CRA INTERNATIONAL, INC. 10-Q

ITEM 1. Financial Statements CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ Fiscal Quarter Ended ​ Period Ended ​ ​ June 27, ​ June 29, ​ June 27, ​ June 29, ​ 2020 2019 2020 2019 Revenues ​ $ 123,031 ​ $ 110,573 ​ $ 249,189 ​ $ 216,422 Costs of services (exclusive of depreciation and amortization) ​ 90,168 ​ 75,972 ​ 181,165 ​ 149,607 Selling, general and administrative expenses ​ 21,418 ​ 23,737 ​ 45,541 ​ 46,480 Depreciation and amortization ​ 3,106 ​ 2,553 ​ 6,049 ​ 5,169 Income from operations ​ 8,339 ​ 8,311 ​ 16,434 ​ 15,166 Interest expense, net ​ ​ ( 372 ) ​ ​ ( 519 ) ​ ​ ( 734 ) ​ ​ ( 530 ) Foreign currency gains (losses), net ​ ( 102 ) ​ 155 ​ 1,320 ​ ( 589 ) Income before provision for income taxes ​ 7,865 ​ 7,947 ​ 17,020 ​ 14,047 Provision for income taxes ​ 1,934 ​ 2,367 ​ 4,621 ​ 3,802 Net income ​ $ 5,931 ​ $ 5,580 ​ $ 12,399 ​ $ 10,245 Net income per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.76 ​ $ 0.70 ​ $ 1.59 ​ $ 1.28 Diluted ​ $ 0.75 ​ $ 0.68 ​ $ 1.55 ​ $ 1.23 Weighted average number of shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 7,764 ​ 7,925 ​ 7,784 ​ 7,970 Diluted ​ 7,920 ​ 8,218 ​ 7,979 ​ 8,282 ​ See accompanying notes to the condensed consolidated financial statements. ​ 3 Table of Contents CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ Fiscal Quarter Ended ​ Period Ended ​ ​ June 27, ​ June 29, ​ June 27, ​ June 29, ​ 2020 2019 ​ 2020 2019 Net income ​ $ 5,931 ​ $ 5,580 ​ $ 12,399 ​ $ 10,245 Other comprehensive income (loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ 536 ​ ( 653 ) ​ ( 1,891 ) ​ 59 Comprehensive income ​ $ 6,467 ​ $ 4,927 ​ $ 10,508 ​ $ 10,304 ​ See accompanying notes to the condensed consolidated financial statements. ​ 4 Table of Contents CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ June 27, December 28, ​ 2020 2019 ASSETS ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 18,807 ​ $ 25,639 Accounts receivable, net of allowances of $ 3,691 at June 27, 2020 and $ 3,838 at December 28, 2019 ​ 101,872 ​ 107,841 Unbilled services, net of allowances of $ 947 at June 27, 2020 and $ 1,503 at December 28, 2019 ​ 50,159 ​ 36,569 Prepaid expenses and other current assets ​ 9,739 ​ 7,277 Forgivable loans ​ ​ 9,380 ​ ​ 6,751 Total current assets ​ 189,957 ​ 184,077 Property and equipment, net ​ 65,402 ​ 61,295 Goodwill ​ 87,914 ​ 88,504 Intangible assets, net ​ 5,790 ​ 6,476 Right-of-use assets ​ ​ 122,983 ​ ​ 130,173 Deferred income taxes ​ 11,508 ​ 10,670 Forgivable loans, net of current portion ​ ​ 61,121 ​ ​ 48,390 Other assets ​ 3,914 ​ 3,658 Total assets ​ $ 548,589 ​ $ 533,243 LIABILITIES AND SHAREHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 20,894 ​ $ 26,069 Accrued expenses ​ 82,199 ​ 121,301 Deferred revenue and other liabilities ​ ​ 7,040 ​ ​ 6,723 Current portion of lease liabilities ​ 13,208 ​ 12,847 Current portion of deferred compensation ​ ​ 15,183 ​ ​ 4,470 Revolving line of credit ​ ​ 59,000 ​ ​ — Total current liabilities ​ 197,524 ​ 171,410 Non-current liabilities: ​ ​ ​ ​ ​ ​ Deferred compensation and other non-current liabilities ​ 4,957 ​ 15,071 Facility-related non-current liabilities ​ 1,887 ​ 1,956 Non-current portion of lease liabilities ​ ​ 141,528 ​ ​ 146,551 Deferred income taxes ​ ​ 478 ​ ​ 504 Total non-current liabilities ​ ​ 148,850 ​ ​ 164,082 Commitments and contingencies (Note 10) ​ ​ ​ ​ ​ ​ Shareholders’ equity: ​ ​ ​ ​ ​ ​ Preferred stock, no par value; 1,000,000 shares authorized; none issued and outstanding ​ — ​ — Common stock, no par value; 25,000,000 shares authorized; 7,779,549 and 7,814,797 shares issued and outstanding at June 27, 2020 and December 28, 2019, respectively ​ 7,085 ​ 9,265 Retained earnings ​ 208,784 ​ 200,249 Accumulated other comprehensive loss ​ ( 13,654 ) ​ ( 11,763 ) Total shareholders’ equity ​ 202,215 ​ 197,751 Total liabilities and shareholders’ equity ​ $ 548,589 ​ $ 533,243 ​ See accompanying notes to the condensed consolidated financial statements. ​ 5 Table of Contents CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ Period Ended ​ ​ June 27, ​ June 29, ​ 2020 2019 OPERATING ACTIVITIES: ​ ​ ​ ​ ​ ​ Net income ​ $ 12,399 ​ $ 10,245 Adjustments to reconcile net income to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 6,049 ​ 5,169 Facility-related liabilities ​ ​ ( 168 ) ​ ​ 50 Right-of-use asset amortization ​ ​ 5,894 ​ ​ 4,848 Deferred income taxes ​ ( 842 ) ​ 45 Share-based compensation expenses ​ 1,451 ​ 1,759 Accounts receivable allowances ​ ( 311 ) ​ ( 260 ) Unrealized foreign currency remeasurement losses, net ​ ​ 34 ​ ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ ​ 5,000 ​ ​ 7,177 Unbilled services, net ​ ( 13,962 ) ​ ( 8,245 ) Prepaid expenses and other current assets, and other assets ​ ( 2,766 ) ​ ( 4,506 ) Forgivable loans ​ ( 25,499 ) ​ ( 14,363 ) Incentive cash awards ​ ​ 3,028 ​ ​ 2,415 Accounts payable, accrued expenses, and other liabilities ​ ​ ( 31,455 ) ​ ​ ( 44,511 ) Lease liabilities ​ ( 3,152 ) ​ ( 5,932 ) Net cash used in operating activities ​ ( 44,300 ) ​ ( 46,109 ) INVESTING