10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 3, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to       

Commission file number: 000-24049

________________________________________________________________________________________

CRA International, Inc.

(Exact name of registrant as specified in its charter)

Massachusetts	04-2372210
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
200 Clarendon Street, Boston, MA	02116-5092
(Address of principal executive offices)	(Zip Code)

(617) 425-3000

(Registrant’s telephone number, including area code)

________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, no par value	CRAI	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer x Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at April 30, 2021
Common Stock, no par value per share	7,322,728 shares

CRA International, Inc.

INDEX

PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements	3
	Condensed Consolidated Statements of Operations (unaudited)—Fiscal Quarters Ended April 3, 2021 and March 28, 2020	3
	Condensed Consolidated Statements of Comprehensive Income (unaudited)—Fiscal Quarters Ended April 3, 2021 and March 28, 2020	4
	Condensed Consolidated Balance Sheets (unaudited)— April 3, 2021 and January 2, 2021	5
	Condensed Consolidated Statements of Cash Flows (unaudited)—Fiscal Quarters Ended April 3, 2021 and March 28, 2020	6
	Condensed Consolidated Statements of Shareholders’ Equity (unaudited)—Fiscal Quarters Ended April 3, 2021 and March 28, 2020	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	22
ITEM 4.	Controls and Procedures	22
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	23
ITEM 1A.	Risk Factors	23
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
ITEM 3.	Defaults Upon Senior Securities	24
ITEM 4.	Mine Safety Disclosures	24
ITEM 5.	Other Information	24
ITEM 6.	Exhibits	25
Signatures		26

2

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

CRA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)

	Fiscal Quarter Ended
	April 3, 2021		March 28, 2020
Revenues	$	146,518	$	126,158
Costs of services (exclusive of depreciation and amortization)	105,374		90,997
Selling, general and administrative expenses	23,206		24,123
Depreciation and amortization	3,301		2,943
Income from operations	14,637		8,095
Interest expense, net	(199)		(362)
Foreign currency gains (losses), net	(551)		1,422
Income before provision for income taxes	13,887		9,155
Provision for income taxes	3,386		2,687
Net income	$	10,501	$	6,468
Net income per share:
Basic	$	1.37	$	0.83
Diluted	$	1.34	$	0.80
Weighted average number of shares outstanding:
Basic	7,626		7,805
Diluted	7,831		8,037

See accompanying notes to the condensed consolidated financial statements.

3

CRA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

(in thousands)

	Fiscal Quarter Ended
	April 3, 2021		March 28, 2020
Net income	$	10,501	$	6,468
Other comprehensive income (loss)
Foreign currency translation adjustments	(111)		(2,427)
Comprehensive income	$	10,390	$	4,041

See accompanying notes to the condensed consolidated financial statements.

4

CRA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except share data)

	April 3, 2021		January 2, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	31,629	$	45,677
Accounts receivable, net of allowances of $3,789 at April 3, 2021 and $3,595 at January 2, 2021	91,690		111,595
Unbilled services, net of allowances of $1,227 at April 3, 2021 and $1,000 at January 2, 2021	63,985		40,881
Prepaid expenses and other current assets	10,030		7,068
Forgivable loans	13,196		14,749
Total current assets	210,530		219,970
Property and equipment, net	60,304		62,878
Goodwill	89,278		89,187
Intangible assets, net	4,839		5,108
Right-of-use assets	120,110		122,144
Deferred income taxes	10,673		9,667
Forgivable loans, net of current portion	44,363		46,864
Other assets	2,423		2,692
Total assets	$	542,520	$	558,510
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	18,995	$	19,430
Accrued expenses	100,758		136,376
Deferred revenue and other liabilities	8,275		9,866
Current portion of lease liabilities	13,889		13,557
Current portion of deferred compensation	1,214		20,902
Revolving line of credit	40,000		—
Total current liabilities	183,131		200,131
Non-current liabilities:
Deferred compensation and other non-current liabilities	8,596		7,075
Facility-related non-current liabilities	2,169		2,113
Non-current portion of lease liabilities	136,561		139,447
Deferred income taxes	735		725
Total non-current liabilities	148,061		149,360
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; 7,627,591 and 7,693,497 shares issued and outstanding at April 3, 2021 and January 2, 2021, respectively	—		503
Retained earnings	219,922		216,999
Accumulated other comprehensive loss	(8,594)		(8,483)
Total shareholders’ equity	211,328		209,019
Total liabilities and shareholders’ equity	$	542,520	$	558,510

See accompanying notes to the condensed consolidated financial statements.

5

CRA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)

	Fiscal Quarter Ended
	April 3, 2021		March 28, 2020
OPERATING ACTIVITIES:
Net income	$	10,501	$	6,468
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	3,301		2,943
Facility-related liabilities	17		35
Right-of-use asset amortization	3,199		2,994
Deferred income taxes	(896)		23
Share-based compensation expense	842		655
Accounts receivable allowances	182		62
Unrealized foreign currency remeasurement gains, net	(284)		(398)
Changes in operating assets and liabilities:
Accounts receivable	19,838		1,388
Unbilled services, net	(23,063)		(8,217)
Prepaid expenses and other current assets, and other assets	(2,733)		(5,327)
Forgivable loans	4,140		(27,139)
Incentive cash awards	1,729		1,423
Accounts payable, accrued expenses, and other liabilities	(52,856)		(39,121)
Lease liabilities	(3,765)		(1,164)
Net cash used in operating activities	(39,848)		(65,375)
INVESTING ACTIVITIES:
Purchases of property and equipment	(692)		(7,949)
Net cash used in investing activities	(692)		(7,949)
FINANCING ACTIVITIES:
Issuance of common stock, principally stock option exercises	1,113		151
Borrowings under revolving line of credit	42,000		70,000
Repayments under revolving line of credit	(2,000)		—
Tax withholding payments reimbursed by shares	(588)		(390)
Cash paid for contingent consideration	(2,357)		—
Cash paid on dividend equivalents	(79)		(40)
Cash dividends paid to shareholders	(1,982)		(1,796)
Repurchase of common stock	(9,642)		(3,810)
Net cash provided by financing activities	26,465		64,115
Effect of foreign exchange rates on cash and cash equivalents	27		(612)
Net decrease in cash and cash equivalents	(14,048)		(9,821)
Cash and cash equivalents at beginning of period	45,677		25,639
Cash and cash equivalents at end of period	$	31,629	$	15,818
Noncash investing and financing activities:
Purchases of property and equipment not yet paid for	$	294	$	370
Asset retirement obligations	$	—	$	155
Right-of-use assets obtained in exchange for lease obligations	$	1,070	$	—
Restricted common stock issued for contingent consideration	$	2,250	$	—
Supplemental cash flow information:
Cash paid for taxes	$	844	$	695
Cash paid for interest	$	24	$	245
Cash paid for amounts included in operating lease liabilities	$	5,157	$	5,039

See accompanying notes to the condensed consolidated financial statements.

6

CRA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE FISCAL QUARTER ENDED APRIL 3, 2021 (unaudited)

(in thousands, except share data)

	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares Issued	Amount
BALANCE AT JANUARY 2, 2021	7,693,497	$	503	$	216,999	$	(8,483)	$	209,019
Net income	—	—		10,501		—		10,501
Foreign currency translation adjustment	—	—		—		(111)		(111)
Issuance of restricted common stock for contingent consideration	40,039	2,250		—		—		2,250
Exercise of stock options	41,008	1,113		—		—		1,113
Share-based compensation expense	—	842		—		—		842
Restricted shares vestings	29,494	—		—		—		—
Redemption of vested employee restricted shares for tax withholding	(9,895)	(588)		—		—		(588)
Shares repurchased	(166,552)	(4,120)		(5,522)		—		(9,642)
Accrued dividends on unvested shares	—	—		5		—		5
Cash paid on dividend equivalents	—	—		(79)		—		(79)
Cash dividends paid to shareholders ($0.26 per share)	—	—		(1,982)		—		(1,982)
BALANCE AT APRIL 3, 2021	7,627,591	$	—	$	219,922	$	(8,594)	$	211,328

See accompanying notes to the condensed consolidated financial statements.

7

CRA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE FISCAL QUARTER ENDED MARCH 28, 2020 (unaudited)

(in thousands, except share data)

	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares Issued	Amount
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

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 January 2, 2021 included in CRA’s Annual Report on Form 10-K filed with the SEC on March 4, 2021 (the “2020 Form 10-K”).

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, 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. 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.

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. The Company repurchases its common stock under its share repurchase program 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. On March 8, 2021, CRA commenced a modified "Dutch auction" self-tender offer to purchase up to $25.0 million in value of shares of its common stock, as further described in Note 11. The purchase price of repurchases is first charged against available paid-in capital (“PIC”) until PIC is exhausted, wherein purchases will be charged

9

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

to retained earnings. As of April 3, 2021, PIC was exhausted. CRA’s common stock has no par value. All shares repurchased have been retired.

Recent Accounting Standards Adopted

Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

CRA adopted Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”) on the first day of fiscal 2021. ASU 2019-12 simplifies or clarifies accounting for income taxes by changing prior guidance related to 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. 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.

2. 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 Quarter Ended
Type of Contract	April 3, 2021		March 28, 2020
Consulting services revenues
Fixed-price	$	33,433	$	28,988
Time-and-materials	113,085		97,170
Total	$	146,518	$	126,158

	Fiscal Quarter Ended
Geographic Breakdown	April 3, 2021		March 28, 2020
Consulting services revenues
United States	$	117,247	$	100,740
United Kingdom	23,286		19,066
Other	5,985		6,352
Total	$	146,518	$	126,158

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 specific price concessions and

10

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

those expected to be extended to CRA customers estimated by CRA's historical realization rates. Reserves for variable consideration are recorded as a component of the allowances for accounts receivable and unbilled services on the condensed consolidated balance sheets. Adjustments to the reserves for variable consideration are included in revenues on the condensed consolidated statements of operations.

