What changed in this filing

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Item 1. Financial Statements

2024-05-02 compared with 2023-11-02 · 107 added, 229 removed, 291 unchanged (54% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

Fiscal Quarter Ended Fiscal Year-to-Date

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Fiscal Quarter Ended

2024 April 1,

Revenues $ 171,789 $ 152,845

4 unchanged sentences

Interest expense, net ( 464 ) ( 571 )

Foreign currency gains (losses), net 755 1,667 ( 459 ) 3,566

Foreign currency losses, net ( 142 ) ( 528 )

Income before provision for income taxes 19,012 12,594

11 unchanged sentences

(in thousands)

Fiscal Quarter Ended Fiscal Year-to-Date

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Fiscal Quarter Ended

2024 April 1,

Net income $ 13,691 $ 8,918

6 unchanged sentences

(in thousands, except share data)

September 30,

2024 December 30,

46 unchanged sentences

(in thousands)

Fiscal Year-to-Date Period Ended

September 30,

2023 October 1,

Fiscal Quarter Ended

2024 April 1,

OPERATING ACTIVITIES:

Net income $ 13,691 $ 8,918

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

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization 2,792 2,943

9 unchanged sentences

Forgivable loans 523 ( 9,982 )

Incentive cash awards 6,110 4,863

Incentive cash awards payable 2,383 1,929

Accounts payable, accrued expenses, and other liabilities ( 69,302 ) ( 73,233 )

6 unchanged sentences

FINANCING ACTIVITIES:

Issuance of common stock, principally stock option exercises — 760

Borrowings under revolving line of credit 70,000 105,000

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

Payments for debt issuance costs — ( 1,008 )

Tax withholding payments reimbursed by shares ( 1,631 ) ( 1,873 )

1 unchanged sentence

Repurchase of common stock ( 9,242 ) ( 20,577 )

Net cash provided by (used in) financing activities ( 1,390 ) 9,260

Net cash provided by financing activities 56,052 74,848

Effect of foreign exchange rates on cash and cash equivalents ( 706 ) 407

Net decrease in cash and cash equivalents ( 3,843 ) ( 42,037 )

Net increase (decrease) in cash and cash equivalents ( 8,464 ) 4,072

Cash and cash equivalents at beginning of period 45,586 31,447

1 unchanged sentence

Noncash investing and financing activities:

Increase (decrease) in accounts payable and accrued expenses for property and equipment $ ( 129 ) $ ( 201 )

Increase in accounts payable and accrued expenses for property and equipment $ 454 $ 23

Excise tax on share repurchases $ ( 65 ) $ ( 173 )

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED SEPTEMBER 30, 2023 (unaudited)

FOR THE FISCAL QUARTER ENDED MARCH 30, 2024 (unaudited)

(in thousands, except share data)

7 unchanged sentences

Foreign currency translation adjustment — — — ( 1,105 ) ( 1,105 )

Exercise of stock options — — — — —

Share-based compensation expense — 940 — — 940

Restricted shares vesting 45,544 — — — —

Redemption of vested employee restricted shares for tax withholding ( 16,614 ) ( 1,873 ) — — ( 1,873 )

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

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

Accrued dividends on unvested shares — — 45 — 45

Cash dividends paid ($ 0.36 per share)

— — ( 2,702 ) — ( 2,702 )

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

Net income — — 9,508 — 9,508

Foreign currency translation adjustment — — — 1,074 1,074

Exercise of stock options — — — — —

Share-based compensation expense — 1,158 — — 1,158

Restricted shares vesting 3,630 — — — —

Redemption of vested employee restricted shares for tax withholding ( 1,237 ) ( 136 ) — — ( 136 )

Shares repurchased ( 31,090 ) ( 554 ) ( 2,446 ) — ( 3,000 )

Accrued excise tax on shares repurchased — — ( 27 ) — ( 27 )

Accrued dividends on unvested shares — — ( 47 ) — ( 47 )

Cash dividends paid ($ 0.36 per share)

— — ( 2,528 ) — ( 2,528 )

BALANCE AT JULY 1, 2023 6,969,236 $ 468 $ 215,173 $ ( 12,855 ) $ 202,786

Net income — — 8,596 — 8,596

Foreign currency translation adjustment — — — ( 1,755 ) ( 1,755 )

Issuance of common stock — — — — —

8 unchanged sentences

— — ( 3,075 ) — ( 3,075 )

BALANCE AT SEPTEMBER 30, 2023 6,978,941 $ 1,363 $ 221,205 $ ( 14,610 ) $ 207,958

BALANCE AT MARCH 30, 2024 6,889,298 $ — $ 225,077 $ ( 13,287 ) $ 211,790

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 1, 2022 (unaudited)

FOR THE FISCAL 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

Foreign currency translation adjustment — — — 1,052 1,052

Exercise of stock options 14,552 341 — — 341

Share-based compensation expense — 940 — — 940

2 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.