ACTIVITIES: ​ ​ ​ ​ ​ ​ Purchases of property and equipment ​ ( 13,517 ) ​ ( 3,904 ) Net cash used in investing activities ​ ( 13,517 ) ​ ( 3,904 ) FINANCING ACTIVITIES: ​ ​ ​ ​ ​ ​ Issuance of common stock, principally stock options exercises ​ ​ 569 ​ ​ 1,526 Borrowings under revolving line of credit ​ ​ 77,000 ​ ​ 50,000 Repayments under revolving line of credit ​ ​ ( 18,000 ) ​ ​ ( 9,000 ) Tax withholding payments reimbursed by shares ​ ( 390 ) ​ ( 388 ) Cash paid on dividend equivalents ​ ​ ( 40 ) ​ ​ ( 35 ) Cash dividends paid to shareholders ​ ​ ( 3,584 ) ​ ​ ( 3,196 ) Repurchase of common stock ​ ( 3,810 ) ​ ( 11,510 ) Net cash provided by financing activities ​ 51,745 ​ 27,397 Effect of foreign exchange rates on cash and cash equivalents ​ ( 760 ) ​ 176 Net decrease in cash and cash equivalents ​ ( 6,832 ) ​ ( 22,440 ) Cash and cash equivalents at beginning of period ​ 25,639 ​ 38,028 Cash and cash equivalents at end of period ​ $ 18,807 ​ $ 15,588 Noncash investing and financing activities: ​ ​ ​ ​ ​ ​ Purchases of property and equipment not yet paid for ​ $ 3,784 ​ $ 4,053 Purchases of property and equipment paid by a third party ​ $ — ​ $ 62 Asset retirement obligations ​ $ 155 ​ $ 335 Right-of-use assets obtained in exchange for lease obligations ​ $ — ​ $ 37,284 Right-of-use assets related to the adoption of ASC 842 ​ $ — ​ $ 82,329 Lease liabilities related to the adoption of ASC 842 ​ $ — ​ $ 106,765 Supplemental cash flow information: ​ ​ ​ ​ ​ ​ Cash paid for taxes ​ $ 2,057 ​ $ 3,583 Cash paid for interest ​ $ 676 ​ $ 510 Cash paid for amounts included in operating lease liabilities ​ $ 9,243 ​ $ 8,113 ​ See accompanying notes to the condensed consolidated financial statements. ​ ​ 6 Table of Contents CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED JUNE 27, 2020 (unaudited) (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ Other ​ Total ​ Shares ​ ​ ​ Retained ​ Comprehensive Shareholders’ ​ Issued Amount Earnings Loss Equity BALANCE AT DECEMBER 28, 2019 7,814,797 ​ $ 9,265 ​ $ 200,249 ​ $ ( 11,763 ) ​ $ 197,751 Balance at December 29, 2019, as previously reported ​ 7,814,797 ​ $ 9,265 ​ $ 200,249 ​ $ ( 11,763 ) ​ $ 197,751 Cumulative effect of a change in accounting principle related to ASC 326 ​ — ​ ​ — ​ ​ ( 203 ) ​ ​ — ​ ​ ( 203 ) Balance at December 29, 2019, as adjusted ​ 7,814,797 ​ $ 9,265 ​ $ 200,046 ​ $ ( 11,763 ) ​ $ 197,548 Net income — ​ — ​ 6,468 ​ — ​ 6,468 Foreign currency translation adjustment — ​ — ​ — ​ ( 2,427 ) ​ ( 2,427 ) Exercise of stock options ​ 8,200 ​ ​ 151 ​ ​ — ​ ​ — ​ ​ 151 Share-based compensation expense — ​ 655 ​ — ​ — ​ 655 Restricted shares vestings 23,884 ​ — ​ — ​ — ​ — Redemption of vested employee restricted shares for tax withholding ​ ( 7,843 ) ​ ​ ( 390 ) ​ ​ — ​ ​ — ​ ​ ( 390 ) Shares repurchased ( 82,613 ) ​ ( 3,810 ) ​ — ​ — ​ ( 3,810 ) Accrued dividends on unvested shares — ​ — ​ 1 ​ — ​ 1 Cash paid on dividend equivalents ​ — ​ ​ — ​ ​ ( 40 ) ​ ​ — ​ ​ ( 40 ) Cash dividends paid to shareholders ( $ 0.23 per share) — ​ — ​ ( 1,796 ) ​ — ​ ( 1,796 ) BALANCE AT MARCH 28, 2020 7,756,425 ​ $ 5,871 ​ $ 204,679 ​ $ ( 14,190 ) ​ $ 196,360 Net income — ​ — ​ 5,931 ​ — ​ 5,931 Foreign currency translation adjustment — ​ — ​ — ​ 536 ​ 536 Exercise of stock options ​ 22,611 ​ ​ 418 ​ ​ — ​ ​ — ​ ​ 418 Share-based compensation expense — ​ 796 ​ — ​ — ​ 796 Restricted shares vestings 513 ​ — ​ — ​ — ​ — Accrued dividends on unvested shares — ​ — ​ ( 38 ) ​ — ​ ( 38 ) Cash dividends paid to shareholders ( $ 0.23 per share) — ​ — ​ ( 1,788 ) ​ — ​ ( 1,788 ) BALANCE AT JUNE 27, 2020 ​ 7,779,549 ​ $ 7,085 ​ $ 208,784 ​ $ ( 13,654 ) ​ $ 202,215 ​ See accompanying notes to the condensed consolidated financial statements. ​ 7 Table of Contents CRA INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED JUNE 29, 2019 (unaudited) (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ Common Stock ​ ​ Other Total ​ ​ Shares ​ ​ ​ ​ Retained Comprehensive Shareholders’ ​ Issued Amount Earnings Loss Equity BALANCE AT DECEMBER 29,2018 ​ 8,010,480 ​ $ 22,837 ​ $ 186,229 ​ $ ( 12,594 ) ​ $ 196,472 Net income ​ — ​ ​ — ​ ​ 4,665 ​ ​ — ​ ​ 4,665 Foreign currency translation adjustment ​ — ​ ​ — ​ ​ — ​ ​ 712 ​ ​ 712 Exercise of stock options ​ 64,700 ​ ​ 1,526 ​ ​ — ​ ​ — ​ ​ 1,526 Share-based compensation expense — ​ ​ 911 ​ ​ — ​ ​ — ​ 911 Restricted shares vestings 25,484 ​ ​ — ​ ​ — ​ ​ — ​ — Redemption of vested employee restricted shares for tax withholding ​ ( 8,157 ) ​ ​ ( 388 ) ​ ​ — ​ ​ — ​ ​ ( 388 ) Shares repurchased ( 86,609 ) ​ ​ ( 4,349 ) ​ ​ — ​ ​ — ​ ( 4,349 ) Accrued dividends on unvested shares ​ — ​ ​ — ​ ​ ( 8 ) ​ ​ — ​ ​ ( 8 ) Cash paid on dividend equivalents ​ — ​ ​ — ​ ​ ( 35 ) ​ ​ — ​ ​ ( 35 ) Cash dividends paid to shareholder ($ 0.20 per share) ​ — ​ ​ — ​ ​ ( 1,616 ) ​ ​ — ​ ​ ( 1,616 ) BALANCE AT MARCH 30, 2019 8,005,898 ​ $ 20,537 ​ $ 189,235 ​ $ ( 11,882 ) ​ $ 197,890 Net income ​ — ​ ​ — ​ ​ 5,580 ​ ​ — ​ ​ 5,580 Foreign currency translation adjustment ​ — ​ ​ — ​ ​ — ​ ​ ( 653 ) ​ ​ ( 653 ) Share-based compensation expense — ​ ​ 848 ​ ​ — ​ ​ — ​ 848 Restricted shares vestings 513 ​ ​ — ​ ​ — ​ ​ — ​ — Shares repurchased ( 177,101 ) ​ ​ ( 7,161 ) ​ ​ — ​ ​ — ​ ( 7,161 ) Accrued dividends on unvested shares ​ — ​ ​ — ​ ​ ( 44 ) ​ ​ — ​ ​ ( 44 ) Cash dividends paid to shareholders ($ 0.20 per share) ​ — ​ ​ — ​ ​ ( 1,580 ) ​ ​ — ​ ​ ( 1,580 ) BALANCE AT JUNE 29, 2019 7,829,310 ​ $ 14,224 ​ $ 193,191 ​ $ ( 12,535 ) ​ $ 194,880 ​ See accompanying notes to the condensed consolidated financial statements. ​ ​ 8 CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Summary of Significant Accounting Policies Description of Business CRA International, Inc. (“CRA” or the “Company”) is a worldwide leading consulting services firm that applies advanced analytic techniques and in-depth industry knowledge to complex engagements for a broad range of clients. CRA offers services in two broad areas: litigation, regulatory, and financial consulting and management consulting. CRA operates in one business segment. CRA operates its business under its registered trade name, Charles River Associates. Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of CRA International, Inc. and its wholly-owned subsidiaries (collectively the “Company”), which require consolidation after the elimination of intercompany accounts and transactions. 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. 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 28, 2019 included in CRA’s Annual Report on Form 10-K filed with the SEC on February 27, 2020 (the “2019 Form 10-K”). Certain prior year amounts have been reclassified to conform to current year presentation. These reclassifications had no effect on previously reported results of operations, financial position, or cash flows. Estimates 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, depreciation of property and equipment, measurement of operating lease right-of-use (“ROU”) assets and liabilities, share-based compensation, valuation of contingent consideration liabilities, valuation of acquired intangible assets, impairment of long-lived assets and 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. Material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. CRA bases its estimates on historical experience and various other assumptions that CRA believes to be reasonable under the circumstances. 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. 9 CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Common Stock and Equity Equity transactions consist primarily of the repurchase by CRA of its common stock under its share repurchase program and the recognition of compensation expense and issuance of common stock under CRA's 2006 Equity Incentive Plan. Under CRA's share repurchase program, the Company repurchases its common stock in open market purchases (including through any Rule 10b5-1 plan adopted by CRA) or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations. The purchase price is first charged against available paid-in capital ("PIC") until PIC is exhausted, wherein purchases will be charged to retained earnings. CRA's common stock has no par value. All shares repurchased have been retired. Recent Accounting Standards Adopted Leases (Topic 842) CRA adopted Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), which supersedes ASC Topic 840, Leases (“ASC 840”), on December 30, 2018, using the modified retrospective transition method. The cumulative effect of the transition adjustments was recognized as of the date of adoption. CRA elected the package of practical expedients provided by ASC 842, which allowed CRA to forgo reassessing the following upon adoption of the new standard: (1) whether contracts contain leases for any expired or existing contracts, (2) the lease classification for any expired or existing leases, and (3) initial direct costs for any existing or expired leases. In addition, CRA elected an accounting policy to exclude from the consolidated balance sheets the ROU assets and lease liabilities related to short-term leases, which are those leases with an initial lease term of twelve months or less that do not include an option to purchase the underlying asset that CRA is reasonably certain to exercise. As a result of adopting the new standard, CRA recognized ROU assets of $ 82.3 million and lease liabilities of $ 106.8 million on December 30, 2018. The difference between the amount of ROU assets and lease liabilities recognized was an adjustment to deferred rent. There was no change to net deferred tax assets as a result of CRA’s adoption of ASC 842. The adoption of ASC 842 did not have a material impact on CRA’s results of operations or cash flows, nor did it have an impact on any of CRA’s existing debt covenants. Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting CRA adopted Accounting Standards Update (“ASU”) No. 2018-07, Compensation–Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting (Topic 718) (“ASU 2018-07”) on December 30, 2018. ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this update specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used effectively to provide financing to the issuer or awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers . The new guidance requires a remeasurement of nonemployee awards at fair value as of the adoption date. The adoption of ASU 2018-07 did not have a material impact on CRA’s financial position, results of operations, cash flows, or disclosures. Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments CRA adopted ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”) on December 29, 2019. ASC 326 replaces the methodology that recognizes impairment of financial instruments when losses have been incurred with a methodology that recognizes impairment of financial instruments when losses are expected. The amendment requires entities to use a forward-looking “expected loss” model for most financial instruments, including accounts receivable, unbilled services, and loans, that is based on historical information, current information, and reasonable and supportable forecasts. 10 CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) As a result of adopting the new standard, CRA recognized a cumulative increase to allowances for accounts receivable and unbilled services and a reduction to the fiscal 2020 opening balance of retained earnings of $ 0.2 million. Comparative periods prior to the adoption of ASC 326 and their respective disclosures have not been adjusted. The adoption of ASC 326 did not have a material impact on CRA’s results of operations or cash flows on the date of transition. Fair Value Measurements (Topic 820) CRA adopted ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU No. 2018-13”) on December 29, 2019. The ASU eliminates, adds, and modifies certain disclosure requirements for fair value measurements from ASC 820. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurement. The adoption of the new standard did not have a material impact on CRA’s financial position, results of operations, cash flows, or disclosures on the date of transition. Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement CRA adopted ASU No. 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”) on December 29, 2019. ASU 2018-15 clarifies the accounting for implementation costs in a cloud computing arrangement that is a service contract and aligns the requirements for capitalizing those costs with the capitalization requirements for costs incurred to develop or obtain internal-use software. CRA adopted the ASU using the prospective transition approach, as permitted under the new guidance. The adoption of the new standard did not have a material impact on CRA’s financial position, results of operations, cash flows, or disclosures on the date of transition. Recent Accounting Standards Not Yet Adopted Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies or clarifies accounting for income taxes by changing the following current guidance: accounting for year-to-date losses in interim periods, accounting for tax law changes in interim periods, determining when a deferred tax liability is recognized for foreign subsidiaries that transition to or from being accounted for as equity method investments, application of income tax guidance to franchise taxes that are partially based on income, and making an intra-period allocation in situations where there is a loss in continuing operations and income or gain from other items. ASU 2019-12 also introduces new guidance to evaluate whether a step up in the tax basis of goodwill relates to a business combination or a separate transaction and provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax. ASU 2019-12 is effective for CRA for interim and annual periods beginning after December 15, 2020. Early adoption is permitted. CRA is in the process of determining the effects, if any, the adoption of the ASU may have on its financial position, results of operations, cash flows, or disclosures. CRA plans to adopt the amendments during the first fiscal quarter of 2021. ​ 11 CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 2. Fair Value of Financial Instruments The following tables show CRA’s financial instruments as of June 27, 2020 and December 28, 2019 that are measured and recorded in the condensed consolidated financial statements at fair value on a recurring basis (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 27, 2020 ​ ​ Quoted Prices in Active ​ ​ ​ ​ ​ ​ Markets for Identical ​ Significant Other ​ Significant Unobservable ​ ​ Assets or Liabilities ​ Observable Inputs ​ Inputs ​ Level 1 Level 2 Level 3 Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market mutual funds ​ $ 150 $ — $ — Total Assets ​ $ 150 ​ $ — ​ $ — Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent consideration liability ​ $ — $ — $ 12,575 Total Liabilities ​ $ — ​ $ — ​ $ 12,575 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 28, 2019 ​ ​ Quoted Prices in Active ​ ​ ​ ​ ​ ​ ​ Markets for Identical ​ Significant Other ​ Significant Unobservable ​ ​ Assets or Liabilities ​ Observable Inputs ​ Inputs ​ Level 1 Level 2 Level 3 Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market mutual funds ​ $ 150 $ — $ — Total Assets ​ $ 150 ​ $ — ​ $ — Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent consideration liability ​ $ — ​ $ — ​ $ 11,579 Total Liabilities ​ $ — ​ $ — ​ $ 11,579 ​ The fair value of CRA’s money market mutual fund share holdings is $ 1.00 per share. The contingent consideration liability in the table above is for estimated future contingent consideration payments related to the acquisition of C1 Consulting, LLC, an independent consulting firm, and its wholly-owned subsidiary C1 Associates (collectively, “C1”). The fair value measurement of the liability is based on significant inputs not observed in the market and thus represents a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the contingent consideration liability are CRA’s measures of the estimated payouts based on internally generated revenue projections, expected volatility of the revenue projections, and discount rates. The fair value of the contingent consideration liability was determined using a Monte Carlo simulation. The fair value of the contingent consideration liability is reassessed on a quarterly basis by CRA using additional information as it becomes available, and any change in the fair value estimates are recorded in costs of services (exclusive of depreciation and amortization) on the condensed consolidated statements of operations. The contingent consideration is required to be paid prior to the end of the second quarter of fiscal 2021. The following table summarizes the changes in the contingent consideration liabilities (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ ​ ​ ​ Period Ended ​ Fiscal Year Ended ​ ​ June 27, 2020 ​ December 28, 2019 Beginning balance ​ $ 11,579 ​ $ 6,197 Remeasurement of acquisition-related contingent consideration ​ 448 ​ 3,285 Accretion ​ ​ 548 ​ ​ 2,097 Ending balance ​ $ 12,575 ​ $ 11,579 ​ ​ 12 CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 3. Revenue Recognition The contracts CRA enters into and operates under specify whether the projects are billed on a time-and-materials or a fixed-price basis. 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 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 Year-to-Date ​ ​ Fiscal Quarter Ended ​ Period Ended ​ ​ June 27, ​ June 29, ​ June 27, ​ June 29, Type of Contract 2020 2019 2020 2019 Consulting services revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed Price ​ $ 30,783 ​ $ 25,179 ​ $ 59,771 ​ $ 46,565 Time-and-materials ​ 92,248 ​ 85,394 ​ ​ 189,418 ​ ​ 169,857 Total ​ $ 123,031 ​ $ 110,573 ​ $ 249,189 ​ $ 216,422 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ Fiscal Quarter Ended ​ Period Ended ​ ​ June 27, ​ June 29, ​ June 27, ​ June 29, Geographic Breakdown 2020 2019 2020 2019 Consulting services revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ United States $ 99,416 $ 87,475 ​ $ 200,156 ​ $ 171,004 United Kingdom ​ ​ 17,931 ​ ​ 17,404 ​ ​ 36,997 ​ ​ 35,911 Other ​ ​ 5,684 ​ ​ 5,694 ​ ​ 12,036 ​ ​ 9,507 Total $ 123,031 ​ $ 110,573 ​ $ 249,189 ​ $ 216,422 ​ Reserves for Variable Consideration and Credit Risk Revenues from CRA's consulting services are recorded at the net transaction price, which includes estimates of variable consideration for which reserves are established. Variable consideration reserves are based on actual price concessions and those expected to be extended to CRA customers as well as CRA's historical realization rates and are recorded as a component of the allowances for accounts receivable and unbilled services. CRA’s accounts receivable and unbilled services consist of receivables from a broad range of clients in a variety of industries located through the U.S. and other countries. CRA performs a credit evaluation of its clients to minimize its collectability risk. Periodically, CRA will require advance payment from certain clients. However, CRA does not require collateral or other security. CRA adopted ASC 326 on December 29, 2019, which changed the method CRA utilizes to estimate reserves related to credit risk. As a result of the adoption, CRA recognized a cumulative-effect adjustment of $ 0.2 million to retained earnings and allowances for accounts receivable and unbilled services . Comparative periods and their respective disclosures prior to the adoption of ASC 326 have not been adjusted. 13 CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Under ASC 326, CRA maintains allowances for accounts receivable and unbilled services for estimated losses resulting from clients’ failure to make required payments. CRA estimates these allowances based on historical charge-off rates, adjusted for days of sales outstanding and expected changes to clients’ financial conditions during the anticipated collection period. CRA writes off allowances when management determines the balance is uncollectible and all efforts of collection have been exhausted. Bad debt expense, net of recoveries of previously written off allowances, is reported as a component of selling, general and administrative expenses on the condensed consolidated statements of operations. Prior to adopting ASC 326 in fiscal 