CRA also maintains allowances for accounts receivable and unbilled services for estimated losses resulting from clients’ failure to make required payments. CRA adopted ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASC 326") on the first day of fiscal 2020, which changed the method CRA utilizes to estimate reserves related to credit risk. As a result of the adoption, CRA recognized a $0.2 million cumulative-effect increase to allowances for accounts receivable and unbilled services and a reduction to the fiscal 2020 opening balance of retained earnings.

The following table presents CRA's bad debt expense, net of recoveries of previously written off allowances (in thousands):

	Fiscal Quarter Ended
	April 3, 2021		March 28, 2020
Bad debt expense (recovery), net	$	(13)	$	59

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 Quarter Ended
	April 3, 2021		March 28, 2020
Reimbursable expenses	$	16,479	$	16,430

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 April 3, 2021 and January 2, 2021.

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

	April 3, 2021		January 2, 2021
Contract liabilities	$	2,941	$	5,527

11

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

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
	April 3, 2021		March 28, 2020
Amounts included in contract liabilities at the beginning of the period	$	4,355	$	2,906
Performance obligations satisfied in previous periods	$	2,183	$	3,257

3. Forgivable Loans

In order to attract and retain highly skilled professionals, CRA may issue forgivable loans to employees and non-employee experts, certain of which loans may be denominated in local currencies. A portion of these loans is collateralized. 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 following table presents forgivable loan activity for the respective periods (in thousands):

	Fiscal Quarter Ended		Fiscal Year Ended
	April 3, 2021		January 2, 2021
Beginning balance	$	61,613	$	55,141
Advances	2,153		42,418
Reclassification from accrued expenses / to other assets (1)	—		(9,713)
Amortization	(6,295)		(26,628)
Effects of foreign currency translation	88		395
Ending balance	$	57,559	$	61,613
Current portion of forgivable loans	$	13,196	$	14,749
Non-current portion of forgivable loans	$	44,363	$	46,864

_______________________________

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

4. Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the fiscal quarter ended April 3, 2021 are summarized as follows (in thousands):

Goodwill	$	161,080
Accumulated goodwill impairment	(71,893)
Goodwill, net at January 2, 2021	89,187
Foreign currency translation adjustment	91
Goodwill, net at April 3, 2021 (1)	$	89,278

_______________________________

(1)Goodwill, net at April 3, 2021, is comprised of goodwill of $161.2 million and accumulated impairment of $71.9 million.

12

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

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 quarter ended April 3, 2021 or during the fiscal year ended January 2, 2021.

The components of acquired identifiable intangible assets are as follows (in thousands):

	April 3, 2021		January 2, 2021
Non-competition agreements	$	280	$	280
Customer relationships	8,220		12,120
Total cost	8,500		12,400
Accumulated amortization	(3,661)		(7,292)
Total intangible assets, net	$	4,839	$	5,108

5. Accrued Expenses

Accrued expenses consist of the following (in thousands):

	April 3, 2021		January 2, 2021
Compensation and related expenses	$	85,209	$	123,540
Income taxes payable	5,251		1,927
Performance awards	2,376		2,176
Other professional fees	1,635		1,541
Direct project accruals	3,116		3,988
Accrued leasehold improvements	40		52
Other	3,131		3,152
Total accrued expenses	$	100,758	$	136,376

As of April 3, 2021, and January 2, 2021, approximately $50.3 million and $102.6 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

6. Income Taxes

For the fiscal quarters ended April 3, 2021 and March 28, 2020, CRA’s effective income tax rate (“ETR”) was 24.4% and 29.4%, respectively. The ETR for the first quarter of fiscal 2021 was lower than the prior year due to an increase in the tax benefit related to the accounting for stock-based compensation as well as the impact of higher pre-tax earnings in the first quarter of fiscal 2021, which diluted the permanent unfavorable differences, primarily related to the impact of the deductibility of compensation paid to executive officers, with respect to the full-year estimated ETR.

During the fourth quarter of fiscal 2020, CRA considered the operating needs of the United Kingdom ("U.K.") subsidiary, as well as the tax implications of no longer asserting indefinite reinvestment with respect to the U.K. operations. As a result of both a qualitative and quantitative analysis, 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 component of foreign currency translation adjustments on the condensed consolidated statements of comprehensive income. For the fiscal quarter ended April 3, 2021, CRA’s U.K. subsidiary distributed approximately £12.0 million of both previously taxed and untaxed earnings to CRA’s U.S. parent entity, the foreign currency translation impact of which was immaterial. 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.

13

CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

7. Net Income Per Share

CRA calculates basic earnings per share using the two-class method. CRA calculates diluted earnings per share using the more dilutive of either the two-class method or treasury stock method. The two-class method was more dilutive for the fiscal quarters ended April 3, 2021 and March 28, 2020.

Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all the net earnings for the period had been distributed. CRA's participating securities consist of unvested share-based payment awards that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders. Net earnings allocable to these participating securities were not material for the fiscal quarters ended April 3, 2021 and March 28, 2020.

The following table presents a reconciliation from net income to the net income available to common shareholders (in thousands):

	Fiscal Quarter Ended
	April 3, 2021		March 28, 2020
Net income, as reported	$	10,501	$	6,468
Less: net income attributable to participating shares	46		26
Net income available to common shareholders	$	10,455	$	6,442

The following table presents a reconciliation of basic to diluted weighted average shares of common stock outstanding (in thousands):

	Fiscal Quarter Ended
	April 3, 2021	March 28, 2020
Basic weighted average shares outstanding	7,626	7,805
Dilutive stock options and restricted stock units	205	232
Diluted weighted average shares outstanding	7,831	8,037

For the fiscal quarters ended April 3, 2021 and March 28, 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 13,826 and 73,647 shares, respectively. These share-based awards each period were anti-dilutive because their exercise price exceeded the average market price over the respective period.

8. Fair Value of Financial Instruments

As of April 3, 2021, CRA did not have any financial instruments measured at fair value on a recurring basis. The following table presents CRA’s financial instruments recorded in the condensed consolidated financial statements at January 2, 2021, which are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

	January 2, 2021
	Level 1		Level 2		Level 3
Assets:
Money market mutual funds	$	150	$	—	$	—
Total Assets	$	150	$	—	$	—
Liabilities:
Contingent consideration liability	$	—	$	—	$	14,620
Total Liabilities	$	—	$	—	$	14,620

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CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The fair value of CRA’s money market mutual fund share holdings was $1.00 per share.

The contingent consideration liability pertained to estimated future contingent consideration payments related to the acquisition of C1 Consulting, LLC, an independent consulting firm, and its wholly-owned subsidiary C1 Associates (collectively, “C1”). The following table summarizes the changes in the contingent consideration liabilities (in thousands):

	Fiscal Quarter Ended		Fiscal Year Ended
	April 3, 2021		January 2, 2021
Beginning balance	$	14,620	$	11,579
Remeasurement of acquisition-related contingent consideration	—		1,156
Accretion	380		1,885
Payment of contingent consideration	(15,000)		—
Ending balance	$	—	$	14,620

9. Credit Agreement

CRA is party to an amended and restated credit agreement that provides the Company with a $175.0 million revolving credit facility, which reflects an increase to the capacity by $50.0 million per an amendment to the credit agreement on January 12, 2021, and includes 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 was $40.0 million in borrowings outstanding under this revolving credit facility as of April 3, 2021. There were no borrowings outstanding under this facility as of January 2, 2021.

As of April 3, 2021, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $4.7 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 April 3, 2021, CRA was in compliance with the covenants of its credit agreement.

10. Commitments and Contingencies

As described in the previous note, 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 believes it has adequate legal defenses or insurance coverage, or both, 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.

11. Self-Tender Offer

On March 8, 2021, CRA commenced a modified "Dutch auction" self-tender offer to purchase up to $25.0 million in value of shares of its common stock at a price of not less than $66.25 per share nor greater than $76.00 per share. The self-tender offer expired on April 5, 2021. On April 8, 2021, CRA paid $25.0 million to repurchase 337,837 shares at a purchase price of $74.00 per share. The purchase price and transaction costs were funded from the revolving credit facility and cash on hand. The repurchased shares were retired.

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CRA INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

12. Subsequent Events

On May 6, 2021, CRA announced that its Board of Directors declared a quarterly cash dividend of $0.26 per common share, payable on June 11, 2021 to shareholders of record as of May 25, 2021.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Except for historical facts, the statements in this quarterly report are forward-looking statements. Forward-looking statements are merely our current predictions of future events. These statements are inherently uncertain, and actual events could differ materially from our predictions. Important factors that could cause actual events to vary from our predictions include those discussed below 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 the other documents that we file with the Securities and Exchange Commission, or SEC. You can read these documents at www.sec.gov.

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 file them electronically 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.

Critical Accounting Policies and Estimates

Our critical accounting policies involving the more significant estimates and judgments used in the preparation of our financial statements as of April 3, 2021 remain unchanged from January 2, 2021. Please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 2, 2021, filed with the Securities and Exchange Commission on March 4, 2021, for details on these critical accounting policies.

Recent Accounting Standards

Please refer to the sections captioned “Recent Accounting Standards Adopted” included in Note 1, “Summary of Significant Accounting Policies” in Part I, Item I, “Financial Statements” of this report.

Results of Operations—For the Fiscal Quarter Ended April 3, 2021, Compared to the Fiscal Quarter Ended March 28, 2020

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

	Fiscal Quarter Ended
	April 3, 2021		March 28, 2020
Revenues	100.0	%	100.0	%
Costs of services (exclusive of depreciation and amortization)	71.9		72.1
Selling, general and administrative expenses	15.8		19.1
Depreciation and amortization	2.3		2.3
Income from operations	10.0		6.4
Interest expense, net	(0.1)		(0.3)
Foreign currency gains (losses), net	(0.4)		1.1
Income before provision for income taxes	9.5		7.3
Provision for income taxes	2.3		2.1
Net income	7.2	%	5.1	%

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Fiscal Quarter Ended April 3, 2021, Compared to the Fiscal Quarter Ended March 28, 2020

Revenues. Revenues increased by $20.3 million, or 16.1%, to $146.5 million for the first quarter of fiscal 2021 from $126.2 million for the first quarter of fiscal 2020. The increase in net revenue was a result of an increase in gross revenues of $22.1 million as compared to the first quarter of fiscal 2020, partially offset by an increase in write-offs and reserves of $1.8 million compared to the first quarter of fiscal 2020. Utilization increased to 76% for the first quarter of fiscal 2021 from 71% for the first quarter of fiscal 2020, while consultant headcount grew 4.8% from 799 at the end of the first quarter of fiscal 2020 to 837 at the end of the first quarter of fiscal 2021.

