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Item 1. Business

2024-02-29 compared with 2023-03-02 · 54 added, 65 removed, 252 unchanged (32% of the section changed)

Item 1 —Business

Forward-Looking Statements

This annual report contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties.

Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact.

These statements are inherently uncertain, and actual events could differ materially from our predictions.

Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," and similar terms.

Forward-looking statements are not guarantees of future performance and the Company's actual results may differ significantly from the results discussed in the forward-looking statements.

Important factors that could cause actual events to vary from our predictions include those discussed in this annual report under the heading "Risk Factors." We assume no obligation to update our forward-looking statements to reflect new information or developments.

We urge readers to review carefully the risk factors described in this annual report and in the other documents that we file with the Securities and Exchange Commission ("SEC").

You can read these documents at www.sec.gov.

Additional Available Information

Our principal internet address is www.crai.com.

Our website provides a link to a third-party website through which our annual, quarterly, and current reports, and amendments to those reports, are available free of charge.

We believe these reports are made available as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.

We do not maintain or provide any information directly to the third-party website, and we do not check its accuracy.

Our website also includes information about our corporate governance practices.

The Investor Relations page of our website provides a link to a web page where you can obtain a copy of our code of business conduct and ethics applicable to our principal executive officer, principal financial officer, and principal accounting officer.

We intend to make required disclosures of amendments to our code of business conduct and ethics, or waivers of a provision of our code of business conduct and ethics, on the Governance Documents & Reports page linked from the Investor Relations page of our website.

CRA International, Inc.

("CRA", "the Company", "us", "we", or "our") was incorporated as a Massachusetts corporation in 1965.

Unless otherwise indicated or required by the context, when we use the terms "CRA", "the Company," "us," "we," or "our" we mean CRA International, Inc., a Massachusetts corporation, and its consolidated subsidiaries.

Company Overview

We are a leading global consulting firm specializing in providing economic, financial and management consulting services.

We advise clients on economic and financial matters pertaining to litigation and regulatory proceedings, and guide corporations through critical business strategy and performance-related issues.

Since 1965, we have been engaged by clients for our unique combination of functional expertise and industry knowledge, and for our objective solutions to complex problems.

Since our inception in 1965, we have been engaged by clients for our unique combination of functional expertise and industry knowledge, and for our objective solutions to complex problems.

We combine economic and financial analysis with expertise in litigation and regulatory support, business strategy and planning, market and demand forecasting, and policy analysis.

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We provide consulting services to corporate clients and attorneys in a wide range of litigation and regulatory proceedings, providing high-quality research and analysis, expert testimony, and comprehensive support in litigation and regulatory proceedings in all areas of finance, accounting, economics, insurance, and forensic accounting and investigations.

We also use our expertise in economics, finance, and business to offer law firms, businesses, and government agencies services related to class certification, damages analysis, expert reports and testimony, regulatory analysis, antitrust and competition matters, strategy development, forensic accounting, information security and privacy matters, labor and employment disputes, transfer pricing issues, valuation of tangible and intangible assets, intellectual property litigation and damages, risk management, and transaction support.

In our management consulting services, we use our expertise in economics, finance, and business analysis to offer our clients such services as strategy development, performance improvement, corporate strategy and portfolio analysis, estimation of market demand, ESG and sustainability strategy and analysis, design and implementation of auction and competitive bidding, new product pricing strategies, valuation of intellectual property and other assets, assessment of competitors' actions, and analysis of new sources of supply.

Our analytical expertise in advanced economic and financial methods is complemented by our in-depth expertise in specific industries, including communications and media;

We also use our expertise in economics, finance, and business to offer law firms, businesses, and government agencies services related to class certification, damages analysis, expert reports and testimony, regulatory analysis, antitrust and competition matters, strategy development, forensic accounting, cybersecurity, information security and privacy matters, labor and employment disputes, transfer pricing issues, valuation of tangible and intangible assets, intellectual property litigation and damages, risk management, and transaction support.

In our management consulting services, we use our expertise in economics, finance, and business analysis to offer our clients such services as strategy development, performance improvement, corporate strategy and portfolio analysis, estimation of market demand, environmental, social and corporate governance ("ESG") and sustainability strategy and analysis, design and implementation of auction and competitive bidding, new product

pricing strategies, survey and market research, valuation of intellectual property and other assets, assessment of competitors' actions, and analysis of new sources of supply.

Our analytical expertise in advanced economic and financial methods is complemented by our in-depth expertise in specific industries, including blockchain and cryptocurrency;

communications and media;

consumer products, health, and wellness;

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Industry Overview

Businesses are operating in an increasingly complex economic, legal, and regulatory environment that create both challenges and opportunities.

Companies across industry sectors are seeking new strategies appropriate for the current economic environment, as well as greater operational efficiencies.