2020, CRA determined allowances for accounts receivable and unbilled services for specific customer accounts based on the financial condition of the customer and related facts and circumstances. Expenses associated with these allowances were reported as a component of selling, general and administrative expenses on the condensed consolidated statements of operations. Additions to the allowances for accounts receivable and unbilled services related to reserves for variable consideration are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ Fiscal Quarter Ended ​ Period Ended ​ ​ June 27, ​ June 29, ​ June 27, ​ June 29, ​ 2020 2019 2020 2019 Additions to reserves for variable consideration ​ $ 1,705 ​ $ 2,725 ​ $ 3,119 ​ $ 4,158 ​ Adjustments to the allowances for accounts receivable and unbilled services related to reserves for credit risk are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ ​ ​ Period Ended ​ Fiscal Year Ended ​ ​ June 27, 2020 ​ December 28, 2019 Beginning balance ​ $ 370 ​ $ 639 Cumulative effect of a change in accounting principle related to ASC 326 ​ 203 ​ — Provision for credit loss expense, net of recoveries ​ ​ ( 43 ) ​ ​ 173 Amounts written off ​ ( 138 ) ​ ( 442 ) Ending balance ​ $ 392 ​ $ 370 ​ The following table presents CRA's bad debt expense, net of recoveries of previously written off allowances (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ Fiscal Quarter Ended ​ Period Ended ​ ​ June 27, ​ June 29, ​ June 27, ​ June 29, ​ 2020 2019 2020 2019 Bad debt expense (recovery), net ​ $ ( 102 ) ​ $ 48 ​ $ ( 43 ) ​ $ 31 ​ Reimbursable Expenses Revenues also include reimbursements for costs incurred by CRA in fulfilling its performance obligations, including travel and other out-of-pocket expenses, fees for outside consultants and other reimbursable expenses. CRA recovers substantially all of these costs. The following expenses are subject to reimbursement (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ Fiscal Quarter Ended ​ Period Ended ​ ​ June 27, ​ June 29, ​ June 27, ​ June 29, ​ 2020 2019 2020 2019 Reimbursable expenses ​ $ 14,815 ​ $ 12,178 ​ $ 31,245 ​ $ 25,013 ​ 14 CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) Contract Balances from Contracts with Customers 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 June 27, 2020 and December 28, 2019. The timing of revenue recognition, billings, and cash collections results in billed receivables, unbilled services and contract liabilities on the condensed consolidated balance sheet. CRA defines contract liabilities as advance payments from or billings to its clients for services that have not yet been performed or earned and retainers. These liabilities are recorded within deferred revenues and are recognized as services are provided. 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. Contract liabilities are recognized as revenue after performance obligations have been satisfied and all revenue recognition criteria have been met. Contract liabilities are included in deferred revenue and other liabilities on the condensed consolidated balance sheet. The following table presents the closing balances of CRA’s contract liabilities (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 27, 2020 ​ December 28, 2019 Balance at the end of the period ​ $ 2,775 ​ $ 4,007 ​ 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 Year-to-Date ​ ​ Fiscal Quarter Ended ​ Period Ended ​ ​ June 27, ​ ​ June 29, ​ June 27, ​ ​ June 29, ​ 2020 ​ ​ 2019 2020 ​ ​ 2019 Revenue recognized for amounts included in contract liabilities at the beginning of the period ​ $ 2,940 ​ $ 2,560 ​ $ 3,250 ​ $ 4,631 Revenue recognized for performance obligations satisfied in previous periods ​ $ 3,554 ​ $ 5,691 ​ $ 4,075 ​ $ 3,590 ​ ​ 4. Forgivable Loans Forgivable loan activity for the fiscal year-to-date period ended June 27, 2020 and the fiscal year ended December 28, 2019 is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ ​ ​ ​ Period Ended ​ Fiscal Year Ended ​ ​ June 27, 2020 December 28, 2019 Beginning balance ​ $ 55,141 ​ $ 40,294 Advances ​ ​ 38,374 ​ ​ 35,166 Repayments ​ ​ — ​ ​ ( 1,173 ) Reclassification from accrued expenses / to other assets ​ ​ ( 9,713 ) ​ ​ ( 1,734 ) Amortization ​ ​ ( 12,848 ) ​ ​ ( 17,700 ) Effects of foreign currency translation ​ ​ ( 453 ) ​ ​ 288 Ending balance ​ $ 70,501 ​ $ 55,141 Current portion of forgivable loans ​ $ 9,380 ​ $ 6,751 Non-current portion of forgivable loans ​ $ 61,121 ​ $ 48,390 ​ At June 27, 2020 and December 28, 2019, CRA had no other loans to current or former employees included in other assets on the condensed consolidated balance sheet. 