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Revenues Costs of services (exclusive of depreciation and amortization) Selling, general and administrative expenses Depreciation and amortization Income from operations GNU gain on sale of business assets Interest expense, net Other income (expense), net Income before provision for income taxes Provision for income taxes Net income Net (income) loss attributable to noncontrolling interest, net of tax Net income attributable to CRA International, Inc. Net income per share attributable to CRA International, Inc: Basic Diluted Weighted average number of shares outstanding: Basic Diluted See accompanying notes to the condensed consolidated financial statements. Net income Other comprehensive (loss) income: Foreign currency translation adjustments Comprehensive income Less: comprehensive (income) loss attributable to noncontrolling interest Comprehensive income attributable to CRA International, Inc. Assets Current assets: Cash and cash equivalents Accounts receivable, net of allowances of $7,486 at September 30, 2017 and $4,253 at December 31, 2016 Unbilled services, net of allowances of $2,531 at September 30, 2017 and $1,720 at December 31, 2016 Prepaid expenses and other current assets Forgivable loans Total current assets Property and equipment, net Goodwill Intangible assets, net Deferred income taxes Forgivable loans, net of current portion Other assets Total assets Liabilities and shareholders' equity Current liabilities: Accounts payable Accrued expenses Deferred revenue and other liabilities Current portion of deferred rent Current portion of deferred compensation Total current liabilities Non-current liabilities: Deferred rent and facility-related non-current liabilities Deferred compensation and other non-current liabilities Deferred income taxes Total non-current liabilities Commitments and contingencies (Note 16) 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; 8,055,783 shares and 8,333,990 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively Retained earnings Accumulated other comprehensive loss Total CRA International, Inc. shareholders' equity Noncontrolling interest Total shareholders' equity Total liabilities and shareholders' equity See accompanying notes to the condensed consolidated financial statements. Operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Loss on disposal of property and equipment Impairment of intangible assets GNU gain on sale of business assets Deferred rent Deferred income taxes Share-based compensation expenses Excess tax benefits from share-based compensation Accounts receivable allowances Changes in operating assets and liabilities: Accounts receivable Unbilled services Prepaid expenses and other current assets, and other assets Forgivable loans Incentive cash awards Accounts payable, accrued expenses, and other liabilities Net cash provided by operating activities Investing activities: Cash consideration paid for acquisitions Purchases of property and equipment GNU cash proceeds from sale of business assets Net cash used in investing activities Financing activities: Issuance of common stock, principally stock option exercises Payments on notes payable Borrowings under line of credit Repayments under line of credit Tax withholding payments reimbursed by restricted shares Excess tax benefits from share-based compensation Cash paid on dividend equivalents Cash dividends paid to stockholders Repurchases of common stock Net cash used in financing activities Effect of foreign exchange rates on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Noncash investing and financing activities: Issuance of common stock for acquired business Purchases of property and equipment not yet paid for Purchases of property and equipment paid by a third party Asset retirement obligations Supplemental cash flow information: Cash paid for income taxes Cash paid for interest BALANCE AT DECEMBER 31, 2016 Net income Foreign currency translation adjustment Issuance of common stock for acquired businesses Exercise of stock options Share-based compensation expense for employees Restricted share and unit vestings Redemption of vested employee restricted shares for tax withholding Cumulative effect of a change in accounting principle related to ASU 2016-09 Shares repurchases Share-based compensation expense for non-employees Accrued dividends on unvested units Cash paid on dividend equivalents Cash dividends paid to stockholders BALANCE AT SEPTEMBER 30, 2017 See accompanying notes to the condensed consolidated financial statements. the condensed consolidated financial statements. 2, 2023 (the “2022 Form 10-K”). transaction. Assets Acquired: Current assets: Accounts receivable and unbilled receivables Other current assets Total current assets Property and equipment Other non-current assets Intangible assets Goodwill Total assets acquired Liabilities Assumed: Current liabilities: Deferred revenue Accrued expenses and other current liabilities Total current liabilities Contingent consideration Total liabilities assumed Net assets acquired The intangible assets acquired are comprised make required payments. The following table Assets: Money market funds Total Assets Liabilities: Contingent consideration liability Total Liabilities Assets: Money market funds Total Assets Liabilities: Contingent consideration liability Total Liabilities the loans. Beginning balance Acquisitions Remeasurement of acquisition-related contingent consideration Accretion Payments Effects of foreign currency translation Ending balance Beginning balance Advances Accruals Repayments Reclassification to other receivables Amortization Effect of foreign currency translation Ending balance Current portion of forgivable loans Non-current portion of forgivable loans Balance at December 31, 2016 Goodwill adjustment related to acquisition Effect of foreign currency translation Balance at September 30, 2017 The components of acquired identifiable intangible assets are as follows (in thousands): Non-competition agreements, net of accumulated amortization of $437 and $3,821, respectively Customer relationships, net of accumulated amortization of $2,838 and $5,181, respectively Total, net of accumulated amortization Compensation and related expenses Income taxes payable Other Total As of Balance at beginning of period Increases to reserve Amounts written off Effects of foreign currency translation Balance at end of period Balance at beginning of period Increases to reserves Amounts written off Effects of foreign currency translation Balance at end of period Reimbursable expenses Net income, as reported Less: net income attributable to participating shares Net income available to common shareholders Basic weighted average shares outstanding Stock options Diluted weighted average shares outstanding Revenue: United States United Kingdom Other Total foreign Total Revenue Long-lived assets (property and equipment, net): United States United Kingdom Other Total foreign Total Long-lived assets July 2, 2022 Revenues Costs of services (exclusive of depreciation and amortization) Selling, general and administrative expenses Depreciation and amortization Income from operations GNU gain on sale of business assets Interest expense, net Other income (expense), net Income before provision for income taxes Provision for income taxes Net income Net (income) loss attributable to noncontrolling interest, net of tax Net income attributable to CRA International, Inc. July 2, 2022 2023. $8.6 million primarily 2022. 2022. 2022. July 2, 2022 2023. July 2, 2022. fiscal year-to-date period ended July 2, 2022. July 2, 2022. July 2, 2022. July 1, 2023 operations for the next 12 months without the need to repatriate funds from our foreign subsidiaries. amortization expense of $5.8 million, right-of-use amortization of $7.2 million, and share-based compensation expenses of $2.1 million. August 19, 2027. Borrowings under the revolving credit facility bear interest at a rate per annum equal to one of the following rates, at our election, Credit Agreement. Compensation Arrangements report. under our share repurchase program. We our share repurchase program. Directors. During the fiscal quarter and fiscal year-to-date period ended July 1, 2023, we paid dividends and dividend equivalents of $2.5 million and $5.2 million, respectively. During the fiscal quarter and fiscal year-to-date period ended July 2, 2022, we paid dividends and dividend equivalents of $2.3 million and $4.6 million, respectively. Future Capital and Liquidity Needs July 2, 2017 to July 29, 2017 July 30, 2017 to August 26, 2017 August 27, 2017 to September, 2017UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-QýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended September 30, 2017OroTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Massachusetts04-2372210Massachusetts 04-2372210 (State or other jurisdiction of
incorporation or organization)(I.R.S. Employer Identification No.)