Overall, revenues outside of the U.S. represented approximately 20% of net revenues for the first quarter of fiscal 2021 and fiscal 2020. Revenues derived from fixed-price projects remained at 23% of total revenues for the first quarter of fiscal 2021 compared with the first quarter of fiscal 2020. The percentage of revenue derived from fixed-price projects depends largely on the proportion of our revenues derived from our management consulting business, which typically has a higher concentration of fixed-price service contracts.

Costs of Services (exclusive of depreciation and amortization). Costs of services (exclusive of depreciation and amortization) increased by $14.4 million, or 15.8%, to $105.4 million for the first quarter of fiscal 2021 from $91.0 million for the first quarter of fiscal 2020. The increase in costs of services was due primarily to an increase of $4.5 million in employee compensation and fringe benefit costs attributable to our increased consultant headcount, an increase in incentive and retention compensation costs of $8.9 million, and an increase in forgivable loan amortization of $0.9 million. Additionally, client reimbursable expenses increased by $0.1 million in the first quarter of fiscal 2021 compared to the first quarter of fiscal 2020. As a percentage of revenues, costs of services (exclusive of depreciation and amortization) decreased to 71.9% for the first quarter of fiscal 2021 from 72.1% for the first quarter of fiscal 2020.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by $0.9 million, or 3.8%, to $23.2 million for the first quarter of fiscal 2021 from $24.1 million for the first quarter of fiscal 2020. Within this category of expenses, there was a $1.3 million decrease in travel and entertainment, a $0.6 million decrease in legal and other professional services fees, a $0.4 million decrease in rent expense, and a $0.2 million decrease in training and marketing expenses. Partially offsetting the decrease in these expenses was a $1.0 million increase in commissions to our non-employee experts, a $0.3 million increase in software subscription and data services, and a $0.3 million increase in employee and incentive compensation for the first quarter of fiscal 2021 as compared to the first quarter of fiscal 2020.

As a percentage of revenues, selling, general and administrative expenses decreased to 15.8% for the first quarter of fiscal 2021 from 19.1% for the first quarter of fiscal 2020. Commissions to our non-employee experts increased to 2.6% of revenues for the first quarter of fiscal 2021 compared to 2.2% of revenues for the first quarter of fiscal 2020.

Provision for Income Taxes. The income tax provision was $3.4 million and the effective tax rate ("ETR") was 24.4% for the first quarter of fiscal 2021 compared to $2.7 million and 29.4% for the first quarter of fiscal 2020. The ETR for the first quarter of fiscal 2021 was lower than the prior year primarily due to an increase in the tax benefit related to the accounting for stock-based compensation as well as the impact of higher pre-tax earnings, which diluted the permanent unfavorable differences, primarily related to the impact of the deductibility of compensation paid to executive officers, with respect to the full-year estimated ETR. The effective tax rate for the first quarter of fiscal 2021 was lower than the combined federal and state statutory tax rate due to the tax benefit related to the accounting for stock-based compensation, partially offset by non-deductible items resulting primarily from limitations of compensation paid to executive officers. The effective tax rate for the first quarter of fiscal 2020 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.

Net Income. Net income increased by $4.0 million to $10.5 million for the first quarter of fiscal 2021 from $6.5 million for the first quarter of fiscal 2020. The net income per diluted share was $1.34 per share for the first quarter of fiscal 2021, compared to $0.80 of net income per diluted share for the first quarter of fiscal 2020. Weighted average diluted shares outstanding decreased by approximately 206,000 shares to approximately 7,831,000 shares for the first quarter of fiscal 2021 from approximately 8,037,000 shares for the first quarter of fiscal 2020. The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since March 28, 2020, offset in part by the vesting of shares of restricted stock and time-vesting restricted stock units, the issuance of common stock for contingent consideration, and the exercise of stock options since March 28, 2020.

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Liquidity and Capital Resources

Fiscal Quarter Ended April 3, 2021

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

General. During the fiscal quarter ended April 3, 2021, cash and cash equivalents decreased by $14.0 million. We completed the period with cash and cash equivalents of $31.6 million. The principal drivers of the reduction of cash were payment of a significant portion of our fiscal 2020 performance bonuses in this fiscal quarter, the payment of the contingent consideration liability, the repurchase of shares, and the payment of dividends, offset by net borrowings of $40.0 million.

During the fiscal quarter ended April 3, 2021, working capital (defined as current assets less current liabilities) increased by $7.6 million to $27.4 million. The increase in working capital was principally due to a decrease in accrued expenses of $35.6 million, mostly due to the payment of our fiscal 2020 performance bonuses offset by fiscal 2021 performance bonus accruals and their related taxes. The increase in working capital was also due to increases in accounts receivable and unbilled services of $3.2 million, and a decrease in the current portion of deferred compensation of $19.7 million primarily related to the payment of the contingent consideration and payment of cash awards for our long-term incentive program. Partially offsetting these increases in working capital was a decrease in cash and cash equivalents of $14.0 million and an increase in borrowings of $40.0 million.

At April 3, 2021, $9.9 million of our cash and cash equivalents was held within the U.S. We have sufficient sources of liquidity in the U.S., including cash flow from operations and availability on our revolving credit facility to fund U.S. operations for the next 12 months without the need to repatriate funds from our foreign subsidiaries.

Sources and Uses of Cash. During the fiscal quarter ended April 3, 2021, net cash used in operating activities was $39.8 million. Net income was $10.5 million for the fiscal quarter ended April 3, 2021. The primary factor in cash used in operations was the decrease in accounts payable, accrued expenses, and other liabilities of $52.9 million, due primarily to the payment of a significant portion of our fiscal 2020 performance bonuses and performance awards and the payment of the contingent consideration liability. Other uses of cash included a $3.8 million decrease in lease liabilities, a net increase of $3.1 million in accounts receivable and unbilled receivables due primarily to the increase in revenues and the timing of billings, and a $2.7 million increase in prepaid expenses and other current assets. The decrease in forgivable loans for the period of $4.1 million was primarily driven by $2.2 million of forgivable loan issuances, offset by $6.3 million of forgivable loan amortization. Cash used in operations included incentive cash award expense of $1.7 million, non-cash depreciation and amortization expense of $3.3 million, right-of-use amortization of $3.2 million, share-based compensation expenses of $0.8 million, and other non-cash expenses of $0.9 million.

During the fiscal quarter ended April 3, 2021, net cash used in investing activities was $0.7 million for capital expenditures primarily related to the purchases of office equipment.

During the fiscal quarter ended April 3, 2021, net cash provided by financing activities was $26.5 million, primarily as a result of borrowings, net of repayments, under the revolving credit facility of $40.0 million and $1.1 million received upon the issuance of shares of common stock related to the exercise of stock options. Offsetting these increases in cash were the tax withholding payments reimbursed by restricted shares of $0.6 million, payment of $2.1 million of cash dividends to shareholders, $9.6 million of repurchases of common stock, and a portion of the payment of the contingent consideration classified as a financing activity in the amount of $2.4 million.

Lease Commitments

We are a lessee under certain operating leases for office space and equipment. Certain of our operating leases have terms that impose asset retirement obligations due to office modifications or the periodic redecoration of the premises, which are included in facility-related liabilities on our consolidated balance sheets and are recorded at a value based on their estimated discounted cash flows. We expect to satisfy these lease and related obligations, as they become due, from cash generated from operations.

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Indebtedness

We are party to an amended and restated credit agreement that provides us with a $175.0 million revolving credit facility, which reflects an increase to the capacity by $50.0 million per an amendment to the credit agreement on January 12, 2021, and includes a $15.0 million sublimit for the issuance of letters of credit. We may use the proceeds of the revolving credit facility to provide working capital and for other general corporate purposes. Generally, we may repay any borrowings under the revolving credit facility at any time, but we must repay all borrowings no later than October 24, 2022. There was $40.0 million in borrowings outstanding under the revolving credit facility as of April 3, 2021.

The amount available under the revolving credit facility is reduced by certain letters of credit outstanding, which amounted to $4.7 million as of April 3, 2021. Borrowings under the revolving credit facility bear interest at a rate per annum, at our election, of either (i) the adjusted base rate, as defined in the credit agreement, plus an applicable margin, which varies between 0.25% and 1.25% depending on our total leverage ratio as determined under the credit agreement, or (ii) the adjusted eurocurrency rate, as defined in the credit agreement, plus an applicable margin, which varies between 1.25% and 2.25% depending on our total leverage ratio. We are required to pay a fee on the unused portion of the revolving credit facility at a rate per annum that varies between 0.20% and 0.35% depending on our total leverage ratio. Borrowings under the revolving credit facility are secured by 100% of the stock of certain of our U.S. subsidiaries and 65% of the stock of certain of our foreign subsidiaries, which represent approximately $29.8 million in net assets as of April 3, 2021.

Under the credit agreement, we must comply with various financial and non-financial covenants. Compliance with these financial covenants is tested on a fiscal quarterly basis. Any indebtedness outstanding under the revolving credit facility may become immediately due and payable upon the occurrence of stated events of default, including our failure to pay principal, interest or fees or a violation of any financial covenant. The financial covenants require us to maintain an adjusted consolidated EBITDA to consolidated interest expense ratio of more than 2.5:1.0 and to comply with a consolidated debt to adjusted consolidated EBITDA ratio of not more than 3.0:1.0. The non-financial covenant restrictions of the senior credit agreement include, but are not limited to, our ability to incur additional indebtedness, engage in acquisitions or dispositions, and enter into business combinations. At April 3, 2021 and currently, we are in compliance with the covenants of our credit agreement.

