EX-99.1 2 a06-20418_1ex99d1.htm EX-99

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:

 

 

Wayne Mackie

 

Jim Buckley

Vice President, Chief Financial Officer

 

Executive Vice President

CRA International

 

Sharon Merrill Associates, Inc.

617-425-3740

 

617-542-5300

 

CRA INTERNATIONAL REPORTS THIRD QUARTER FISCAL 2006
FINANCIAL RESULTS

Revenue Increase of 15.7 Percent Driven by Growth Across Practices,
Strength in International Business, and BBG Acquisition

BOSTON, September 28, 2006 — CRA International, Inc. (Nasdaq: CRAI), a worldwide leader in providing economic, financial, and management consulting services, today reported financial results for its third quarter of fiscal 2006, the sixteen weeks ended September 1, 2006.

Revenue for the third quarter of fiscal 2006 increased 15.7 percent to $107.0 million from $92.5 million for the third quarter of fiscal 2005.  Net income for the third quarter of fiscal 2006 was $8.7 million, or $0.71 per diluted share, compared with $7.9 million, or $0.66 per diluted share, in the comparable period last year.  Weighted average diluted shares outstanding used to calculate earnings per share in the third quarter of fiscal 2006 were 12.3 million, versus 12.0 million in the third quarter of fiscal 2005.

In fiscal 2006, CRA began to expense stock-based compensation in accordance with Financial Accounting Standards Board Statement No. 123R (“123R”).  Included in the Company’s third quarter of fiscal 2006 net income and diluted earnings per share amounts were approximately $950,000 and $0.08 per share, respectively, of stock-based compensation.

Revenue for the first three quarters of fiscal 2006 was $263.6 million, an 18.9 percent increase from $221.7 million in the same period a year earlier.  Net income for the first three quarters of fiscal 2006 was $21.1 million, a 17.3 percent increase from $18.0 million in the first three quarters of fiscal 2005.  Earnings per diluted share were $1.73 in the first three quarters of fiscal 2006, compared with $1.58 in the first three quarters of fiscal 2005.  Included in the Company’s first three quarters of fiscal 2006 net income and diluted earnings per share amounts were approximately $2.5 million and $0.21 per share, respectively, of stock-based compensation.  Weighted average diluted shares outstanding used to calculate earnings per share in the first three quarters of fiscal 2006 were 12.2 million, versus 11.4 million in the first three quarters of fiscal 2005.




 

Comments on the Third Quarter

“CRA’s third-quarter performance reflects strong contributions from a number of our litigation and business consulting practices, resulting in overall revenue growth of nearly 16 percent,” said James C. Burrows, CRA International’s president and chief executive officer.  “The diversity of our revenue base is a significant asset for CRA and enables us to take advantage of the changing dynamics within our functional practices and vertical markets.  During the third quarter, we experienced considerable growth in our Competition and Finance practices, as well as in Transfer Pricing, which benefited from the Ballentine Barbera Group (“BBG”) acquisition earlier in the quarter.  In addition, CRA’s share in NeuCo’s third-quarter loss was approximately $500,000.  The NeuCo loss included a one-time charge attributable to a legal settlement incurred in connection with an acquisition made by NeuCo.  As of this quarter, NeuCo is no longer consolidated in our financials.”

“We continued to see significant contributions from our international consulting businesses,” Burrows said.  “Our results in the quarter demonstrate our ongoing success in generating demand for CRA’s services on a global basis.”

“Utilization in the third quarter of 2006 improved to 76 percent from 74 percent in the year ago period,” said Burrows.  “In a quarter that is traditionally challenging due to the summer holiday season, we continued to be on track towards our goal of achieving fiscal 2006 utilization of 78 to 80 percent.”

Outlook and Financial Guidance

“For the fourth quarter of 2006, we anticipate that global, economic and legal trends will continue to stimulate demand for CRA’s broad range of specialized consulting expertise and our recognized staff of elite professionals,” Burrows said.  “Based on this outlook and current market conditions, we expect continued growth across the majority of our practice areas.”

CRA continues to anticipate revenue growth for fiscal 2006 in the range of 18-20 percent.  In fiscal 2006, CRA expects a 29-30 cents-per-share impact from stock-based compensation.  Based on year-to-date results, CRA anticipates a slightly lower effective tax rate for the year compared to its prior guidance of approximately 42-43 percent.  As a result of the expected slightly lower tax rate, CRA anticipates net income for the full year to be slightly above the high end of the previous guidance of $26.5 million to $27.5 million, or $2.18 to $2.27 per diluted share, including the impact of stock-based compensation.

Fiscal 2006 EPS assumes an average diluted share count of 12.2 million shares for the year and assumes a stock price of $46.05 for the remainder of the year, which was




 

derived from the average of the past 10 trading days. Deviations from this stock price will cause earnings per share to vary based on share dilution from CRA’s stock options and convertible bonds.

Conference Call/Webcast Information

CRA International will host a conference call this morning at 11:00 a.m. ET to discuss its third-quarter fiscal 2006 financial results.  To listen to a live webcast of the conference call, please visit the Investor Relations section of CRA’s website, www.crai.com.  CRA’s third-quarter fiscal 2006 conference call also can be heard live by dialing (913) 981-5542 or (800) 289-0569 prior to the start of the call.  A replay of the call also will be available on the Company’s website.