02116-509202116-5092(Address of principal executive offices) (Zip Code) Registrant'sRegistrant’s telephone number, including area code)Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, no par value CRAI Nasdaq Global Select Market ýx No o and posted on its corporate Web site, if any, 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 and post such files). Yes ýx No oor a smaller reporting company, or an emerging growth company. See definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer,” “smaller reporting company,” and "smaller reporting company"“emerging growth company” in Rule 12b-2 of the Exchange Act.Large accelerated filer o☐ Accelerated filer ýx Non-accelerated filer o(Do not check if a smallerreporting company)☐ Smaller reporting company o☐ Emerging growth company o☐ o☐ No ý☒issuer'sissuer’s classes of common stock, as of the latest practicable date.ClassOutstanding at October 25, 2017Common Stock, no par value per share8,109,135 sharesClass Outstanding at July 28, 2023 Common Stock, no par value per share 7,001,716 shares SignaturesInternational, Inc.Condensed Consolidated Income StatementsINTERNATIONAL, INC.Inin thousands, except per share data)Fiscal Quarter Ended Fiscal Year-to-Date
Period EndedJuly 1,
2023July 2,
2022July 1,
2023July 2,
2022Revenues $ 161,965 $ 149,102 $ 314,810 $ 297,484 Costs of services (exclusive of depreciation and amortization) 113,333 103,076 221,170 207,136 Selling, general and administrative expenses 29,846 27,963 58,218 53,780 Depreciation and amortization 2,872 3,050 5,815 6,026 Income from operations 15,914 15,013 29,607 30,542 Interest expense, net (1,616) (468) (2,187) (676) Foreign currency gains (losses), net (686) 1,700 (1,214) 1,899 Income before provision for income taxes 13,612 16,245 26,206 31,765 Provision for income taxes 4,104 4,602 7,780 8,696 Net income $ 9,508 $ 11,643 $ 18,426 $ 23,069 Net income per share: Basic $ 1.36 $ 1.60 $ 2.61 $ 3.15 Diluted $ 1.34 $ 1.57 $ 2.56 $ 3.09 Weighted average number of shares outstanding: Basic 6,983 7,263 7,051 7,311 Diluted 7,080 7,380 7,166 7,442 Quarter Ended Fiscal Year-to-Date
Period Ended September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 $ 91,325 $ 81,691 $ 273,059 $ 245,210 62,422 57,832 190,223 171,297 20,803 16,671 59,778 52,748 2,453 1,891 6,652 5,861 5,647 5,297 16,406 15,304 — — 250 3,836 (116 ) (129 ) (361 ) (356 ) 4 (108 ) (233 ) (270 ) 5,535 5,060 16,062 18,514 (2,310 ) (1,909 ) (6,100 ) (6,357 ) 3,225 3,151 9,962 12,157 (11 ) 42 (82 ) (1,327 ) $ 3,214 $ 3,193 $ 9,880 $ 10,830 $ 0.39 $ 0.39 $ 1.18 $ 1.25 $ 0.38 $ 0.38 $ 1.15 $ 1.24 8,149 8,177 8,332 8,581 8,353 8,309 8,530 8,653 CRA International, Inc.Condensed Consolidated Statements of Comprehensive Income (unaudited)(In thousands) Quarter Ended Fiscal Year-to-Date
Period Ended September 30,
2017 October 1,
2016 September 30
2017 October 1,
2016 $ 3,225 $ 3,151 $ 9,962 $ 12,157 1,274 (608 ) 3,611 (2,523 ) 4,499 2,543 13,573 9,634 (11 ) 42 (82 ) (1,327 ) $ 4,488 $ 2,585 $ 13,491 $ 8,307 Fiscal Quarter Ended Fiscal Year-to-Date
Period EndedJuly 1,
2023July 2,
2022July 1,
2023July 2,
2022Net income $ 9,508 $ 11,643 $ 18,426 $ 23,069 Other comprehensive income (loss) Foreign currency translation adjustments, net of tax 1,074 (3,860) 2,126 (5,032) Comprehensive income $ 10,582 $ 7,783 $ 20,552 $ 18,037 International, Inc.Condensed Consolidated Balance SheetsINTERNATIONAL, INC.Inin thousands, except share data)July 1,
2023December 31,
2022ASSETS Current assets: Cash and cash equivalents $ 14,271 $ 31,447 Accounts receivable, net of allowances of $3,823 and $2,640, respectively 140,160 143,644 Unbilled services, net of allowances of $1,089 and $1,120, respectively 72,935 51,343 Prepaid expenses and other current assets 15,218 12,760 Forgivable loans 12,134 9,666 Total current assets 254,718 248,860 Property and equipment, net 42,443 45,582 Goodwill 93,899 92,922 Intangible assets, net 7,886 8,588 Right-of-use assets 90,627 96,725 Deferred income taxes 9,402 9,163 Forgivable loans, net of current portion 48,863 46,790 Other assets 3,220 2,287 Total assets $ 551,058 $ 550,917 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 22,909 $ 27,584 Accrued expenses 107,173 155,864 Deferred revenue and other liabilities 8,999 12,016 Current portion of lease liabilities 16,386 15,972 Current portion of deferred compensation 3,523 5,689 Revolving line of credit 80,000 — Total current liabilities 238,990 217,125 Non-current liabilities: Deferred compensation and other non-current liabilities 10,343 15,677 Non-current portion of lease liabilities 97,938 106,008 Deferred income taxes 1,001 953 Total non-current liabilities 109,282 122,638 Commitments and contingencies (Note 11) 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; 6,969,236 and 7,149,884 shares issued and outstanding, respectively 468 1,743 Retained earnings 215,173 224,392 Accumulated other comprehensive loss (12,855) (14,981) Total shareholders’ equity 202,786 211,154 Total liabilities and shareholders’ equity $ 551,058 $ 550,917 September 30,