Forgivable Loans

In order to attract and retain highly skilled professionals, we may issue forgivable loans or term loans to employees and non-employee experts. A portion of these loans is collateralized by key person life insurance. The forgivable loans have terms that are generally between one and eight years. The principal amount of forgivable loans and accrued interest is forgiven by us over the term of the loans, so long as the employee or non-employee expert continues employment or affiliation with us 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.

Compensation Arrangements

We have entered into compensation arrangements for the payment of performance awards to certain of our employees and non-employee experts that are payable if specific performance targets are met. The financial targets may include a measure of revenue generation, profitability, or both. The amounts of the awards to be paid under these compensation arrangements could fluctuate depending on future performance during the applicable measurement periods. Increases in estimated awards are expensed prospectively over the remaining service period. Decreases in estimated awards are recorded in the period incurred We believe that we will have sufficient funds to satisfy any obligations related to the performance awards. We expect to fund any cash payments from existing cash resources, cash generated from operations, or borrowings on our revolving credit facility.

Our Amended and Restated 2006 Equity Incentive Plan, as amended (the "2006 Equity Plan"), authorizes the grant of a variety of incentive and performance equity awards to our directors, employees and non-employee experts, including stock options, shares of restricted stock, restricted stock units, and other equity awards.

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. 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 long-term incentive program, or "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. The compensation committee of our Board of Directors is responsible for

20

approving all cash and equity awards under the LTIP. We expect to fund any cash payments from existing cash resources, cash generated from operations, or borrowings on our revolving credit facility.

Business and Talent Acquisitions

As part of our business, we regularly evaluate opportunities to acquire other consulting firms, practices or groups, or other businesses. In recent years, we have typically paid for acquisitions with cash, or a combination of cash and our common stock, and we may continue to do so in the future. To pay for an acquisition, we may use cash on hand, cash generated from our operations, borrowings under our revolving credit facility, or we may pursue other forms of financing. Our ability to secure short-term and long-term debt or equity financing in the future, including our ability to refinance our credit agreement, will depend on several factors, including our future profitability, the levels of our debt and equity, restrictions under our existing revolving credit facility, and the overall credit and equity market environments.

Share Repurchases

In February 2021, our Board of Directors authorized an expansion of our existing share repurchase program, authorizing the purchase of an additional $40.0 million of our common stock. We may repurchase shares under this program in open market purchases (including through any Rule 10b5-1 plan adopted by us) or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations. During the fiscal quarter ended April 3, 2021, we repurchased and retired 166,552 shares under our share repurchase program at an average price per share of $57.93. During the fiscal quarter ended March 28, 2020, we repurchased and retired 82,613 shares under our share repurchase program at an average price per share of $46.15. As of April 3, 2021, we had approximately $40.5 million available for future repurchases under our share repurchase program. We plan to finance future repurchases with available cash, cash from future operations, and funds from our revolving credit facility. We expect to continue to repurchase shares under our share repurchase program.

Self-Tender Offer

On March 8, 2021, we commenced a modified "Dutch auction" self-tender offer to purchase up to $25.0 million in value of shares of our common stock at a price of not less than $66.25 per share nor greater than $76.00 per share. The self-tender offer expired on April 5, 2021. On April 8, 2021, we paid $25.0 million to repurchase 337,837 shares at a purchase price of $74.00 per share. The purchase price and transaction costs were funded from the revolving credit facility and cash on hand. The repurchased shares were retired.

Dividends to Shareholders

We anticipate paying regular quarterly dividends each year. These dividends are anticipated to be funded through cash flow from operations, available cash on hand, and/or borrowings under our revolving credit facility. Although we anticipate paying regular quarterly dividends on our common stock for the foreseeable future, the declaration, timing and amounts of any such dividends remain subject to the discretion of our Board of Directors. During the fiscal quarters ended April 3, 2021 and March 28, 2020, we paid dividends and dividend equivalents of $2.1 million and $1.8 million, respectively.

Impact of Inflation

To date, inflation has not had a material impact on our financial results. There can be no assurance, however, that inflation will not adversely affect our financial results in the future.

Future Capital and Liquidity Needs

We anticipate that our future capital and liquidity needs will principally consist of funds required for:

•operating and general corporate expenses relating to the operation of our business, including the compensation of our employees under various annual bonus or long-term incentive compensation programs;

•the hiring of individuals to replenish and expand our employee base;

•capital expenditures, primarily for information technology equipment, office furniture and leasehold improvements;

•debt service and repayments, including interest payments on borrowings under our revolving credit facility;

•share repurchases, under programs that we may have in effect from time to time;

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•dividends to shareholders;

•potential acquisitions of businesses that would allow us to diversify or expand our service offerings;

•contingent obligations related to our acquisitions; and

•other known future contractual obligations.

The hiring of individuals to replenish and expand our employee base is an essential part of our business operations and has historically been funded principally from operations. Many of the other above activities are discretionary in nature. For example, capital expenditures can be deferred, acquisitions can be forgone, and share repurchase programs and regular dividends can be suspended. As such, our operating model provides flexibility with respect to the deployment of cash flow from operations. Given this flexibility, we believe that our cash flows from operations, supplemented by cash on hand and borrowings under our revolving credit facility (as necessary), will provide adequate cash to fund our long-term cash needs from normal operations for at least the next twelve months.

Our conclusion that we will be able to fund our cash requirements by using existing capital resources and cash generated from operations does not take into account the impact of any future acquisition transactions or any unexpected significant changes in the number of employees or other expenditures that are currently not contemplated. The anticipated cash needs of our business could change significantly if we pursue and complete additional business acquisitions, if our business plans change, if economic conditions change from those currently prevailing or from those now anticipated, or if other unexpected circumstances arise that have a material effect on the cash flow or profitability of our business. Any of these events or circumstances, including any new business opportunities, could involve significant additional funding needs in excess of the identified currently available sources and could require us to raise additional debt or equity funding to meet those needs on terms that may be less favorable compared to our current sources of capital. Our ability to raise additional capital over the next twelve months, if necessary, is subject to a variety of factors that we cannot predict with certainty, including:

•our future profitability;

•the quality of our accounts receivable;

•our relative levels of debt and equity;

•the volatility and overall condition of the capital markets; and

•the market prices of our securities.

Factors Affecting Future Performance

Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q, as well as a description of material risks we face, are set forth below under the heading “Risk Factors” and included in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended January 2, 2021, filed with the Securities and Exchange Commission on March 4, 2021. If any of these risks, or any risks not presently known to us or that we currently believe are not significant, develops into an actual event, then our business, financial condition, and results of operations could be adversely affected.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

For information regarding our exposure to certain market risks see Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended January 2, 2021, filed with the Securities and Exchange Commission on March 4, 2021.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. This is done in order to ensure that information we are required to disclose in the reports that are filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Based upon that evaluation, our President and Chief

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Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of April 3, 2021.

Management has concluded that the condensed consolidated financial statements included in this quarterly report on Form 10-Q present fairly, in all material aspects, our financial position at the end of, and the results of operations and cash flows for, the periods presented in conformity with accounting principles generally accepted in the United States.

Evaluation of Changes in Internal Control over Financial Reporting

Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial Officer, we evaluated whether there were any changes in our internal control over financial reporting during the first quarter of fiscal 2021. There were no changes in our internal control over financial reporting identified in connection with the above evaluation that occurred during the first quarter of fiscal 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Important Considerations

The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

None.

ITEM 1A. Risk Factors

There are many risks and uncertainties that can affect our future business, financial performance or results of operations. In addition to the other information set forth in this report, please review and consider the information regarding certain factors that could materially affect our business, financial condition or future results set forth under Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 2, 2021, filed with the Securities and Exchange Commission on March 4, 2021. There have been no material changes to these risk factors during the quarter ended April 3, 2021.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a)On February 25, 2021, we issued 40,039 shares of common stock to certain principals of C1 Consulting, LLC (“C1 Consulting”) as partial consideration for the acquisition of substantially all of the assets of C1 Consulting pursuant to an asset purchase agreement. For the purposes of the acquisition, the agreed upon value of our common stock was $56.19 per share. No underwriters were used in the foregoing transaction. This sale of securities was made in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder for transactions by an issuer not involving a public offering.

(b)Not applicable.

(c)The following provides information about our repurchases of shares of our common stock during the fiscal quarter ended April 3, 2021. During that period, we did not act in concert with any affiliate or any other person to acquire any of our common stock and, accordingly, we do not believe that purchases by any such affiliate or other person (if any) are reportable in the following table. For purposes of this table, we have divided the fiscal quarter into three periods of four weeks, four weeks, and five weeks, respectively, to coincide with our reporting periods during the first quarter of fiscal 2020.

23

Issuer Purchases of Equity Securities

Period	(a) Total Number of Shares Purchased(1)(2)	(b) Average Price Paid per Share(1)(2)		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)	(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(2)
January 3, 2021 to January 30, 2021	73,062	$	57.60	73,062	$	5,924,092
January 31, 2021 to February 27, 2021	72,619	$	56.85	67,965	$	42,058,408
February 28, 2021 to April 3, 2021	30,766	$	61.74	25,525	$	40,484,285

_______________________________

(1)During the four weeks ended February 27, 2021, we accepted 4,654 shares of our common stock as a tax withholding from certain of our employees in connection with the vesting of shares of restricted stock that occurred during the indicated period, pursuant to the terms of our 2006 equity incentive plan, at the average price of $56.44. During the five weeks ended April 3, 2021, we accepted 5,241 shares of our common stock as a tax withholding from certain of our employees in connection with the vesting of shares of restricted stock and restricted stock units that occurred during the indicated period, pursuant to the terms of our 2006 equity incentive plan, at the average price per share of $62.07.

(2)On February 4, 2021 our Board of Directors authorized an expansion to our existing share repurchase program of an additional $40.0 million of outstanding shares of our common stock. We may repurchase shares under this program in open market purchases (including through any Rule 10b5-1 plan adopted by us) or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations. During the four weeks ended January 30, 2021, we repurchased and retired 73,062 shares under this program at an average price per share of $57.60. During the four weeks ended February 27, 2021, we repurchased and retired 67,965 shares under this program at an average price per share of $56.88. During the five weeks ended April 3, 2021, we repurchased and retired 25,525 shares under this program at an average price per share of $61.67. Approximately $40.5 million was available for future repurchases under this program as of April 3, 2021. We expect to continue to repurchase shares under this program.