To accomplish these objectives, they gather, analyze, and use information wisely to assure that business decisions are well-informed.

Businesses operate in a complex economic, legal, and regulatory environment that creates challenges and opportunities.

Companies across industry sectors are seeking strategies appropriate for the economic environment, as well as greater operational efficiencies.

To accomplish these objectives, they gather, analyze, and use information to ensure that business decisions are well-informed.

In addition, as markets have become global, companies have the opportunity to expand their presence throughout the world, which can expose them to increased competition and the uncertainties of foreign operations.

Further, companies are increasingly relying on technological and business innovations to improve efficiency, thus increasing the importance of strategically analyzing their businesses and developing and protecting new technology.

The increasing complexity and changing nature of the business environment are also forcing governments to modify their regulatory strategies.

These constant changes in the regulatory environment and the evolving regulatory posture in the U.S.

have led to frequent litigation and interaction with government agencies, as our clients attempt to interpret and react to the implications of this changing environment.

Furthermore, as the general business and regulatory environment becomes more complex, corporate litigation has also become more complicated, protracted, expensive, and important to the parties involved.

As a result, companies rely on sophisticated economic and financial analysis to solve complex problems and improve decision-making.

Economic and financial models provide the tools necessary to analyze a variety of issues confronting businesses, such as interpretation of sales data, effects of price changes, valuation of assets, assessment of competitors' activities, evaluation of new products, and analysis of supply limitations.

Governments also rely on economic and finance theory to measure the effects of anticompetitive activity, evaluate mergers and acquisitions, change regulations, implement auctions to allocate resources, and establish transfer pricing rules.

Further, companies rely on technological and business innovations to improve efficiency, thus increasing the importance of strategically analyzing their businesses and developing and protecting new technology.

The increasing complexity and changing nature of the business environment prompt governments to modify their regulatory strategies.

These changes in the regulatory environment and the evolving regulatory posture have led to frequent litigation and interaction with government agencies.

Furthermore, as the general business and regulatory environment becomes more complex, private litigation has also become more complicated, protracted, expensive, and important to the parties involved.

As a result, companies rely on sophisticated economic and financial analyses to solve complex problems and improve decision-making.

Economic and financial models provide the tools necessary to analyze a variety of issues confronting businesses, such as the interpretation of sales data, effects of price changes, valuation of assets, assessment of competitors' activities, evaluation of new products, and analysis of supply limitations.

Governments also rely on economic and finance theory to measure the effects of potentially anticompetitive activity, evaluate mergers and acquisitions, change regulations, implement auctions to allocate resources, and establish transfer pricing rules.

Finally, litigants and law firms are using economic and finance theory to help determine liability and to calculate damages in complex and high-stakes litigation.

At times, companies and their counsel may require eDiscovery strategies for data preservation, collection, analysis, reporting, and delivery.

As the need for complex economic and financial analysis becomes more widespread, companies and governments are turning to outside consulting firms, such as ours, for access to the independent and specialized expertise, experience, and prestige that are not available to them internally.

In addition, companies' strategic, organizational, and operational problems have become more acute as a result of the economic environment, and companies are relying on management consultants for help in analyzing, addressing, and solving strategic business problems and performance-related issues involving market supply and demand dynamics, supply chain and sourcing, pricing, capital allocation, technology management, portfolio positioning, risk management, merger integration, and improving shareholder value.

As the need for complex economic and financial analysis becomes more widespread, companies and governments are turning to outside consulting firms, such as ours, for access to the independent and specialized expertise and experience that are not available to them internally.

In addition, companies are relying on management consultants for help analyzing, addressing, and solving strategic business problems involving market supply and demand dynamics, supply chains and sourcing, pricing, capital allocation, technology management, portfolio positioning, risk management, merger integration, and improving shareholder value.

Competitive Strengths

Since 1965, we have been committed to providing sophisticated consulting services to our clients.

We are committed to providing sophisticated consulting services to our clients.

We believe that the following factors have been critical to our success.

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High Level of Repeat Business.

Since 1965, we have been a leader in providing sophisticated economic analysis and original, authoritative advice to clients involved in complex litigation and regulatory proceedings, and we also provide management consulting services to companies facing strategic, organizational, and operational challenges.

Since our inception in 1965, we have been a leader in providing sophisticated economic analysis and original, authoritative advice to clients involved in complex litigation and regulatory proceedings, and we also provide management consulting services to companies facing strategic, organizational, and operational challenges.

As a result, we believe we have established a strong reputation among leading law firms and business clients as a preferred source of expertise in economics, finance, business, and management consulting, as evidenced by our high level of repeat business.

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We believe our most important asset is our base of employee consultants, particularly our senior employee consultants.