2017 December 31,
2016 $ 20,899 $ 53,530 76,819 66,852 41,536 24,937 12,211 19,295 6,474 5,897 157,939 170,511 41,062 36,381 88,529 74,764 9,867 2,685 10,105 10,049 25,388 28,065 1,530 1,187 $ 334,420 $ 323,642 $ 17,162 $ 13,729 74,285 75,281 3,980 3,021 1,110 1,499 851 570 97,388 94,100 18,790 15,191 9,710 6,346 355 122 28,855 21,659 — — 44,520 54,124 173,119 166,914 (10,207 ) (13,818 ) 207,432 207,220 745 663 208,177 207,883 $ 334,420 $ 323,642 CRA International, Inc.Condensed Consolidated Statements of Cash Flows (unaudited)(In thousands) Fiscal Year-to-Date
Period Ended September 30,
2017 October 1,
2016 $ 9,962 $ 12,157 6,636 5,848 10 3 523 — (250 ) (3,836 ) 1,316 3,250 230 886 4,633 4,791 — (55 ) 3,166 (247 ) (11,600 ) (3,627 ) (15,533 ) (11,874 ) 6,505 1,588 2,418 7,743 956 — (1,181 ) (414 ) 7,791 16,213 (16,163 ) — (5,366 ) (11,808 ) 250 1,100 (21,279 ) (10,708 ) 2,950 1,448 — (75 ) 11,500 7,500 (11,500 ) (7,500 ) (703 ) (490 ) — 55 (25 ) — (3,529 ) — (19,528 ) (19,318 ) (20,835 ) (18,380 ) 1,692 (80 ) (32,631 ) (12,955 ) 53,530 38,139 $ 20,899 $ 25,184 $ 3,044 $ 44 $ 2,568 $ 1,234 $ 1,640 $ — $ — $ 1,479 $ 7,297 $ 3,959 $ 248 $ 327 Fiscal Year-to-Date Period Ended July 1,
2023July 2,
2022OPERATING ACTIVITIES: Net income $ 18,426 $ 23,069 Adjustments to reconcile net income to net cash used in operating activities, net of effect of acquired businesses: Depreciation and amortization 5,815 6,026 Right-of-use asset amortization 7,193 6,825 Deferred income taxes (236) (165) Share-based compensation expense 2,098 2,078 Bad debt expense (recovery) 392 (262) Unrealized foreign currency remeasurement (gains) losses, net (62) (309) Changes in operating assets and liabilities: Accounts receivable 4,676 (13,435) Unbilled services (21,091) (23,114) Prepaid expenses and other current assets, and other assets (3,247) (1,572) Forgivable loans (4,374) (9,992) Incentive cash awards 4,029 3,271 Accounts payable, accrued expenses, and other liabilities (69,747) (63,093) Lease liabilities (8,851) (8,139) Net cash used in operating activities (64,979) (78,812) INVESTING ACTIVITIES: Purchases of property and equipment (1,282) (2,067) Consideration paid for acquisition, net (570) (10,185) Net cash used in investing activities (1,852) (12,252) FINANCING ACTIVITIES: Issuance of common stock, principally stock option exercises — 341 Borrowings under revolving line of credit 105,000 70,000 Repayments under revolving line of credit (25,000) — Tax withholding payments reimbursed by shares (2,009) (975) Cash dividends paid (5,230) (4,636) Repurchase of common stock (23,577) (22,630) Net cash provided by financing activities 49,184 42,100 Effect of foreign exchange rates on cash and cash equivalents 471 (1,545) Net decrease in cash and cash equivalents (17,176) (50,509) Cash and cash equivalents at beginning of period 31,447 66,130 Cash and cash equivalents at end of period $ 14,271 $ 15,621 Noncash investing and financing activities: Increase (decrease) in accounts payable and accrued expenses for property and equipment $ 376 $ (184) Excise tax on share repurchases $ (200) $ — Right-of-use assets obtained in exchange for lease obligations $ 190 $ 2,020 Supplemental cash flow information: Cash paid for taxes $ 6,218 $ 7,532 Cash paid for interest $ 2,178 $ 452 Cash paid for amounts included in operating lease liabilities $ 11,077 $ 10,584 International, Inc.Condensed Consolidated Statement of Shareholders' EquityINTERNATIONAL, INC.Inin thousands, except share data)Common Stock Retained
EarningsAccumulated
Other
Comprehensive
LossTotal
Shareholders’
EquityShares
IssuedAmount BALANCE AT DECEMBER 31, 2022 7,149,884 $ 1,743 $ 224,392 $ (14,981) $ 211,154 Net income — — 8,918 — 8,918 Foreign currency translation adjustment — — — 1,052 1,052 Exercise of stock options — — — — — Share-based compensation expense — 940 — — 940 Restricted shares vesting 45,544 — — — — Redemption of vested employee restricted shares for tax withholding (16,614) (1,873) — — (1,873) Shares repurchased (180,881) (810) (19,767) — (20,577) Accrued excise tax on shares repurchased — — (173) — (173) Accrued dividends on unvested shares — — 45 — 45 Cash dividends paid ($0.36 per share) — — (2,702) — (2,702) BALANCE AT APRIL 1, 2023 6,997,933 $ — $ 210,713 $ (13,929) $ 196,784 Net income — — 9,508 — 9,508 Foreign currency translation adjustment — — — 1,074 1,074 Exercise of stock options — — — — — Share-based compensation expense — 1,158 — — 1,158 Restricted shares vesting 3,630 — — — — Redemption of vested employee restricted shares for tax withholding (1,237) (136) — — (136) Shares repurchased (31,090) (554) (2,446) — (3,000) Accrued excise tax on shares repurchased — — (27) — (27) Accrued dividends on unvested shares — — (47) — (47) Cash dividends paid ($0.36 per share) — — (2,528) — (2,528) BALANCE AT JULY 1, 2023 6,969,236 $ 468 $ 215,173 $ (12,855) $ 202,786 Common Stock CRA
International,
Inc.