On March 8, 2021, we commenced a modified "Dutch auction" self-tender offer to purchase up to $25.0 million in value of shares of our common stock at a price of not less than $66.25 per share nor greater than $76.00 per share. The self-tender offer expired on April 5, 2021. On April 8, 2021, we paid $25.0 million to repurchase 337,837 shares at a purchase price of $74.00 per share. The purchase price and transaction costs were funded from the revolving credit facility and cash on hand. The repurchased shares were retired. Because the shares were repurchased on April 8, 2021, after the conclusion of the fiscal quarter reported pursuant to this Quarterly Report on Form 10-Q, such shares are not reflected in the Issuer Purchase of Equity Securities table above.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

None.

ITEM 5. Other Information

None.

24

ITEM 6. EXHIBIT INDEX

Item No.	Description
3.1	Amended and Restated Articles of Organization, as amended by the Articles of Amendment to our Articles of Organization filed on May 6, 2005 (incorporated by reference to Exhibit 3.1 to our annual report on Form 10-K filed on February 27, 2020).
3.2	Amended and Restated By-Laws, as amended (incorporated by reference to Exhibit 3.2 to our current report on Form 8-K filed on January 31, 2011).
10.1	Incremental Amendment to Amended and Restated Credit Agreement, dated as of January 12, 2021, by and among CRA International, Inc., CRA International (UK) Limited, CRA International (Netherlands) B.V., and CRA International Limited, as the Borrowers, Citizens Bank, N.A., as Administrative Agent and a 2021 Incremental Revolving Lender, and Bank of America, N.A., as a 2021 Incremental Revolving Lender (incorporated by reference to Exhibit 10.1 of our current report on Form 8-K filed on January 14, 2021)
31.1	Certification of Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements from CRA International, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 3, 2021, formatted in Inline XBRL (eXtensible Business Reporting Language), as follows: (i) Condensed Consolidated Statements of Operations (unaudited) for the fiscal quarters ended April 3, 2021 and March 28, 2020, (ii) Condensed Consolidated Statements of Comprehensive Income (unaudited) for the fiscal quarters ended April 3, 2021 and March 28, 2020, (iii) Condensed Consolidated Balance Sheets (unaudited) at April 3, 2021 and January 2, 2021, (iv) Condensed Consolidated Statements of Cash Flows (unaudited) for the fiscal quarters ended April 3, 2021 and March 28, 2020, (v) Condensed Consolidated Statement of Shareholders’ Equity (unaudited) for the fiscal quarters ended April 3, 2021 and March 28, 2020, and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CRA INTERNATIONAL, INC.
Date: May 6, 2021	By:	/s/ PAUL A. MALEH
		Paul A. Maleh
		President and Chief Executive Officer
Date: May 6, 2021	By:	/s/ DANIEL K. MAHONEY
		Daniel K. Mahoney
		Chief Financial Officer, Executive Vice President and Treasurer

26

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul A. Maleh, certify that:

1.I have reviewed this quarterly report on Form 10-Q of CRA International, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of the financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect adversely the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2021	By:	/s/ PAUL A. MALEH
		Paul A. Maleh
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel K. Mahoney, certify that:

1.I have reviewed this quarterly report on Form 10-Q of CRA International, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of the financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect adversely the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2021	By:	/s/ DANIEL K. MAHONEY
		Daniel K. Mahoney
		Chief Financial Officer, Executive Vice President and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CRA International, Inc. (the “Company”) on Form 10-Q for the quarter ended April 3, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned President and Chief Executive Officer of the Company, certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ PAUL A. MALEH

Paul A. Maleh

President and Chief Executive Officer

Date: May 6, 2021

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CRA International, Inc. (the “Company”) on Form 10-Q for the quarter ended April 3, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Financial Officer, Executive Vice President and Treasurer of the Company, certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ DANIEL K. MAHONEY

Daniel K. Mahoney

Chief Financial Officer, Executive Vice President and Treasurer

Date: May 6, 2021

XML

Document and Entity Information - shares	3 Months Ended
	Apr. 03, 2021	Apr. 30, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Apr. 03, 2021
Document Transition Report	false
Entity File Number	000-24049
Entity Registrant Name	CRA International, Inc.
Entity Incorporation, State or Country Code	MA
Entity Tax Identification Number	04-2372210
Entity Address, Address Line One	200 Clarendon Street
Entity Address, City or Town	Boston
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02116-5092
City Area Code	617
Local Phone Number	425-3000
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	CRAI
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		7,322,728
Entity Central Index Key	0001053706
Amendment Flag	false
Current Fiscal Year End Date	--01-01
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Income Statement [Abstract]
Revenues	$ 146,518	$ 126,158
Costs of services (exclusive of depreciation and amortization)	105,374	90,997
Selling, general and administrative expenses	23,206	24,123
Depreciation and amortization	3,301	2,943
Income from operations	14,637	8,095
Interest expense, net	(199)	(362)
Foreign currency gains (losses), net	(551)	1,422
Income before provision for income taxes	13,887	9,155
Provision for income taxes	3,386	2,687
Net income	$ 10,501	$ 6,468
Net income per share:
Basic (in dollars per share)	$ 1.37	$ 0.83
Diluted (in dollars per share)	$ 1.34	$ 0.80
Weighted average number of shares outstanding:
Basic (in shares)	7,626	7,805
Diluted (in shares)	7,831	8,037

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 10,501	$ 6,468
Other comprehensive income (loss)
Foreign currency translation adjustments	(111)	(2,427)
Comprehensive income	$ 10,390	$ 4,041

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands	Apr. 03, 2021	Jan. 02, 2021
Current assets:
Cash and cash equivalents	$ 31,629	$ 45,677
Accounts receivable, net of allowances of $3,789 at April 3, 2021 and $3,595 at January 2, 2021	91,690	111,595
Unbilled services, net of allowances of $1,227 at April 3, 2021 and $1,000 at January 2, 2021	63,985	40,881
Prepaid expenses and other current assets	10,030	7,068
Forgivable loans	13,196	14,749
Total current assets	210,530	219,970
Property and equipment, net	60,304	62,878
Goodwill	89,278	89,187
Intangible assets, net	4,839	5,108
Right-of-use assets	120,110	122,144
Deferred income taxes	10,673	9,667
Forgivable loans, net of current portion	44,363	46,864
Other assets	2,423	2,692
Total assets	542,520	558,510
Current liabilities:
Accounts payable	18,995	19,430
Accrued expenses	100,758	136,376
Deferred revenue and other liabilities	8,275	9,866
Current portion of lease liabilities	13,889	13,557
Current portion of deferred compensation	1,214	20,902
Revolving line of credit	40,000	0
Total current liabilities	183,131	200,131
Non-current liabilities:
Deferred compensation and other non-current liabilities	8,596	7,075
Facility-related non-current liabilities	2,169	2,113
Non-current portion of lease liabilities	136,561	139,447
Deferred income taxes	735	725
Total non-current liabilities	148,061	149,360
Commitments and contingencies
Shareholders’ equity:
Preferred stock, no par value; 1,000,000 shares authorized; none issued and outstanding	0	0
Common stock, no par value; 25,000,000 shares authorized; 7,627,591 and 7,693,497 shares issued and outstanding at April 3, 2021 and January 2, 2021, respectively	0	503
Retained earnings	219,922	216,999
Accumulated other comprehensive loss	(8,594)	(8,483)
Total shareholders’ equity	211,328	209,019
Total liabilities and shareholders’ equity	$ 542,520	$ 558,510

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands	Apr. 03, 2021	Jan. 02, 2021
Statement of Financial Position [Abstract]
Allowance for accounts receivable	$ 3,789	$ 3,595
Allowance for unbilled services	$ 1,227	$ 1,000
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (shares)	1,000,000	1,000,000
Preferred stock, shares issued (shares)	0	0
Preferred stock, shares outstanding (shares)	0	0
Common stock, par value ( in dollars per share )	$ 0	$ 0
Common stock, shares authorized (shares)	25,000,000	25,000,000
Common stock, shares issued (shares)	7,627,591	7,693,497
Common stock, shares outstanding (shares)	7,627,591	7,693,497

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
OPERATING ACTIVITIES:
Net income	$ 10,501	$ 6,468
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	3,301	2,943
Facility-related liabilities	17	35
Right-of-use asset amortization	3,199	2,994
Deferred income taxes	(896)	23
Share-based compensation expense	842	655
Accounts receivable allowances	182	62
Unrealized foreign currency remeasurement gains, net	(284)	(398)
Changes in operating assets and liabilities:
Accounts receivable	19,838	1,388
Unbilled services, net	(23,063)	(8,217)
Prepaid expenses and other current assets, and other assets	(2,733)	(5,327)
Forgivable loans	4,140	(27,139)
Incentive cash awards	1,729	1,423
Accounts payable, accrued expenses, and other liabilities	(52,856)	(39,121)
Lease liabilities	(3,765)	(1,164)
Net cash used in operating activities	(39,848)	(65,375)
INVESTING ACTIVITIES:
Purchases of property and equipment	(692)	(7,949)
Net cash used in investing activities	(692)	(7,949)
FINANCING ACTIVITIES:
Issuance of common stock, principally stock option exercises	1,113	151
Borrowings under revolving line of credit	42,000	70,000
Repayments under revolving line of credit	(2,000)	0
Tax withholding payments reimbursed by shares	(588)	(390)
Cash paid for contingent consideration	(2,357)	0
Cash paid on dividend equivalents	(79)	(40)
Cash dividends paid to shareholders	(1,982)	(1,796)
Repurchase of common stock	(9,642)	(3,810)
Net cash provided by financing activities	26,465	64,115
Effect of foreign exchange rates on cash and cash equivalents	27	(612)
Net decrease in cash and cash equivalents	(14,048)	(9,821)
Cash and cash equivalents at beginning of period	45,677	25,639
Cash and cash equivalents at end of period	31,629	15,818
Noncash investing and financing activities:
Purchases of property and equipment not yet paid for	294	370
Asset retirement obligations	0	155
Right-of-use assets obtained in exchange for lease obligations	1,070	0
Restricted common stock issued for contingent consideration	2,250	0
Supplemental cash flow information:
Cash paid for taxes	844	695
Cash paid for interest	24	245
Cash paid for amounts included in operating lease liabilities	$ 5,157	$ 5,039

