subject to the discretion of our Board of Directors.

During the fiscal quarter and fiscal year-to-date period ended July 1, 2023, we paid dividends and dividend equivalents of $2.5 million and $5.2 million, respectively.

During the fiscal quarter and fiscal year-to-date period ended July 2, 2022, we paid dividends and dividend equivalents of $2.3 million and $4.6 million, respectively.

During the fiscal quarter and fiscal year-to-date period ended September 30, 2023, we paid dividends and dividend equivalents of $2.5 million and $7.8 million, respectively.

During the fiscal quarter and fiscal year-to-date period ended October 1, 2022, we paid dividends and dividend equivalents of $2.2 million and $6.9 million, respectively.

Impact of Inflation

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Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our exposure to market risk during the fiscal quarter ended July 1, 2023.

There have been no material changes in our exposure to market risk during the fiscal quarter ended September 30, 2023.

For information regarding our exposure to certain market risks, see Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk” of our 2022 Form 10-K.

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 2. Management’s Discussion and Analysis