Shareholders'
Equity Accumulated
Other
Comprehensive
Loss Shares
Issued Amount Retained
Earnings Noncontrolling
Interest Total
Shareholders'
Equity 8,333,990 $ 54,124 $ 166,914 $ (13,818 ) $ 207,220 $ 663 $ 207,883 — — 9,880 — 9,880 82 9,962 — — — 3,611 3,611 — 3,611 89,312 3,044 — — 3,044 — 3,044 133,955 2,950 — — 2,950 — 2,950 — 4,540 — — 4,540 — 4,540 72,753 — — — — — — (19,519 ) (703 ) — — (703 ) — (703 ) — — 48 — 48 — 48 (554,708 ) (19,528 ) — — (19,528 ) — (19,528 ) — 93 — — 93 — 93 — — (169 ) — (169 ) — (169 ) — — (25 ) — (25 ) — (25 ) — — (3,529 ) — (3,529 ) — (3,529 ) 8,055,783 $ 44,520 $ 173,119 $ (10,207 ) $ 207,432 $ 745 $ 208,177 International, Inc.NotesINTERNATIONAL, INC.Common Stock Retained
EarningsAccumulated
Other
Comprehensive
LossTotal
Shareholders’
EquityShares
IssuedAmount BALANCE AT JANUARY 1, 2022 7,362,703 $ — $ 215,784 $ (9,950) $ 205,834 Net income — — 11,426 — 11,426 Foreign currency translation adjustment — — — (1,172) (1,172) Exercise of stock options 14,552 341 — — 341 Share-based compensation expense — 1,037 — — 1,037 Restricted shares vesting 29,558 — — — — Redemption of vested employee restricted shares for tax withholding (10,163) (897) — — (897) Shares repurchased (56,665) (481) (4,475) — (4,956) Accrued dividends on unvested shares — — (11) — (11) Cash dividends paid ($0.31 per share) — — (2,377) — (2,377) BALANCE AT APRIL 2, 2022 7,339,985 $ — $ 220,347 $ (11,122) $ 209,225 Net income — — 11,643 — 11,643 Foreign currency translation adjustment — — — (3,860) (3,860) Share-based compensation expense — 1,041 — — 1,041 Restricted shares vesting 3,630 — — — — Redemption of vested employee restricted shares for tax withholding (921) (78) — — (78) Shares repurchased (211,345) (963) (16,711) — (17,674) Accrued dividends on unvested shares — — (52) — (52) Cash dividends paid ($0.31 per share) — — (2,259) — (2,259) BALANCE AT JULY 2, 2022 7,131,349 $ — $ 212,968 $ (14,982) $ 197,986 Condensed Consolidated Financial Statements("CRA"(together with its wholly-owned subsidiaries, “CRA” or the “Company”) is a worldwide leading consulting services firm that applies advanced analytic techniques and in-depth industry knowledge to complex engagements for a broad range of clients. CRA 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.2. and Estimates accompanying unaudited condensed consolidated financial statements reflectinclude the resultsaccounts of operations, financial position, cash flows,CRA International, Inc. and stockholders' equity asits wholly-owned subsidiaries, which require consolidation after the elimination of intercompany accounts and for the fiscal quarters and year-to-date periods ended September 30, 2017 and October 1, 2016, respectively.transactions. These financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"(“SEC”) for Quarterly Reports on Form 10-Q. Accordingly, these financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America ("GAAP"(“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 statementpresentation of CRA'sCRA’s results of operations, financial position, cash flows, and stockholders'shareholders’ equity for the interim periods presented in conformity with GAAP. Results of operations for the interim periods presented herein are not necessarily indicative of results of operations for a full year. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 31, 2016,2022 included in ourCRA’s Annual Report on Form 10-K filed with the SEC on March 15, 2017.fixedfixed-price contracts, variable consideration to be included in the transaction price of revenue contracts, depreciationthe useful life of propertylong-lived assets, measurement of operating lease right-of-use (“ROU”) assets and equipment,liabilities, share-based compensation, valuation of acquired intangible assets, impairmentvaluation of long lived assets,contingent consideration liabilities, goodwill, accrued and deferred income taxes, valuation allowances on deferred tax assets, accrued incentive compensation, accrued exit costs, 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'sCRA’s assumptions based on past experience or other assumptions do not turn out to be substantially accurate.3. Principles of Consolidation The condensed consolidated financial statements include the accounts of CRA and its wholly owned subsidiaries. In addition, the condensed consolidated financial statements include CRA's interest in GNU123 Liquidating Corporation ("GNU", formerly known as NeuCo Inc.). All significant intercompany transactions and accounts have been eliminated.CRA International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)3. Principles of Consolidation (Continued) CRA's ownership interest in GNU was 55.89% for all periods presented. GNU's financial results have been consolidated with CRA, and the portion of GNU's results allocable to its other owners is shown as "noncontrolling interest." GNU's interim reporting schedule is based on calendar month-ends, but its fiscal year end is the last Saturday of November. CRA's quarterly results could include a few days reporting lag between CRA's quarter end and the most recent financial statements available from GNU. CRA does not believe that the reporting lag will have a significant impact on CRA's consolidated income statements or financial condition. On April 13, 2016, a buyer acquired substantially all of the business assets and assumed substantially all of the liabilities of GNU for a purchase price of $1.35 million. Of this amount, $1.1 million was received at closing, with the remaining $0.25 million payable on or after April 13, 2017, subject to contingencies, as outlined in the asset purchase agreement, which remaining amount was paid in full on May 3, 2017. GNU recognized a gain on sale of its business assets of $0.25 million during the second quarter of fiscal 2017, of which $0.14 million is attributed to CRA, and $3.8 million during the second quarter of fiscal 2016, of which $2.1 million is attributed to CRA.4. Recent Accounting Standards AdoptedImprovements to Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-09,Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 requires all of the tax effects related to share-based payments to be recorded through the income statement. The new pronouncement also allows for the option of estimating awards expected to vest or accounting for forfeitures when they occur. In the statement of cash flows, cash paid by employers when withholding shares for tax withholding purposes should be classified as a financing activity whereas cash flows resulting from excess tax benefits should be reported in operating activities. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Accordingly, CRA adopted ASU No. 2016-09 on January 1, 2017, resulting in the recognition of a tax benefit of $0.5 million to retained earnings as of that date. CRA had traditionally classified employee taxes paid through employer share withholdings as financing activities, therefore no further adjustment was necessary. CRA has classified the excess tax benefits from share-based compensation as operating activities on a prospective basis beginning in the quarter ended April 1, 2017. Additionally, CRA did not make any changes to its accounting for forfeitures and continues to estimate forfeitures based on historical experience.5. Recent Accounting Standards Not Yet AdoptedRevenue from Contracts with Customers In August 2015, FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ("ASU 2015-14"). ASU 2015-14 defers by one year the effective date of ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). The deferral results in ASU 2014-09 being effective for fiscal years, and interim periods within those fiscalCRA International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)5. Recent Accounting Standards Not Yet Adopted (Continued)years, beginning after December 15, 2017. The main provision of ASU 2014-09 is to recognize revenue when control of the goods or services transfers to the customer, as opposed to the existing guidance of recognizing revenue when the risks and rewards transfer to the customer. The standard is expected to have an impact on the amount and timing of revenue recognized and the related disclosures on CRA's financial statements. CRA will adopt ASU 2014-09 effective January 1, 2018 and CRA expects to adopt this new standard using the modified retrospective method, which requires a cumulative-effect adjustment to retained earnings in the period of adoption. CRA currently anticipates that the most significant impact to adopting this guidance will occur with contracts which include variable consideration. The adoption of ASU 2014-09 will not have a material impact on CRA's consolidated financial position, results of operations, equity or cash flows.Leases (Topic 842) In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02,Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 establishes a comprehensive new lease accounting model. The new standard clarifies the definition of a lease, requires a dual approach to lease classification similar to current lease classifications, and causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease term of more than twelve months. The new standard is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. CRA has not yet determined the effects, if any, that the adoption of ASU 2016-02 may have on its financial position, results of operations, cash flows, or disclosures.Statement of Cash Flows (Topic 230): Restricted Cash In November 2016, the FASB issued ASU No. 2016-18,Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"). ASU 2016-18 amends ASC 230 to add or clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. The new standard requires cash and cash equivalents balances on the statement of cash flows to include restricted cash and cash equivalent balances. ASU 2016-18 requires the registrant to provide appropriate disclosures about its accounting policies pertaining to restricted cash in accordance with GAAP. Additionally, changes in restricted cash and restricted cash equivalents that result from transfers between cash, cash equivalents, and restricted cash and restricted cash equivalents should not be presented as cash flow activities in the statement of cash flows. A registrant with a material balance of amounts generally described as restricted cash and restricted cash equivalents must disclose information about the nature of the restrictions. The new standard is effective for interim and annual periods beginning after December 15, 2017. CRA believes that the adoption of ASU 2016-18 will not have a material impact on its financial position, results of operations, cash flows, or disclosures.CRA International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)5. Recent Accounting Standards Not Yet Adopted (Continued)Business Combinations (Topic 805): Clarifying the Definition of a Business On January 5, 2017, the FASB issued a new ASU No. 2017-01,Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist companies and other reporting organizations with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the amendments, a business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. For public companies, ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early application of the amendments in ASU 2017-01 is allowed for transactions of which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance; and for transactions in which a subsidiary is deconsolidated or a group of assets is derecognized that occur before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. CRA has not yet determined the effects, if any, that the adoption of ASU 2017-01 may have on its financial position, results of operations, cash flows, or disclosures.Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment On January 26, 2017, the FASB issued a new ASU No. 2017-04,Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the subsequent measurement of goodwill, and gives the option to eliminate Step 2 from the goodwill impairment test. Under the amendments, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The amendment also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. For public companies, ASU 2017-04 is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. CRA has not yet determined the effects, if any, that the adoption of ASU 2017-04 may have on its financial position, results of operations, cash flows, or disclosures.CRA International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)5. Recent Accounting Standards Not Yet Adopted (Continued)Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting On May 10, 2017, the FASB issued a new ASU No. 2017-09,Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). ASU 2017-09 updates guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Under the amendments, an entity should account for the effects of a modification unless all the following conditions are