XML

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) - USD ($) $ in Thousands	Total	Cumulative Effect Period of Adoption, Adjustment	Cumulative Effect Period of Adoption, Adjusted Balance	Common Stock	Common Stock Cumulative Effect Period of Adoption, Adjusted Balance	Retained Earnings	Retained Earnings Cumulative Effect Period of Adoption, Adjustment	Retained Earnings Cumulative Effect Period of Adoption, Adjusted Balance	Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss Cumulative Effect Period of Adoption, Adjusted Balance
Beginning balance at Dec. 28, 2019	$ 197,751		$ 197,548	$ 9,265	$ 9,265	$ 200,249		$ 200,046	$ (11,763)	$ (11,763)
Beginning balance (ASC 326) at Dec. 28, 2019		$ (203)					$ (203)
Beginning balance (in shares) at Dec. 28, 2019				7,814,797	7,814,797
Increase (Decrease) in Shareholders' Equity
Net income	6,468					6,468
Foreign currency translation adjustment	(2,427)								(2,427)
Issuance of restricted common stock for contingent consideration	0
Exercise of stock options	151			$ 151
Exercise of stock options (in shares)				8,200
Share-based compensation expense	$ 655			$ 655
Restricted shares vesting (in shares)	23,884
Redemption of vested employee restricted shares for tax withholding	$ (390)			$ (390)
Redemption of vested employee restricted shares for tax withholding (in shares)				(7,843)
Shares repurchased	(3,810)			$ (3,810)
Shares repurchased (in shares)				(82,613)
Accrued dividends on unvested shares	1					1
Cash paid on dividend equivalents	(40)					(40)
Cash dividends paid to shareholders (per share)	(1,796)					(1,796)
Ending balance at Mar. 28, 2020	196,360			$ 5,871		204,679			(14,190)
Ending balance (in shares) at Mar. 28, 2020				7,756,425
Beginning balance at Jan. 02, 2021	$ 209,019			$ 503		216,999			(8,483)
Beginning balance (in shares) at Jan. 02, 2021	7,693,497			7,693,497
Increase (Decrease) in Shareholders' Equity
Net income	$ 10,501					10,501
Foreign currency translation adjustment	(111)								(111)
Issuance of restricted common stock for contingent consideration	$ 2,250
Issuance of restricted common stock for contingent consideration (in shares)	40,039
Exercise of stock options	$ 1,113			$ 1,113
Exercise of stock options (in shares)				41,008
Share-based compensation expense	842			$ 842
Restricted shares vesting (in shares)				29,494
Redemption of vested employee restricted shares for tax withholding	(588)			$ (588)
Redemption of vested employee restricted shares for tax withholding (in shares)				(9,895)
Shares repurchased	(9,642)			$ (4,120)		(5,522)
Shares repurchased (in shares)				(166,552)
Accrued dividends on unvested shares	5					5
Cash paid on dividend equivalents	(79)					(79)
Cash dividends paid to shareholders (per share)	(1,982)					(1,982)
Ending balance at Apr. 03, 2021	$ 211,328			$ 0		$ 219,922			$ (8,594)
Ending balance (in shares) at Apr. 03, 2021	7,627,591			7,627,591

XML

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) (Parenthetical) - $ / shares	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Statement of Stockholders' Equity [Abstract]
Cash dividends paid to shareholders (in dollars per share)	$ 0.26	$ 0.23

XML

Summary of Significant Accounting Policies

3 Months Ended

Apr. 03, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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 January 2, 2021 included in CRA’s Annual Report on Form 10-K filed with the SEC on March 4, 2021 (the “2020 Form 10-K”).

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, 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. 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.

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. The Company repurchases its common stock under its share repurchase program 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. On March 8, 2021, CRA commenced a modified "Dutch auction" self-tender offer to purchase up to $25.0 million in value of shares of its common stock, as further described in Note 11. The purchase price of repurchases is first charged against available paid-in capital (“PIC”) until PIC is exhausted, wherein purchases will be charged

to retained earnings. As of April 3, 2021, PIC was exhausted. CRA’s common stock has no par value. All shares repurchased have been retired.

Recent Accounting Standards Adopted

Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

CRA adopted Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”) on the first day of fiscal 2021. ASU 2019-12 simplifies or clarifies accounting for income taxes by changing prior guidance related to 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. 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.

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Fair Value of Financial Instruments

3 Months Ended

Apr. 03, 2021

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

As of April 3, 2021, CRA did not have any financial instruments measured at fair value on a recurring basis. The following table presents CRA’s financial instruments recorded in the condensed consolidated financial statements at January 2, 2021, which are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

	January 2, 2021
	Level 1		Level 2		Level 3
Assets:
Money market mutual funds	$	150	$	—	$	—
Total Assets	$	150	$	—	$	—
Liabilities:
Contingent consideration liability	$	—	$	—	$	14,620
Total Liabilities	$	—	$	—	$	14,620

The fair value of CRA’s money market mutual fund share holdings was $1.00 per share.

The contingent consideration liability pertained to estimated future contingent consideration payments related to the acquisition of C1 Consulting, LLC, an independent consulting firm, and its wholly-owned subsidiary C1 Associates (collectively, “C1”). The following table summarizes the changes in the contingent consideration liabilities (in thousands):

	Fiscal Quarter Ended		Fiscal Year Ended
	April 3, 2021		January 2, 2021
Beginning balance	$	14,620	$	11,579
Remeasurement of acquisition-related contingent consideration	—		1,156
Accretion	380		1,885
Payment of contingent consideration	(15,000)		—
Ending balance	$	—	$	14,620

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Revenue Recognition

3 Months Ended

Apr. 03, 2021

Revenue from Contract with Customer [Abstract]

Revenue Recognition

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 Quarter Ended
Type of Contract	April 3, 2021		March 28, 2020
Consulting services revenues
Fixed-price	$	33,433	$	28,988
Time-and-materials	113,085		97,170
Total	$	146,518	$	126,158

	Fiscal Quarter Ended
Geographic Breakdown	April 3, 2021		March 28, 2020
Consulting services revenues
United States	$	117,247	$	100,740
United Kingdom	23,286		19,066
Other	5,985		6,352
Total	$	146,518	$	126,158

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 specific price concessions and

those expected to be extended to CRA customers estimated by CRA's historical realization rates. Reserves for variable consideration are recorded as a component of the allowances for accounts receivable and unbilled services on the condensed consolidated balance sheets. Adjustments to the reserves for variable consideration are included in revenues on the condensed consolidated statements of operations.

CRA also maintains allowances for accounts receivable and unbilled services for estimated losses resulting from clients’ failure to make required payments. CRA adopted ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASC 326") on the first day of fiscal 2020, which changed the method CRA utilizes to estimate reserves related to credit risk. As a result of the adoption, CRA recognized a $0.2 million cumulative-effect increase to allowances for accounts receivable and unbilled services and a reduction to the fiscal 2020 opening balance of retained earnings.

The following table presents CRA's bad debt expense, net of recoveries of previously written off allowances (in thousands):

	Fiscal Quarter Ended
	April 3, 2021		March 28, 2020
Bad debt expense (recovery), net	$	(13)	$	59

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 Quarter Ended
	April 3, 2021		March 28, 2020
Reimbursable expenses	$	16,479	$	16,430

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 April 3, 2021 and January 2, 2021.

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

	April 3, 2021		January 2, 2021
Contract liabilities	$	2,941	$	5,527

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
	April 3, 2021		March 28, 2020
Amounts included in contract liabilities at the beginning of the period	$	4,355	$	2,906
Performance obligations satisfied in previous periods	$	2,183	$	3,257

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Forgivable Loans

3 Months Ended

Apr. 03, 2021

Forgivable Loans

Forgivable Loans

Forgivable Loans

In order to attract and retain highly skilled professionals, CRA may issue forgivable loans to employees and non-employee experts, certain of which loans may be denominated in local currencies. A portion of these loans is collateralized. 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 following table presents forgivable loan activity for the respective periods (in thousands):

	Fiscal Quarter Ended		Fiscal Year Ended
	April 3, 2021		January 2, 2021
Beginning balance	$	61,613	$	55,141
Advances	2,153		42,418
Reclassification from accrued expenses / to other assets (1)	—		(9,713)
Amortization	(6,295)		(26,628)
Effects of foreign currency translation	88		395
Ending balance	$	57,559	$	61,613
Current portion of forgivable loans	$	13,196	$	14,749
Non-current portion of forgivable loans	$	44,363	$	46,864

_______________________________

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

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Goodwill and Intangible Assets

3 Months Ended

Apr. 03, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the fiscal quarter ended April 3, 2021 are summarized as follows (in thousands):

Goodwill	$	161,080
Accumulated goodwill impairment	(71,893)
Goodwill, net at January 2, 2021	89,187
Foreign currency translation adjustment	91
Goodwill, net at April 3, 2021 (1)	$	89,278

_______________________________

(1)Goodwill, net at April 3, 2021, is comprised of goodwill of $161.2 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 quarter ended April 3, 2021 or during the fiscal year ended January 2, 2021.