As of December 31, 2022, we employed 939 consultants, which consisted of 149 officers, 496 other senior staff and 294 junior staff.

As of December 30, 2023, we employed 1,004 consultants,

which consisted of 156 officers, 527 other senior staff and 321 junior staff.

Approximately 75% of our senior staff have advanced degrees, with 41% of the advanced degrees being doctorate degrees.

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We have completed thousands of engagements for clients in a broad range of industries around the world.

Our clients are major firms, and national and international law firms representing such clients, across a multitude of industries that include communications and media;

Our clients are major firms, and national and international law firms representing such clients, across a multitude of industries that include:

blockchain and cryptocurrency;

communications and media;

consumer products, health, and wellness;

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Depending on client needs, we use non-employee experts for their specialized expertise, assistance in conceptual problem-solving, and expert witness testimony.

We work regularly with renowned professors at such institutions as the University of Chicago, the University of California at Berkeley, Yale University, Georgetown University, Boston University, Harvard University, Texas

A&M University, Brigham Young University, University of Texas-Austin, the University of Wisconsin-Madison and other leading universities.

We work regularly with renowned professors at such institutions as the University of Chicago, Georgetown University, Texas A&M University, Yale University, Duke University, Brigham Young University, Northwestern University, the University of California at Berkeley, Boston University, the University of Toronto, and other leading universities.

These experts also generate business for us and provide us access to other leading academic and industry experts.

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Litigation, Regulatory, and Financial Consulting

In our litigation, regulatory, and financial consulting practices, we typically work closely with law firms on behalf of one or more companies involved in litigation or regulatory proceedings in such areas as antitrust, damages, and labor and employment.

Many of the lawsuits and regulatory proceedings in which we are involved are critical assignments with high-stakes outcomes, such as obtaining regulatory approval of a pending merger or analyzing possible damages awards in a class action case.

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Areas of Functional Expertise Description of Area of Service

Antitrust & Competition Antitrust litigation, including economic analysis of the competitive effects of alleged collusion and cartels, monopolization, abuse of dominance, monopsony, and vertical restrictions.

Antitrust Litigation Antitrust litigation, including economic analysis of the competitive effects of alleged collusion and cartels, monopolization, abuse of dominance, monopsony, and vertical restrictions.

Damages & Valuation Disputes involving lost profits, breach of contract, purchase price, valuation, business interruption, product liability, and fraud, among other damages claims.

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and other independent professional services that help clients preserve their reputation and support their commitment to integrity.

Areas of Functional Expertise Description of Area of Service

Insurance Economics Matters pertaining to advising insurers, regulators, and legislators with respect to management, insurance products, and litigation and regulation.

Areas of Functional Expertise Description of Area of Service

Intellectual Property Matters pertaining to all types of intellectual property assets including valuation, litigation, transaction and strategic advisory services, patents, trade secrets, copyrights, and trademarks as well as economic damages in intellectual property litigation, valuations of intellectual property assets for strategic and regulatory purposes, and transactional advisory services for licensing and other intellectual property-rich transactions.

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Federal Trade Commission, the U.S.

Department of Justice, the Merger Task Force at the European Commission, and the Canadian Competition Bureau.

Department of Justice, the U.K.

Competition and Markets Authority, the Merger Task Force at the European Commission, and the Canadian Competition Bureau.

Analyses include simulating the effects of mergers on prices, estimating demand elasticities, designing and administering customer and consumer surveys, and studying possible acquisition-related synergies.

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While we provide services to clients in a wide variety of industries, we have particular expertise in the following industries:

• Blockchain and Cryptocurrency

• Communications & Media

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Our clients come from a broad range of industries, with no single client accounting for more than 5% of our revenues in any of fiscal 2023, fiscal 2022, or fiscal 2021.

We derived approximately 19% of consolidated revenues from fixed-price contracts in fiscal 2022, and approximately 24% of consolidated revenues from fixed-price contracts in each of fiscal 2021, and fiscal 2020.

We derived approximately 18%, 19%, and 24% of consolidated revenues from fixed-price contracts in fiscal 2023, fiscal 2022, and fiscal 2021, respectively.

These contracts are more common in our management consulting practices, and would likely grow in number with expansion of those practices.

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We derive most of our revenues directly from the services provided by our employee consultants.

Our employee consultants have backgrounds in many disciplines, including economics, business, corporate finance, accounting, materials sciences, life sciences, computer science, and engineering.

Our employee consultants have backgrounds in many disciplines, including economics, life sciences, engineering, computer science, business, corporate finance, accounting, and mathematics.

We are highly selective in our hiring of consultants, recruiting primarily from a select group of leading universities and degree programs, industry, and government.

We foster a culture where different ideas and perspectives are both welcomed and encouraged, and we strive to retain and promote diverse and dynamic talent.