met. First, the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. Second, the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. Third, the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The new standard is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public entities for reporting periods for which financial statements have not yet been issued. CRA will adopt ASU 2017-09 during the first quarter of 2018. CRA has not completed its assessment of this standard and has not yet determined whether the impact of the adoption of this standard on its financial position, results of operations, cash flows, or disclosures will be material.6.2. Business AcquisitionsJanuary 30, 2017,February 28, 2022, CRA acquired substantially all of thebusiness assets and assumed certain liabilities of C1Welch Consulting, LLC,Ltd. (“Welch Consulting”), a Texas limited partnership. Welch Consulting provided economic, business, and strategic consulting services principally involving labor and employment issues. The acquisition expands CRA’s business opportunities, expertise, and market presence with the addition of 45 colleagues and offices in Bryan, Texas; Los Angeles, California; and Washington, D.C. A non-employee expert of CRA served as an independent consulting firm,agent and its wholly-owned subsidiary C1 Associates (collectively, "C1") for initial consideration comprisedattorney-in-fact on behalf of cashWelch Consulting. The non-employee expert did not and CRA restricted common stock. The asset purchase agreement provided for additional purchase consideration to be paid for up to four years following the transaction in the form of an earnout, if specific performance targets are met. These earnout payments are payable in cash and CRA restricted common stock. The fair value of this obligation was measured as of the acquisition date and accounted for aswill not receive compensation or a componentportion of the purchase consideration, any adjustments to this initial valuation in future accounting periods will be reportedprice as an adjustment to net income. C1 provides management consulting services in the life sciences industry, and has built a reputation for its specialty consulting services. Acquiring C1 will assist CRA in expanding its geographical presence in the western part of the United States and Europe, servicing CRA's existing life sciences customers more efficiently, and providing opportunities to engage with new clients in both the United States and European markets.underas a business combination, and the purchase method of accounting, and C1's results of operations have been included in the accompanying condensed consolidated incomefinancial statements from the date of acquisition. On the date of acquisition, right-of-use assets and lease liabilities were recorded in accordance with ASC Topic 842, Leases. In addition, contract assets and contract liabilities were recorded in accordance with ASC 606, as CRA adopted ASU 2021-08 on the first day of fiscal 2022. All other tangible assets and identifiable intangible assets acquired and liabilities assumed were recorded at their fair value as of the date of acquisition.a preliminarythe final allocation of the purchase price to the estimated fair value of assets acquired and liabilities assumed. The allocationassumed (in thousands):Assets Acquired Current assets: Accounts receivable $ 3,742 Unbilled services 1,382 Prepaid expenses and other current assets 100 Total current assets 5,224 Property and equipment 141 Goodwill 2,409 Intangible assets 4,150 Right-of-use assets 1,210 Other assets 41 Total assets acquired $ 13,175 Liabilities Assumed Current liabilities: Accrued expenses $ 1,245 Deferred revenue and other liabilities 161 Current portion of lease liabilities 549 Total current liabilities 1,955 Non-current portion of lease liabilities 661 Total liabilities assumed $ 2,616 Net assets acquired $ 10,559 purchase price will be finalized as CRA receives additional information relevant to the acquisition and completes its analysis of transaction-related activities. The final purchase price allocation may be different from theCRA International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)6. Business Acquisitions (Continued)preliminary estimate reported, the impact of which is not expected to be material to CRA's results of operations for fiscal 2017. The following table shows CRA's acquired assets and assumed liabilities, assumed fromCRA has paid $10.6 million, net, the purchaseamount of C1 Consulting (in thousands): $ 3,820 10 3,830 206 106 8,800 12,626 $ 25,568 $ 3,396 652 4,048 2,357 6,405 $ 19,163 of non-compete agreements and the value of customer relationships, the fair value of which was determined using the incremental income method anda multi-period excess earnings method, respectively. The non-compete agreements are being amortized over the stated term of five years on a straight-line basis.method. The customer relationships intangible is being amortized over a ten yearten-year life on a straight-line basis, which approximates the expected pattern of economic benefit from this asset. The fair valueCompany also recorded $2.4 million of goodwill, all of which is expected to be deductible for tax purposes.contingent consideration was determined usingbusiness assets and assumed certain liabilities of bioStrategies Group, Inc. (“bSG”), a monte carlo simulationChicago-based consulting firm focused on developing commercial strategies for healthcare products and will be accreted overtechnologies. The acquisition expands CRA’s business opportunities, expertise, and market presence with the liabilities' measurement periodaddition of 17 colleagues with an office in Chicago, Illinois. The acquisition has been accounted for as a business combination, and the results of operations have been included in the accompanying condensed consolidated financial statements from the date of acquisition. The acquisition of bSG is not significant to its expected future payment valueour overall results presented in our condensed consolidated financial statements.straight-linetime-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, exclusive of depreciation and amortization, and are based on the direct salary of CRA’s employee consultants on the engagement, plus all direct expenses incurred to complete the project, including any amounts billed to CRA by its non-employee experts.fair valuefollowing tables disaggregate CRA’s revenue by type of contract and geographic location (in thousands):Fiscal Quarter Ended Fiscal Year-to-Date