The components of acquired identifiable intangible assets are as follows (in thousands):

	April 3, 2021		January 2, 2021
Non-competition agreements	$	280	$	280
Customer relationships	8,220		12,120
Total cost	8,500		12,400
Accumulated amortization	(3,661)		(7,292)
Total intangible assets, net	$	4,839	$	5,108

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Accrued Expenses

3 Months Ended

Apr. 03, 2021

Accrued Liabilities, Current [Abstract]

Accrued Expenses

Accrued Expenses

Accrued expenses consist of the following (in thousands):

	April 3, 2021		January 2, 2021
Compensation and related expenses	$	85,209	$	123,540
Income taxes payable	5,251		1,927
Performance awards	2,376		2,176
Other professional fees	1,635		1,541
Direct project accruals	3,116		3,988
Accrued leasehold improvements	40		52
Other	3,131		3,152
Total accrued expenses	$	100,758	$	136,376

As of April 3, 2021, and January 2, 2021, approximately $50.3 million and $102.6 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”

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Income Taxes	3 Months Ended
	Apr. 03, 2021
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesFor the fiscal quarters ended April 3, 2021 and March 28, 2020, CRA’s effective income tax rate (“ETR”) was 24.4% and 29.4%, respectively. The ETR for the first quarter of fiscal 2021 was lower than the prior year due to an increase in the tax benefit related to the accounting for stock-based compensation as well as the impact of higher pre-tax earnings in the first quarter of fiscal 2021, which diluted the permanent unfavorable differences, primarily related to the impact of the deductibility of compensation paid to executive officers, with respect to the full-year estimated ETR.During the fourth quarter of fiscal 2020, CRA considered the operating needs of the United Kingdom ("U.K.") subsidiary, as well as the tax implications of no longer asserting indefinite reinvestment with respect to the U.K. operations. As a result of both a qualitative and quantitative analysis, 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 component of foreign currency translation adjustments on the condensed consolidated statements of comprehensive income. For the fiscal quarter ended April 3, 2021, CRA’s U.K. subsidiary distributed approximately £12.0 million of both previously taxed and untaxed earnings to CRA’s U.S. parent entity, the foreign currency translation impact of which was immaterial. 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.

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Net Income Per Share

3 Months Ended

Apr. 03, 2021

Earnings Per Share [Abstract]

Net Income Per Share

Net Income Per Share

CRA calculates basic earnings per share using the two-class method. CRA calculates diluted earnings per share using the more dilutive of either the two-class method or treasury stock method. The two-class method was more dilutive for the fiscal quarters ended April 3, 2021 and March 28, 2020.

Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all the net earnings for the period had been distributed. CRA's participating securities consist of unvested share-based payment awards that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders. Net earnings allocable to these participating securities were not material for the fiscal quarters ended April 3, 2021 and March 28, 2020.

The following table presents a reconciliation from net income to the net income available to common shareholders (in thousands):

	Fiscal Quarter Ended
	April 3, 2021		March 28, 2020
Net income, as reported	$	10,501	$	6,468
Less: net income attributable to participating shares	46		26
Net income available to common shareholders	$	10,455	$	6,442

The following table presents a reconciliation of basic to diluted weighted average shares of common stock outstanding (in thousands):

	Fiscal Quarter Ended
	April 3, 2021	March 28, 2020
Basic weighted average shares outstanding	7,626	7,805
Dilutive stock options and restricted stock units	205	232
Diluted weighted average shares outstanding	7,831	8,037

For the fiscal quarters ended April 3, 2021 and March 28, 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 13,826 and 73,647 shares, respectively. These share-based awards each period were anti-dilutive because their exercise price exceeded the average market price over the respective period.

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Credit Agreement

3 Months Ended

Apr. 03, 2021

Debt Disclosure [Abstract]

Credit Agreement

Credit Agreement

CRA is party to an amended and restated credit agreement that provides the Company with a $175.0 million revolving credit facility, which reflects an increase to the capacity by $50.0 million per an amendment to the credit agreement on January 12, 2021, and includes 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 was $40.0 million in borrowings outstanding under this revolving credit facility as of April 3, 2021. There were no borrowings outstanding under this facility as of January 2, 2021.

As of April 3, 2021, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $4.7 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 April 3, 2021, CRA was in compliance with the covenants of its credit agreement.

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Commitments and Contingencies

3 Months Ended

Apr. 03, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

As described in the previous note, 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 believes it has adequate legal defenses or insurance coverage, or both, 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.

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Self-Tender Offer	3 Months Ended
	Apr. 03, 2021
Equity [Abstract]
Self-Tender Offer	Tender OfferOn March 8, 2021, CRA commenced a modified "Dutch auction" self-tender offer to purchase up to $25.0 million in value of shares of its common stock at a price of not less than $66.25 per share nor greater than $76.00 per share. The self-tender offer expired on April 5, 2021. On April 8, 2021, CRA paid $25.0 million to repurchase 337,837 shares at a purchase price of $74.00 per share. The purchase price and transaction costs were funded from the revolving credit facility and cash on hand. The repurchased shares were retired.

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Subsequent Events	3 Months Ended
	Apr. 03, 2021
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn May 6, 2021, CRA announced that its Board of Directors declared a quarterly cash dividend of $0.26 per common share, payable on June 11, 2021 to shareholders of record as of May 25, 2021.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Apr. 03, 2021

Accounting Policies [Abstract]

Basis of Presentation

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 January 2, 2021 included in CRA’s Annual Report on Form 10-K filed with the SEC on March 4, 2021 (the “2020 Form 10-K”).

Estimates

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, 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. 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.

Common Stock and Equity

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. The Company repurchases its common stock under its share repurchase program 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. On March 8, 2021, CRA commenced a modified "Dutch auction" self-tender offer to purchase up to $25.0 million in value of shares of its common stock, as further described in Note 11. The purchase price of repurchases is first charged against available paid-in capital (“PIC”) until PIC is exhausted, wherein purchases will be charged

to retained earnings. As of April 3, 2021, PIC was exhausted. CRA’s common stock has no par value. All shares repurchased have been retired.

Recent Accounting Standards Adopted and Not Yet Adopted

Recent Accounting Standards Adopted

Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

CRA adopted Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”) on the first day of fiscal 2021. ASU 2019-12 simplifies or clarifies accounting for income taxes by changing prior guidance related to 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. 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.

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Fair value of Financial Instruments (Tables)

3 Months Ended

Apr. 03, 2021

Fair Value Disclosures [Abstract]

Schedule of assets that are measured and recorded at fair value on a recurring basis

The following table presents CRA’s financial instruments recorded in the condensed consolidated financial statements at January 2, 2021, which are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

	January 2, 2021
	Level 1		Level 2		Level 3
Assets:
Money market mutual funds	$	150	$	—	$	—
Total Assets	$	150	$	—	$	—
Liabilities:
Contingent consideration liability	$	—	$	—	$	14,620
Total Liabilities	$	—	$	—	$	14,620

Schedule of liabilities that are measured and recorded at fair value on a recurring basis

The following table presents CRA’s financial instruments recorded in the condensed consolidated financial statements at January 2, 2021, which are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

	January 2, 2021
	Level 1		Level 2		Level 3
Assets:
Money market mutual funds	$	150	$	—	$	—
Total Assets	$	150	$	—	$	—
Liabilities:
Contingent consideration liability	$	—	$	—	$	14,620
Total Liabilities	$	—	$	—	$	14,620

Summary of the changes in the contingent consideration liabilities

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

	Fiscal Quarter Ended		Fiscal Year Ended
	April 3, 2021		January 2, 2021
Beginning balance	$	14,620	$	11,579
Remeasurement of acquisition-related contingent consideration	—		1,156
Accretion	380		1,885
Payment of contingent consideration	(15,000)		—
Ending balance	$	—	$	14,620

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Revenue Recognition (Tables)

3 Months Ended

Apr. 03, 2021

Revenue from Contract with Customer [Abstract]

Schedule of disaggregate CRA's revenue by type of contract and geographic location

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

	Fiscal Quarter Ended
Type of Contract	April 3, 2021		March 28, 2020
Consulting services revenues
Fixed-price	$	33,433	$	28,988
Time-and-materials	113,085		97,170
Total	$	146,518	$	126,158

	Fiscal Quarter Ended
Geographic Breakdown	April 3, 2021		March 28, 2020
Consulting services revenues
United States	$	117,247	$	100,740
United Kingdom	23,286		19,066
Other	5,985		6,352
Total	$	146,518	$	126,158

Schedule of bad debt expense, net of recoveries

The following table presents CRA's bad debt expense, net of recoveries of previously written off allowances (in thousands):

	Fiscal Quarter Ended
	April 3, 2021		March 28, 2020
Bad debt expense (recovery), net	$	(13)	$	59

Schedule of expenses are subject to reimbursement

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

	Fiscal Quarter Ended
	April 3, 2021		March 28, 2020
Reimbursable expenses	$	16,479	$	16,430

Schedule of opening and closing balances and result of changes in contract liability balance (in thousands)

	April 3, 2021		January 2, 2021
Contract liabilities	$	2,941	$	5,527

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
	April 3, 2021		March 28, 2020
Amounts included in contract liabilities at the beginning of the period	$	4,355	$	2,906
Performance obligations satisfied in previous periods	$	2,183	$	3,257

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Forgivable Loans (Tables)

3 Months Ended

Apr. 03, 2021

Forgivable Loans

Schedule of forgivable loan activity

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

	Fiscal Quarter Ended		Fiscal Year Ended
	April 3, 2021		January 2, 2021
Beginning balance	$	61,613	$	55,141
Advances	2,153		42,418
Reclassification from accrued expenses / to other assets (1)	—		(9,713)
Amortization	(6,295)		(26,628)
Effects of foreign currency translation	88		395
Ending balance	$	57,559	$	61,613
Current portion of forgivable loans	$	13,196	$	14,749
Non-current portion of forgivable loans	$	44,363	$	46,864

_______________________________

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

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Apr. 03, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of changes in the carrying amount of goodwill

The changes in the carrying amount of goodwill for the fiscal quarter ended April 3, 2021 are summarized as follows (in thousands):

Goodwill	$	161,080
Accumulated goodwill impairment	(71,893)
Goodwill, net at January 2, 2021	89,187
Foreign currency translation adjustment	91
Goodwill, net at April 3, 2021 (1)	$	89,278

_______________________________

(1)Goodwill, net at April 3, 2021, is comprised of goodwill of $161.2 million and accumulated impairment of $71.9 million.