15 CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) The principal amount of forgivable loans and accrued interest is forgiven by CRA over the term of the loans, provided that the employee or non-employee expert continues employment or affiliation with CRA and complies with certain contractual requirements. CRA maintains an allowance for doubtful accounts for amounts not expected to be collected, which is initially assessed when the employee or non-employee fails to comply with contractual requirements or ceases employment or affiliation with CRA. The allowances are determined per specific borrower and are based on their financial condition and related facts and circumstances, including consideration of collateral. For the fiscal year-to-date period ended June 27, 2020 and the fiscal year ended December 28, 2019, no allowances or write-offs of these loans were recorded. ​ 5. Goodwill and Intangible Assets The changes in the carrying amount of goodwill during the fiscal year ended December 28, 2019 and the fiscal year- to-date period ended June 27, 2020, are as follows (in thousands): ​ ​ ​ ​ ​ Balance at December 28, 2019 ​ ​ Goodwill ​ $ 164,921 Accumulated goodwill impairment ​ ​ ( 76,417 ) Goodwill, net at December 28, 2019 ​ ​ 88,504 Foreign currency translation adjustment and other (1) ​ ( 590 ) Goodwill, net at June 27, 2020 (2) ​ $ 87,914 (1) During the fiscal quarter ended March 28, 2020, goodwill and accumulated goodwill impairment were reduced by $ 4.5 million as a result of the dissolution and final liquidation of GNU123 Liquidating Corporation. (2) Goodwill, net at June 27, 2020, is comprised of goodwill of $ 159.8 million and accumulated impairment of $ 71.9 million. Intangible assets that are separable from goodwill and have determinable useful lives are valued separately and amortized over their expected useful lives. There were no impairment losses related to intangible assets during the fiscal year-to-date periods ended June 27, 2020 or June 29, 2019. The components of acquired identifiable intangible assets are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 27, 2020 ​ December 28, 2019 Non-competition agreements ​ $ 280 ​ $ 324 Customer relationships ​ 12,120 ​ 12,120 Total cost ​ ​ 12,400 ​ ​ 12,444 Accumulated amortization ​ ​ ( 6,610 ) ​ ​ ( 5,968 ) Total intangible assets, net ​ $ 5,790 ​ $ 6,476 ​ ​ 16 CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 6. Accrued Expenses Accrued expenses consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ June 27, 2020 ​ December 28, 2019 Compensation and related expenses ​ $ 68,832 ​ $ 99,993 Income taxes payable ​ 3,321 ​ 430 Commissions due to non-employee experts ​ ​ 293 ​ ​ 9,961 Other professional fees ​ ​ 2,502 ​ ​ 2,077 Direct project accruals ​ ​ 3,320 ​ ​ 3,201 Accrued leasehold improvements ​ ​ 895 ​ ​ 2,166 Other ​ 3,036 ​ 3,473 Total accrued expenses ​ $ 82,199 ​ $ 121,301 ​ As of June 27, 2020, and December 28, 2019, approximately $ 47.8 million and $ 81.2 million, respectively, of accrued bonuses for the fiscal quarter ended June 27, 2020 and the fiscal year ended December 28, 2019 were included above in “Compensation and related expenses.” ​ 7. Income Taxes CRA’s effective income tax rates were 24.6 % and 29.8 % for the fiscal quarters ended June 27, 2020 and June 29, 2019, respectively. The effective tax rate for the second quarter of fiscal 2020 was lower than the prior year due to increases in the tax benefit related to foreign-derived intangible income and the accounting for stock-based compensation, a decrease in non-deductible meals and entertainment, and the true-up of the estimated annual run rate driven by an increase in forecasted profit as a result of strong earnings in the second quarter. The effective tax rate for the second quarter of fiscal 2020 was lower than the combined federal and state statutory tax rate due to the same drivers, partially offset by non-deductible items resulting from the limitations on the deductibility of compensation paid to executive officers and the deductibility of meals and entertainment. The effective tax rate for the second quarter of fiscal 2019 was higher than the combined federal and state statutory tax rate primarily due to non-deductible items resulting from limitations on the deductibility of compensation paid to executive officers and the deductibility of meals and entertainment. CRA’s effective income tax rates were 27.2 % and 27.1 % for the fiscal year-to-date periods ended June 27, 2020 and June 29, 2019, respectively. The effective tax rate for the fiscal year-to-date period ended June 27, 2020 was comparable to the prior year. The effective tax rates for both fiscal year-to-date periods were the same as the combined federal and state statutory tax rate but included the effect of offsetting adjustments primarily driven by the tax benefit on stock-based compensation and non-deductible items resulting from limitations on the deductibility of compensation paid to executive officers and the deductibility of meals and entertainment. CRA has not provided for deferred income taxes or foreign withholding taxes on undistributed earnings and other basis differences that may exist from its foreign subsidiaries as of June 27, 2020, because such earnings are considered to be indefinitely reinvested. CRA does not rely on these unremitted earnings as a source of funds for its domestic business as it expects to have sufficient cash flow in the U.S. to fund its U.S. operational and strategic needs. If CRA were to repatriate its foreign earnings that are indefinitely reinvested, it would accrue substantially no additional tax expense. ​ 17 CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) 8. Net Income Per Share CRA calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of 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. Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards. Net earnings allocable to these participating securities were not material for the fiscal quarters and fiscal year-to-date periods ended June 27, 2020 and June 29, 2019. The following table presents a reconciliation from net income to the net income available to common shareholders (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ Fiscal Quarter Ended ​ Period Ended ​ ​ June 27, ​ June 29, ​ June 27, ​ June 29, ​ 2020 2019 2020 2019 Net income, as reported ​ $ 5,931 ​ $ 5,580 ​ $ 12,399 ​ $ 10,245 Less: net income attributable to participating shares ​ 22 ​ 24 ​ ​ 49 ​ ​ 34 Net income available to common shareholders ​ $ 5,909 ​ $ 5,556 ​ $ 12,350 ​ $ 10,211 ​ The following table presents a reconciliation of basic to diluted weighted average shares of common stock outstanding (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year-to-Date ​ ​ Fiscal Quarter Ended ​ Period Ended ​ ​ June 27, ​ June 29, ​ June 27, ​ June 29, ​ 2020 2019 2020 2019 Basic weighted average shares outstanding ​ 7,764 7,925 7,784 7,970 Dilutive stock options and restricted stock units ​ 156 293 195 312 Diluted weighted average shares outstanding ​ 7,920 8,218 7,979 8,282 ​ For the fiscal quarter and fiscal year-to-date period ended June 27, 2020, 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 106,018 and 44,069 shares, respectively. For the fiscal quarter and fiscal year-to-date period ended June 29, 2019, 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 45,200 and 31,378 shares, respectively. These share-based awards each period were anti-dilutive because their exercise price exceeded the average market price over the respective period. ​ 9. Credit Agreement CRA is party to a credit agreement that provides CRA with a $ 125.0 million revolving credit facility and a $ 15.0 million sublimit for the issuance of letters of credit. CRA may use the proceeds of the revolving credit facility to provide working capital and for other general corporate purposes. CRA may repay any borrowings under the revolving credit facility at any time, but any borrowings must be repaid no later than October 24, 2022. There were $ 59.0 million in borrowings outstanding under this revolving credit facility as of June 27, 2020. There were no outstanding borrowings under this facility as of December 28, 2019. 18 CRA INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) As of June 27, 2020, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $ 4.4 million. Under the credit agreement, CRA must comply with various financial and non-financial covenants. Compliance with these financial covenants is tested on a fiscal quarterly basis. As of June 27, 2020 and December 28, 2019, CRA was in compliance with the covenants of its credit agreement. ​ 10. Commitments and Contingencies As described in Note 9, CRA is party to standby letters of credit with its bank in support of minimum future lease payments under leases for permanent office space. CRA is subject to legal actions arising in the ordinary course of business. In management’s opinion, based on current knowledge, CRA has adequate legal defenses and/or insurance coverage with respect to the eventuality of such actions. CRA does not believe any settlement or judgment relating to any pending legal action would materially affect its financial position or results of operations . However, the outcome of such legal actions is inherently unpredictable and subject to inherent uncertainties. While CRA has not experienced a material adverse impact to its business, financial condition or results of operations from the COVID-19 pandemic to date, there continues to be uncertainty about client demand for the Company’s services, the worldwide economy and consequently, the financial results for the current fiscal quarter and fiscal year-to-date period ended June 27, 2020, may not be indicative of the results to be expected for the full fiscal year. The timing of ongoing projects and new project originations may be delayed or otherwise disrupted due to the length and severity of current business closures and other restrictions implemented in response to COVID-19, which may impact the timing and amount of future revenues. The magnitude of any impact on CRA's business and its duration is uncertain and cannot be reasonably estimated at this time. CRA is not aware of any specific events or circumstances that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of July 30, 2020, the issuance date of this Quarterly Report on Form 10-Q. ​ 11. Subsequent Events On July 30, 2020, CRA announced that its Board of Directors declared a quarterly cash dividend of $ 0.23 per common share, payable on September 14, 2020 to shareholders of record as of August 25, 2020. ​ ​ 19 ​ ​