Period EndedType of Contract July 1,
2023July 2,
2022July 1,
2023July 2,
2022Consulting services revenues: Fixed-price $ 28,082 $ 27,541 $ 54,859 $ 56,314 Time-and-materials 133,883 121,561 259,951 241,170 Total $ 161,965 $ 149,102 $ 314,810 $ 297,484 Fiscal Quarter Ended Fiscal Year-to-Date
Period EndedGeographic Breakdown July 1,
2023July 2,
2022July 1,
2023July 2,
2022Consulting services revenues: United States $ 126,894 $ 120,168 $ 244,766 $ 237,087 United Kingdom 26,396 20,843 52,045 43,253 Other 8,675 8,091 17,999 17,144 Total $ 161,965 $ 149,102 $ 314,810 $ 297,484 contingent acquisition liability will be reassessed on a quarterly basis by CRA using additional information as it becomes available,allowances for accounts receivable and any change in the fair value estimate will be recorded in the earnings of that period. Transaction related costs, which are principally legal and accounting service fees, amount to $0.5 million for the fiscal year-to-date period ended September 30, 2017 and are included in selling, general and administrative expensesunbilled services on the condensed consolidated income statement.International, Inc.NotesINTERNATIONAL, INC.Condensed Consolidated Financial Statements (Continued)(Unaudited)7. Cash and Cash Equivalents Cash equivalents consist principally of money market funds with maturities of three months or less when purchased. As of September 30, 2017, a substantial portion of CRA's cash accounts were concentrated at a single financial institution, which potentially exposes CRA to credit risks. The financial institution has a short-term credit rating of A-2 by Standard & Poor's ratings services. CRA has not experienced any losses related to such accounts. CRA does not believe that there is significant risk of non-performance by the financial institution, and its cash on deposit is fully liquid. CRA continually monitors the credit ratings of the institution.8. Fair Value of Financial Instruments Accounting Standards Codification ("ASC") Topic 820,Fair Value Measurements and Disclosures, establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurement), then priority to quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market (Level 2 measurement), then the lowest priority to unobservable inputs (Level 3 measurement).showspresents CRA's financial instrumentsbad debt expense, net of recoveries of previously written off allowances (in thousands):Fiscal Quarter Ended Fiscal Year-to-Date
Period EndedJuly 1,
2023July 2,
2022July 1,
2023July 2,
2022Bad debt expense (recovery), net $ 392 $ (141) $ 392 $ (262) Fiscal Quarter Ended Fiscal Year-to-Date
Period EndedJuly 1,
2023July 2,
2022July 1,
2023July 2,
2022Reimbursable expenses $ 17,252 $ 16,441 $ 31,233 $ 32,645 September 30, 2017July 1, 2023 and December 31, 20162022.July 1,
2023December 31,
2022Contract liabilities $ 3,213 $ 6,977 are measured and recordedwas included in the financial statements at fair value on a recurring basiscontract liabilities balance as of the opening of the respective period or for performance obligations satisfied in previous periods (in thousands):Fiscal Quarter Ended Fiscal Year-to-Date
Period EndedJuly 1,
2023July 2,
2022July 1,
2023July 2,
2022Amounts included in contract liabilities at the beginning of the period $ 2,832 $ 3,331 $ 6,194 $ 7,656 Performance obligations satisfied in previous periods $ 3,298 $ 2,628 $ 2,744 $ 2,150 September 30, 2017 Quoted Prices in Active Markets
for Identical Assets or Liabilities Significant Other
Observable Inputs Significant
Unobservable
Inputs Level 1 Level 2 Level 3 $ 5 $ — $ — $ 5 $ — $ — $ — $ — $ 3,375 $ — $ — $ 3,375 International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)8. Fair Value of Financial Instruments (Continued) December 31, 2016 Quoted Prices in Active Markets
for Identical Assets or Liabilities Significant Other
Observable Inputs Significant
Unobservable
Inputs Level 1 Level 2 Level 3 $ 10,024 $ — $ — $ 10,024 $ — $ — $ — $ — $ 549 $ — $ — $ 549 The fair valuesCRA's money market funds are based on quotes received from third-party banks. The contingent consideration liabilitieswhich may be denominated in the tables above are for estimated future contingent consideration payments related to prior acquisitions. The fair value measurelocal currencies. A portion of these liabilities are based on significant inputs not observed inloans is collateralized. The principal amount of forgivable loans and accrued interest is forgiven by CRA over the market and thus represent Level 3 measurement. The significant unobservable inputs used in the fair value measurements of these contingent acquisition liabilities are CRA's measuresterm of the estimated payouts based on internally generated financial projectionsloans, so long as the employee or non-employee expert continues employment or affiliation with CRA and discount rates.complies with certain contractual requirements. The fair valueexpense associated with the forgiveness of these contingent acquisition liabilities are reassessed on a quarterly basis by CRA using additional informationthe principal amount of the loans is recorded as it becomes available, and any change incompensation expense over the fair value estimates are recorded inservice period, which is consistent with the earningsterm of that period.summarizes the changes in the contingent consideration liabilities over the fiscal year-to-date period ended September 30, 2017 and the fiscal year ended December 31, 2016 (in thousands): September 30,
2017 December 31,
2016 $ 549 $ 773 2,357 — (296 ) 71 1,018 — (299 ) (292 ) 46 (3 ) $ 3,375 $ 549 CRA International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)9. Forgivable Loans Forgivablepresents forgivable loan activity for the fiscal year-to-date period ended September 30, 2017 and the fiscal year ended December 31, 2016 is as followsrespective periods (in thousands):Fiscal Year-to-Date Period Ended Fiscal Year Ended July 1,
2023December 31,
2022Beginning balance $ 56,456 $ 48,591 Advances 17,592 34,984 Repayments (616) (25) Reclassifications from accrued expenses or to other assets (1) — (2,192) Amortization (12,600) (24,403) Effects of foreign currency translation 165 (499) Ending balance $ 60,997 $ 56,456 Current portion of forgivable loans $ 12,134 $ 9,666 Non-current portion of forgivable loans $ 48,863 $ 46,790 September 30,
2017 December 31,