4 unchanged sentences

CRA International, Inc.

(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” 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, which require consolidation after the elimination of intercompany accounts and transactions.

and its wholly-owned subsidiaries (collectively the "Company") 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.

Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q.

Accordingly, these financial statements do not include all the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements.

In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair presentation of CRA’s results of operations, financial position, cash flows, and shareholders’ equity for the interim periods presented in conformity with GAAP.

Accordingly, these financial statements do not include all the information and note disclosures required by accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for annual financial statements.

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.

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 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 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 financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 30, 2023 included in CRA’s Annual Report on Form 10-K filed with the SEC on February 29, 2024 (the “2023 Form 10-K”).

The preparation of financial statements in conformity with U.S.

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 assets and liabilities, share-based compensation, valuation of contingent consideration liabilities, 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.

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 Acquisitions

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

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

Welch Consulting provided economic, business, and strategic consulting services principally involving labor and employment issues.

The acquisition expanded CRA’s business opportunities, expertise, and market presence with the addition of 45 colleagues and offices in Bryan, Texas;

Los Angeles, California;

and Washington, D.C.

A non-employee expert of CRA served as an agent and attorney-in-fact on behalf of Welch Consulting.

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.

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

In addition, contract assets and contract liabilities were recorded in accordance with ASC 606, as CRA adopted ASU 2021-08 on the first day of fiscal 2022.

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

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

Current assets:

Accounts receivable $ 3,742

Unbilled services 1,382

Prepaid expenses and other current assets 100

Total current assets 5,224

Property and equipment 141

Goodwill 2,409

Intangible assets 4,150

Right-of-use assets 1,210

Other assets 41

Total assets acquired $ 13,175

Liabilities Assumed

Current liabilities:

Accrued expenses $ 1,245

Deferred revenue and other liabilities 161

Current portion of lease liabilities 549

Total current liabilities 1,955

Non-current portion of lease liabilities 661

Total liabilities assumed $ 2,616

Net assets acquired $ 10,559

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

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 over the term of the loan.

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.

Recent Accounting Standards Not Yet Adopted

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued Accounting Standards Update ("ASU") No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07) .

The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 also requires that a public entity that has a single reportable segment provide all disclosures required by these amendments and all existing segment disclosures in Topic 280.

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 expanded 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 the Company's overall results presented in its condensed consolidated financial statements.

ASU 2023-07 is effective for CRA for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

CRA plans to adopt the amendments during the fourth fiscal quarter of 2024.

CRA is in the process of evaluating the impact of adopting ASU 2023-07.

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

In December 2023, the FASB issued Accounting Standards Update ("ASU") No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09) .

The ASU requires disclosure of specific categories in the rate reconciliation, provides additional information for reconciling items that meet a quantitative threshold, and discloses the amount of income taxes paid disaggregated by federal, state, foreign taxes, and individual jurisdiction.

ASU 2023-09 also requires income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.

ASU 2023-09 is effective for CRA for annual periods beginning after December 15, 2024.

CRA plans to adopt the amendments during the annual reporting fiscal year of 2025.

CRA is in the process of evaluating the impact of adopting ASU 2023-09.

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 costs of services, exclusive of depreciation and amortization, 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 September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Fiscal Quarter Ended

Type of Contract March 30,

2024 April 1,

Consulting services revenues:

2 unchanged sentences

Total $ 171,789 $ 152,845

Fiscal Quarter Ended Fiscal Year-to-Date

Geographic Breakdown September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Revenues have been attributed to locations based on the location of the legal entity generating the revenues.

Fiscal Quarter Ended

Geographic Breakdown March 30,

2024 April 1,

Consulting services revenues:

3 unchanged sentences

Total $ 171,789 $ 152,845

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Reserves for Variable Consideration and Credit Risk

3 unchanged sentences

Adjustments to the reserves for variable consideration are included in revenues on the condensed consolidated statements of operations.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

CRA also maintains allowances for accounts receivable and unbilled services for estimated losses resulting from clients’ failure to make required payments.