Our recruitment process evaluates an individual's experience, skills, and potential for growth, and is tailored to meet both the needs of the role and the interests of the candidate.

We have trained our interviewing professionals on practices associated with inclusive interviewing, including how to minimize unconscious bias.

Our recruitment process evaluates an individual's experience, skills, and potential for growth, and we annually meet with our interviewers to discuss effective interviewing strategies including how to evaluate candidates, how to conduct fair and unbiased interviews, and how to answer candidate questions.

We believe consultants choose to work for us because of our emphasis on accurate, rigorous analytics and high quality work;

our culture that values intellectual curiosity, initiative, and resourcefulness;

and our collegial, inclusive, and multi-disciplinary approach to complex client needs.

Our training and career development programs for our employee consultants focus on providing multi-dimensional technical, foundational, and consulting skills.

This framework is designed to complement on-the-job experience and an employee's pursuit of his or her own career development.

a culture that values intellectual curiosity, initiative, and resourcefulness;

and a collegial, inclusive, and multi-disciplinary approach to complex client needs.

Our training and career development framework and programs are designed to complement on-the-job experience and an employee's pursuit of his or her own career development.

Employee consultants participate in structured programs focused on managing teams, technical and empirical knowledge, and building client relationships.

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Additionally, we encourage our employee consultants to pursue their academic interests through self-directed training modules, our on-demand library of software webinars, and external professional development and continuing education opportunities.

Many of our employee consultants have signed non-solicitation agreements, which generally prohibit the employee from soliciting our clients or soliciting or hiring our employees for one year or longer following termination of the person's employment with us.

We seek to align each employee's interest with our overall interests, and many of our strongest contributors have an equity interest in us.

We compensate our senior corporate leaders, practice leaders, key revenue generators, and other employees with salary and a mixture of incentive-based programs that provide for cash and equity compensation.

We maintain a bonus program through which we pay annual, performance-based cash bonuses to our employee consultants and certain other employees.

In 2009, the compensation committee of our Board of Directors adopted our long-term incentive program, or "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.

We seek to reward both strong performance and those who demonstrate growth in their careers at CRA.

Accordingly, we compensate our senior corporate leaders, practice leaders, key revenue generators, and other employees with salary and a

mixture of incentive-based programs that provide for cash and equity compensation.

We maintain a discretionary bonus program through which we pay annual, performance-based cash bonuses to our employee consultants and certain other employees.

Our long-term incentive program, or "LTIP," is used as a framework for equity grants made under our 2006 equity incentive 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.

In December 2016, our compensation committee modified the LTIP to allow grants of service- and performance-based cash awards in lieu of, or in addition to, equity awards to our senior corporate leaders, practice leaders, and key revenue generators.

These LTIP cash awards are currently granted under our cash incentive plan.

The LTIP is designed to reward our senior corporate leaders, practice leaders and key revenue generators and to provide them with the opportunity to share in the long-term growth of our business.

Our LTIP allows us to grant service- and performance-based cash awards in lieu of, or in addition to, equity awards to our senior corporate leaders, practice leaders, and key revenue generators.

These LTIP cash awards are currently granted under our cash incentive plan and reward our senior corporate leaders, practice leaders and key revenue generators with the opportunity to share in the long-term growth of our business.

The compensation committee of our Board of Directors is responsible for approving all cash and equity awards under the LTIP, all other equity compensation awards, and the total bonuses to be distributed under our bonus program, and for establishing performance goals under compensation awards and determining the extent to which these goals are achieved.

Our chief executive officer, in his discretion and in consultation with the compensation committee of our Board of Directors, approves the bonuses to be granted to our employees.

To protect our intellectual property and the investment in our client and employee relationships, many of our employee consultants sign confidentiality agreements and non-solicitation agreements.

These agreements generally prohibit the employee from soliciting our clients or soliciting or hiring our employees for one year or longer following termination of the person's employment with us.

In addition, we work closely with a select group of non-employee experts from leading universities and industry.

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We regularly organize seminars for existing and potential clients featuring panel members that include our employee consultants, non-employee experts, and leading government officials.

We have an extensive set of brochures and infographics organized around our service areas, which describe our experience and capabilities.

We have an extensive set of brochures, videos, and infographics organized around our service areas, which describe our experience and capabilities.

Our corporate website is another means of marketing our consultants and capabilities as it houses information about our business development activities, engagements, and biographies of our employee consultants and academic affiliates.

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We believe the principal competitive factors in this market are reputation, industry expertise, analytical ability, service, and price.

Additional Available Information

Our principal internet address is www.crai.com.

Our website provides a link to a third-party website through which our annual, quarterly, and current reports, and amendments to those reports, are available free of charge.

We do not maintain or provide any information directly to the third-party website, and we do not check its accuracy.

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 1. Business