About CRA International

Founded in 1965, CRA International is a leading provider of economic and financial expertise and management consulting services.  Working with businesses, law firms, accounting firms, and governments, CRA is the preferred consulting firm for complex assignments with pivotal and high-stakes outcomes.  The firm is distinguished by a unique combination of credentials: deep vertical experience in a variety of industries;  broad horizontal expertise in a range of functional disciplines; and rigorous economic, financial, and market analysis.  CRA offers a proven track record of thousands of successful engagements in regulatory and litigation support, business strategy and planning, market and demand forecasting, policy analysis, and engineering and technology management.  Headquartered in Boston, the firm has more than a dozen offices within the United States and nine offices in Canada, Europe, the Middle East, and the Asia Pacific region.  Detailed information about CRA is available at www.crai.com. 

Statements in this press release concerning the future business, operating results, and financial condition of the Company and statements using the terms “anticipates,” “believes,” “expects,” “should,” or similar expressions, are “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995.  These statements are based upon management’s current expectations and are subject to a number of factors and uncertainties.  Information contained in these forward-looking statements is inherently uncertain and actual performance and results may differ materially due to many important factors.  Such factors that could cause actual results to differ materially from any forward-looking statements made by the Company include, among others, changes in the Company’s effective tax rate, share dilution from the Company’s convertible debt offering, the impact of Financial Accounting Standards Board Statement No. 123R and total stock-based compensation, dependence on key personnel, attracting and retaining qualified consultants, dependence on outside experts,




 

utilization rates, factors related to its recent acquisitions, including integration of personnel, clients, offices, and unanticipated expenses and liabilities, risks associated with acquisitions it may make in the future, risks inherent in international operations, the performance of NeuCo, changes in accounting standards, rules and regulations, management of new offices, the potential loss of clients, dependence on growth of the Company’s business consulting practice, the ability of the Company to integrate successfully new consultants into its practice, intense competition, risks inherent in litigation, and professional liability.  Further information on these and other potential factors that could affect the Company’s financial results is included in the Company’s filings with the Securities and Exchange Commission.  The Company cannot guarantee any future results, levels of activity, performance or achievement.  The Company undertakes no obligation to update any of its forward-looking statements after the date of this press release.

CRA’s consolidated statements of income and consolidated balance sheets are attached.




 

CRA INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 

 

Sixteen
Weeks Ended

 

Sixteen
Weeks Ended

 

Forty
Weeks Ended

 

Forty
Weeks Ended

 

 

 

September 1,

 

September 2,

 

September 1,

 

September 2,

 

 

 

2006

 

2005

 

2006

 

2005

 

Revenues

 

$

107,001

 

$

92,515

 

$

263,568

 

$

221,674

 

Costs of services

 

68,208

 

54,893

 

166,573

 

131,925

 

Gross profit

 

38,793

 

37,622

 

96,995

 

89,749

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

23,805

 

23,865

 

61,926

 

56,583

 

Income from operations

 

14,988

 

13,757

 

35,069

 

33,166

 

 

 

 

 

 

 

 

 

 

 

Interest and other income (expense), net

 

442

 

(281

)

967

 

(1,417

)

Income before provision for income taxes and minority interest and effect of equity investment in NeuCo, net

 

15,430

 

13,476

 

36,036

 

31,749

 

Provision for income taxes

 

(6,218

)

(5,458

)

(14,575

)

(13,752

)

Income before minority interest and effect of equity investment in NeuCo, net

 

9,212

 

8,018

 

21,461

 

17,997

 

Minority interest and effect of equity investment in NeuCo, net

 

(496

)

(132

)

(355

)

(3

)

Net income

 

$

8,716

 

$

7,886

 

$

21,106

 

$

17,994

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.76

 

$

0.73

 

$

1.85

 

$

1.75

 

Diluted

 

$

0.71

 

$

0.66

 

$

1.73

 

$

1.58

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

11,529

 

10,782

 

11,389

 

10,308

 

Diluted

 

12,252

 

12,010

 

12,207

 

11,416

 

 




 

CRA INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

September 1,

 

November 26,

 

 

 

2006

 

2005

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

113,213

 

$

115,203

 

Accounts receivable and unbilled, net

 

104,849

 

92,842

 

Other current assets

 

21,240

 

18,940

 

Total current assets

 

239,302

 

226,985

 

 

 

 

 

 

 

Property and equipment, net

 

25,156

 

25,892

 

Goodwill and intangible assets, net

 

149,446

 

122,518

 

Other assets

 

13,481

 

12,150

 

Total assets

 

$

427,385

 

$

387,545

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities

 

$

82,706

 

$

78,603

 

Long-term liabilities

 

99,045

 

104,322

 

Total liabilities

 

181,751

 

182,925

 

 

 

 

 

 

 

Total shareholders’ equity

 

245,634

 

204,620

 

Total liabilities and shareholders’ equity

 

$

427,385

 

$

387,545