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

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Fiscal Quarter Ended

2024 April 1,

Bad debt expense (recovery), net $ 663 $ —

3 unchanged sentences

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

Fiscal Quarter Ended Fiscal Year-to-Date

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Fiscal Quarter Ended

2024 April 1,

Reimbursable expenses $ 17,061 $ 13,981

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 September 30, 2023 and December 31, 2022.

The contract assets balance was immaterial as of March 30, 2024 and December 30, 2023.

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):

September 30,

2024 December 30,

Contract liabilities $ 2,683 $ 6,037

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Fiscal Quarter Ended

2024 April 1,

Amounts included in contract liabilities at the beginning of the period $ 4,703 $ 5,139

Performance obligations satisfied in previous periods $ 2,847 $ 2,638

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Forgivable Loans

1 unchanged sentence

A portion of these loans is collateralized.

The forgivable loans have terms that are generally between two and six years with interest rates currently ranging up to 6.00 %.

The principal amount of forgivable loans and accrued interest is forgiven by CRA over the term of the loans, so long as the employee or non-employee expert continues employment or affiliation with CRA and complies with certain contractual requirements.

The expense associated with the forgiveness of the principal amount of the loans is recorded as compensation expense over the service period, which is consistent with the term of the loans.

The forgiveness of the principal amount of the loans is recorded as compensation over the service period, which is consistent with the term of the loans.

The following table presents forgivable loan activity for the respective periods (in thousands):

Fiscal Year-to-Date Period Ended Fiscal Year Ended

September 30,

2024 December 30,

2 unchanged sentences

Repayments — ( 1,816 )

Reclassifications from accrued expenses or to other assets (1) ( 1,200 ) ( 2,192 )

Amortization ( 5,772 ) ( 24,198 )

3 unchanged sentences

Non-current portion of forgivable loans $ 38,675 $ 45,182

_______________________________

(1) Relates to the reclassification of performance awards previously recorded as accrued expenses or forgivable loans that have been reclassified to other receivables.

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the fiscal year-to-date period ended September 30, 2023 are summarized as follows (in thousands):

The changes in the carrying amount of goodwill for the fiscal quarter ended March 30, 2024 are summarized as follows (in thousands):

Goodwill, at December 30, 2023 $ 165,882

3 unchanged sentences

Foreign currency translation adjustment ( 136 )

Goodwill, net at September 30, 2023 $ 93,467

Goodwill at September 30, 2023, is comprised of goodwill of $ 165.4 million and accumulated impairment of $ 71.9 million.

There were no impairment losses related to goodwill during the fiscal year-to-date period ended September 30, 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):

Goodwill, net at March 30, 2024 $ 93,853

Goodwill, net at March 30, 2024, is comprised of goodwill of $ 165.7 million and accumulated impairment of $ 71.9 million.

There were no impairment losses related to goodwill during the fiscal quarter ended March 30, 2024 or during the fiscal year ended December 30, 2023.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

September 30, 2023 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):

March 30, 2024 December 30, 2023

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

1 unchanged sentence

$ 13,800 $ ( 6,949 ) $ 6,851 $ 13,800 $ ( 6,604 ) $ 7,196

There were no impairment losses related to intangible assets during the fiscal year-to-date period ended September 30, 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 quarter of fiscal 2022.

Amortization expense related to intangible assets was $ 0.3 million and $ 1.0 million for the fiscal quarter and fiscal year-to-date period ended September 30, 2023, respectively, and $ 0.3 million and $ 0.9 million for the fiscal quarter and fiscal year-to-date period ended October 1, 2022, respectively.

There were no impairment losses related to intangible assets during the fiscal quarter ended March 30, 2024 or during the fiscal year ended December 30, 2023.

Amortization expense related to intangible assets was $ 0.3 million and $ 0.4 million for the fiscal quarters ended March 30, 2024 and April 1, 2023, respectively.

Accrued Expenses

Accrued expenses consist of the following (in thousands):

September 30,

2024 December 30,

4 unchanged sentences

Total accrued expenses $ 106,008 $ 171,040

As of September 30, 2023 and December 31, 2022, approximately $ 86.7 million and $ 116.1 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

For the fiscal quarters ended September 30, 2023 and October 1, 2022, CRA’s effective income tax rate (“ETR”) was 18.3 % and 25.3 %, respectively.