Schedule of components of acquired identifiable intangible assets

The components of acquired identifiable intangible assets are as follows (in thousands):

	April 3, 2021		January 2, 2021
Non-competition agreements	$	280	$	280
Customer relationships	8,220		12,120
Total cost	8,500		12,400
Accumulated amortization	(3,661)		(7,292)
Total intangible assets, net	$	4,839	$	5,108

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Accrued Expenses (Tables)

3 Months Ended

Apr. 03, 2021

Accrued Liabilities, Current [Abstract]

Schedule of accrued expenses

Accrued expenses consist of the following (in thousands):

	April 3, 2021		January 2, 2021
Compensation and related expenses	$	85,209	$	123,540
Income taxes payable	5,251		1,927
Performance awards	2,376		2,176
Other professional fees	1,635		1,541
Direct project accruals	3,116		3,988
Accrued leasehold improvements	40		52
Other	3,131		3,152
Total accrued expenses	$	100,758	$	136,376

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Net Income Per Share (Tables)

3 Months Ended

Apr. 03, 2021

Earnings Per Share [Abstract]

Schedule of reconciliation from net income to the net income available to common shareholders

The following table presents a reconciliation from net income to the net income available to common shareholders (in thousands):

	Fiscal Quarter Ended
	April 3, 2021		March 28, 2020
Net income, as reported	$	10,501	$	6,468
Less: net income attributable to participating shares	46		26
Net income available to common shareholders	$	10,455	$	6,442

Schedule of reconciliation of basic to diluted weighted average shares of common stock outstanding

The following table presents a reconciliation of basic to diluted weighted average shares of common stock outstanding (in thousands):

	Fiscal Quarter Ended
	April 3, 2021	March 28, 2020
Basic weighted average shares outstanding	7,626	7,805
Dilutive stock options and restricted stock units	205	232
Diluted weighted average shares outstanding	7,831	8,037

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Summary of Significant Accounting Policies - Description of Business and Fiscal Year (Details)	3 Months Ended
	Apr. 03, 2021 segments area	Mar. 08, 2021 USD ($)
Self-Tender Stock Offering [Line Items]
Number of broad areas of consulting services | area	2
Number of business segment | segments	1
Self Tender Offer
Self-Tender Stock Offering [Line Items]
Self-tender stock offering, authorized amount | $		$ 25,000,000.0

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Fair Value of Financial Instruments (Details) - USD ($)	3 Months Ended	12 Months Ended
	Apr. 03, 2021	Jan. 02, 2021
Money market mutual funds
Fair Value of Financial Instruments
Fair value per share of CRA's money market mutual fund share holdings (in dollars per share)	$ 1.00
Recurring
Fair Value of Financial Instruments
Total Assets	$ 0
Total Liabilities	0
Summary of changes in contingent consideration liability
Beginning balance	14,620,000	$ 11,579,000
Remeasurement of acquisition-related contingent consideration	0	1,156,000
Accretion	380,000	1,885,000
Payment of contingent consideration	(15,000,000)	0
Ending balance	$ 0	14,620,000
Recurring | Level 1
Fair Value of Financial Instruments
Total Assets		150,000
Contingent consideration liability		0
Total Liabilities		0
Recurring | Level 1 | Money market mutual funds
Fair Value of Financial Instruments
Cash and cash equivalents		150,000
Recurring | Level 2
Fair Value of Financial Instruments
Total Assets		0
Contingent consideration liability		0
Total Liabilities		0
Recurring | Level 2 | Money market mutual funds
Fair Value of Financial Instruments
Cash and cash equivalents		0
Recurring | Level 3
Fair Value of Financial Instruments
Total Assets		0
Contingent consideration liability		14,620,000
Total Liabilities		14,620,000
Recurring | Level 3 | Money market mutual funds
Fair Value of Financial Instruments
Cash and cash equivalents		$ 0

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Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Disaggregation of Revenue
Consulting services revenues	$ 146,518	$ 126,158
United States
Disaggregation of Revenue
Consulting services revenues	117,247	100,740
United Kingdom
Disaggregation of Revenue
Consulting services revenues	23,286	19,066
Other
Disaggregation of Revenue
Consulting services revenues	5,985	6,352
Fixed-price
Disaggregation of Revenue
Consulting services revenues	33,433	28,988
Time-and-materials
Disaggregation of Revenue
Consulting services revenues	$ 113,085	$ 97,170

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Revenue Recognition - Reserves for Variable Consideration and Credit Risk (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020	Jan. 02, 2021	Dec. 28, 2019
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative effect of a change in accounting principle	$ 211,328	$ 196,360	$ 209,019	$ 197,751
Bad debt expense (recovery), net	(13)	59
Reimbursable expenses	16,479	16,430
Retained Earnings
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative effect of a change in accounting principle	$ 219,922	$ 204,679	$ 216,999	200,249
ASC 326 | Cumulative Effect Period of Adoption, Adjustment
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative effect of a change in accounting principle				(203)
ASC 326 | Cumulative Effect Period of Adoption, Adjustment | Retained Earnings
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative effect of a change in accounting principle				$ (203)

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Revenue Recognition - Contract Balances from Contracts with Customers (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020	Jan. 02, 2021
Contract liabilities:
Contract liabilities	$ 2,941		$ 5,527
Revenue recognized from:
Amounts included in contract liabilities at the beginning of the period	4,355	$ 2,906
Performance obligations satisfied in previous periods	$ 2,183	$ 3,257

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Forgivable Loans (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Apr. 03, 2021	Jan. 02, 2021
Forgivable loan activity
Beginning balance	$ 61,613	$ 55,141
Advances	2,153	42,418
Reclassification from accrued expenses / to other assets	0	(9,713)
Amortization	(6,295)	(26,628)
Effects of foreign currency translation	88	395
Ending balance	57,559	61,613
Current portion of forgivable loans	13,196	14,749
Non-current portion of forgivable loans	$ 44,363	$ 46,864

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Goodwill and Intangible Assets (Details) - USD ($)	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020	Jan. 02, 2021
Changes in the carrying amount of goodwill
Goodwill	$ 161,200,000		$ 161,080,000
Accumulated goodwill impairment	(71,900,000)		(71,893,000)
Balance at the beginning of the period, Goodwill, net	89,187,000
Foreign currency translation adjustment and other	91,000
Balance at the end of the period, Goodwill, net	89,278,000
Accumulated impairment	(71,900,000)		$ (71,893,000)
Intangible assets impairment losses	$ 0	$ 0

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Goodwill and Intangible Assets - Acquired and Amortization (Details) - USD ($) $ in Thousands	Apr. 03, 2021	Jan. 02, 2021
Acquired identifiable intangible assets
Total intangible asset cost	$ 8,500	$ 12,400
Accumulated amortization	(3,661)	(7,292)
Total intangible assets, net	4,839	5,108
Non-competition agreements
Acquired identifiable intangible assets
Total intangible asset cost	280	280
Customer relationships
Acquired identifiable intangible assets
Total intangible asset cost	$ 8,220	$ 12,120

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Accrued Expenses (Details) - USD ($) $ in Thousands	Apr. 03, 2021	Jan. 02, 2021
Accrued Liabilities, Current [Abstract]
Compensation and related expenses	$ 85,209	$ 123,540
Income taxes payable	5,251	1,927
Performance awards	2,376	2,176
Other professional fees	1,635	1,541
Direct project accruals	3,116	3,988
Accrued leasehold improvements	40	52
Other	3,131	3,152
Total accrued expenses	100,758	136,376
Compensation and related expenses
Accrued bonuses	$ 50,300	$ 102,600

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Income Taxes (Details) £ in Millions, $ in Millions	3 Months Ended
	Apr. 03, 2021 GBP (£)	Mar. 28, 2020	Apr. 03, 2021 USD ($)
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	24.40%	29.40%
Distributed foreign earnings | £	£ 12.0
Deferred tax liability recognized, undistributed foreign earnings | $			$ 0.4

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Net Income Per Share (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Net Income (Loss) Available to Common Stockholders, Diluted [Abstract]
Net income	$ 10,501	$ 6,468
Less: net income attributable to participating shares	46	26
Net income available to common shareholders	$ 10,455	$ 6,442
Reconciliation of basic to diluted weighted average shares of common stock outstanding
Basic weighted average shares outstanding (in shares)	7,626,000	7,805,000
Dilutive stock options and restricted stock units (in shares)	205,000	232,000
Diluted weighted average shares outstanding (in shares)	7,831,000	8,037,000
Calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding
Anti-dilutive securities excluded from EPS computation (in shares)	13,826,000	73,647,000

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Credit Agreement (Details) - USD ($)	3 Months Ended
	Apr. 03, 2021	Jan. 02, 2021
Senior Loan Agreement
Borrowings on revolving line of credit outstanding	$ 40,000,000	$ 0
Revolving credit facility
Senior Loan Agreement
Revolving credit facility, maximum capacity	175,000,000.0
Increased capacity of revolving credit facility, amount	50,000,000.0
Borrowings on revolving line of credit outstanding	40,000,000.0	$ 0
Secured by letters of credit
Senior Loan Agreement
Revolving credit facility, maximum capacity	15,000,000.0
Amount available under revolving credit facility reduced	$ 4,700,000

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Self-Tender Offer (Details) - Self Tender Offer - USD ($)	Apr. 08, 2021	Mar. 08, 2021
Self-Tender Stock Offering [Line Items]
Self-tender stock offering, authorized amount		$ 25,000,000.0
Subsequent Events
Self-Tender Stock Offering [Line Items]
Self-Tender stock offering, share purchase price (in dollars per share)	$ 74.00
Payments for Self-Tender stock offering, net	$ 25,000,000.0
Self-tender stock offering, number of shares repurchased (in shares)	337,837
Minimum
Self-Tender Stock Offering [Line Items]
Self-Tender stock offering, share purchase price (in dollars per share)		$ 66.25
Maximum
Self-Tender Stock Offering [Line Items]
Self-Tender stock offering, share purchase price (in dollars per share)		$ 76.00

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Subsequent Events (Details) - $ / shares		3 Months Ended
	May 06, 2021	Apr. 03, 2021	Mar. 28, 2020
Subsequent Events
Common share quarterly cash dividend declared (in dollars per share)		$ 0.26	$ 0.23
Subsequent Events
Subsequent Events
Common share quarterly cash dividend declared (in dollars per share)	$ 0.26