The ETR for the third quarter of fiscal 2023 was lower than the third quarter of fiscal 2022 primarily due to the release of a valuation allowance in a foreign jurisdiction coupled with the revaluation of the deferred tax asset, 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 change in the total valuation allowance for the current fiscal quarter was a decrease of approximately $ 0.7 million compared to the same fiscal quarter of the prior year.

The $ 0.7 million decrease is comprised primarily of foreign net operating loss carryforwards that have an indefinite life and are forecasted to be utilized over approximately a forty-year period.

The change in assessment was prompted by the enactment of new legislation in the foreign jurisdiction, and as a result, the foreign entity will be profitable in the current and future years.

For the fiscal year-to-date periods ended September 30, 2023 and October 1, 2022, CRA's ETR was 26.4 % and 26.7 %, respectively.

The ETR for the current fiscal year-to-date period was slightly lower than the prior year-to-date period primarily due to the same items noted above.

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.

earnings were no longer considered permanently reinvested.

Deferred taxes that are a consequence of foreign exchange translation resulting from earnings that are no longer considered permanently reinvested are recorded as a

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

component of foreign currency translation adjustments on the condensed consolidated statements of comprehensive income.

During the fiscal quarter ended September 30, 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.

On August 16, 2022, the U.S.

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

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

For the fiscal quarter ended September 30, 2023, net share repurchases were immaterial.

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.

As of March 30, 2024 and December 30, 2023, approximately $ 56.6 million and $ 121.2 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

For the fiscal quarters ended March 30, 2024 and April 1, 2023, CRA’s effective income tax rate (“ETR”) was 28.0 % and 29.2 %, respectively.

The ETR for the first quarter of fiscal 2024 was lower than the first quarter of fiscal 2023 primarily due to changes in state statutory tax rates in the current year, having had a valuation allowance in the prior year that has now been reversed, as well as the impact of a higher profit in the current period.

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 and fiscal year-to-date periods ended September 30, 2023 and October 1, 2022.

The two-class method was more dilutive for the fiscal quarters ended March 30, 2024 and April 1, 2023.

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 and fiscal year-to-date periods ended September 30, 2023 and October 1, 2022.

Net earnings allocable to these participating securities were not material for the fiscal quarters ended March 30, 2024 and April 1, 2023.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Fiscal Quarter Ended

2024 April 1,

Net income — basic $ 13,691 $ 8,918

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Diluted $ 1.95 $ 1.23

For the fiscal quarter and fiscal year-to-date period ended September 30, 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 6,185 and 5,875 shares, respectively.

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.

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the fiscal quarter ended March 30, 2024, there were no anti-dilutive share-based awards that were excluded from the calculation of common stock equivalents for purposes of computing diluted weighted average outstanding shares.

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.

Fair Value of Financial Instruments

The following tables show CRA's financial instruments recorded in the condensed consolidated financial statements which are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

September 30, 2023

March 30, 2024

Level 1 Level 2 Level 3

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Total Liabilities $ — $ — $ 190

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 30, 2023

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Total Liabilities $ — $ — $ 190

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

The contingent consideration liability pertains to estimated future contingent consideration payments related to the acquisition of bioStrategies Group, Inc.

during fiscal 2022.

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

Fiscal Year-to-Date

Period Ended Fiscal Year Ended

September 30, 2023 December 31, 2022

Fiscal Quarter Ended Fiscal Year Ended

March 30, 2024 December 30, 2023

Beginning balance $ 190 $ 1,056

Acquisition-related contingent consideration — 1,056

Remeasurement of acquisition-related contingent consideration — ( 934 )

Accretion — 68

2 unchanged sentences

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.

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

The 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 16 in a year through January 15 in the next year.

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

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

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

There were $ 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.

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

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

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 March 30, 2024, CRA was in compliance with the covenants of the Credit Agreement.

There were $ 70.0 million in borrowings outstanding under the revolving credit facility as of March 30, 2024 and no borrowings outstanding as of December 30, 2023.

As of March 30, 2024, the amount available under the revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 4.5 million.

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.

3 unchanged sentences

Subsequent Events

On November 2, 2023, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.42 per common share, payable on December 8, 2023 to shareholders of record as of November 28, 2023.

On May 2, 2024, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.42 per common share, payable on June 14, 2024 to shareholders of record as of May 28, 2024.

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