2016 $ 33,962 $ 44,685 10,134 6,949 670 316 (1,884 ) (709 ) (1,102 ) — (10,293 ) (16,575 ) 375 (704 ) $ 31,862 $ 33,962 $ 6,474 $ 5,897 $ 25,388 $ 28,065 10.5. Goodwill and Intangible Assetsduringfor the fiscal year-to-datefiscal-year-to-date period ended September 30, 2017,July 1, 2023 are summarized as follows (in thousands):Goodwill $ 164,815 Accumulated goodwill impairment (71,893) Goodwill, net at December 31, 2022 92,922 Additions due to acquisitions 415 Foreign currency translation adjustment 562 Goodwill, net at July 1, 2023 $ 93,899 Goodwill,
gross Accumulated
impairment
losses Goodwill,
net $ 151,181 $ (76,417 ) $ 74,764 12,626 — 12,626 1,139 — 1,139 $ 164,946 $ (76,417 ) $ 88,529 There were impairment losses of $0.5 million related to intangible assets during the fiscal year-to-date period ended September 30, 2017. There were no impairment losses related to intangible assets during the fiscal year ended December 31, 2016. September 30,
2017 December 31,
2016 $ 286 $ 80 9,581 2,605 $ 9,867 $ 2,685 International, Inc.NotesINTERNATIONAL, INC.July 1, 2023 December 31, 2022 Useful Life
(in years)Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships 10 $ 13,800 $ (5,914) $ 7,886 $ 13,800 $ (5,212) $ 8,588 Condensed Consolidated Financial Statements (Continued)(Unaudited)11.intangible assets during the fiscal-year-to-date period ended July 1, 2023 or during the fiscal year ended December 31, 2022. As a result of the Welch Consulting acquisition, CRA recognized approximately $4.2 million of intangible assets related to customer relationships in the first quarter of fiscal 2022. As a result of the bSG acquisition, CRA recognized approximately $1.4 million of intangible assets related to customer relationships in the fourth quarter of fiscal 2022. Amortization expense related to intangible assets was $0.3 million and $0.7 million for the fiscal quarter and fiscal year-to-date period ended July 1, 2023, respectively, $0.3 million and $0.6 million for the fiscal quarter and fiscal year-to-date period ended July 2, 2022, respectively.July 1,
2023December 31,
2022Compensation and related expenses $ 84,844 $ 138,728 Performance awards 12,021 9,359 Direct project accruals 2,892 1,783 Other 7,416 5,994 Total accrued expenses $ 107,173 $ 155,864 September 30,
2017 December 31,
2016 $ 60,254 $ 67,582 465 534 13,566 7,165 $ 74,285 $ 75,281 September 30, 2017July 1, 2023 and December 31, 2016,2022, approximately $47.2$62.7 million and $53.9$116.1 million, respectively, of accrued bonuses were included above in "Compensation“Compensation and related expenses".12. Credit Agreement CRA is partyexpenses.”a credit agreement that provides CRAan increase in nondeductible meals and entertainment expenses and an increase in the U.K. statutory rate from 19% to 25% effective April 1, 2023, with a $125.0blended rate of 23.5% for the fiscal year. The increase in the tax impact of the meals expense is a result of the expiration of the relief provided by The Consolidated Appropriations Act, 2021, whereby the deduction for business meals from restaurants was 100% during 2021 and 2022 and reverted back to 50% in 2023.revolving credit facilityhave not been recorded for other jurisdictions as those earnings are considered to be permanently reinvested.$15.0 million sublimit for the issuanceone percent excise tax on net repurchases 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 no later than April 24, 2018. There were no borrowings outstanding under this revolving credit facility as of September 30, 2017 andstock after December 31, 2016. As2022. The Company had net share repurchases of September 30, 2017 and December 31, 2016, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $3.6$2.7 million and $2.2 million, respectively. 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 September 30, 2017, CRA was in compliance with the covenants of its credit agreement.13. Revenue Recognition CRA offers consulting services in two broad areas: litigation, regulatory, and financial consulting and management consulting. Together, these two service areas comprised 100.0% of CRA's consolidated revenues for the fiscal quarter ended July 1, 2023 resulting in a tax payable of $0.03 million. As the Company's issued and fiscal year-to-date period ended September 30, 2017. CRA recognizes all project revenue on a gross basis based on consideration of the criteria set forth in ASC Topic 605-45,Principal Agent Considerations. The contracts that CRA enters into and operates under specify whether the engagement will be billed on a time-and-materials or a fixed-price basis. Most of CRA's revenue is derived from time-and-materials service contracts. Revenues from time-and-materials service contracts are recognized as services are provided based upon hours worked and contractually agreed-upon hourly rates, as well as indirect fees based upon hours worked. Revenues from a majority of CRA's fixed-price engagements are recognized on a proportional performance method basedoutstanding common stock on the ratio of costs incurred, substantially all of which are labor-related,condensed consolidated balance sheet is classified as permanent equity, the excise tax is treated as a specific incremental cost directly attributable to the total estimated project costs. In general, project costs are classified in costs of servicesrepurchase. As such, the excise tax is charged against the gross proceeds and are based on the direct salary of the consultants on the engagement plus all direct expenses incurred to complete the engagement, including any amounts billed to CRA by its non-employee experts.CRA International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)13. Revenue Recognition (Continued) CRA's billed and unbilled receivables consist of receivables from a broad range of clients in a variety of industries located throughout the U.S. and in other countries. CRA performs a credit evaluation of its clients to minimize its collectability risk. Periodically, CRA will require advance payment from certain clients. However, CRA does not require collateral or other security. CRA maintains accounts receivable allowances for estimated losses and disputed amounts resulting from clients' failures to make required payments. CRA bases its estimates on historical collection experience, current trends, and credit policy. In determining these estimates, CRA examines historical write-offs of its receivables and reviews client accounts to identify any specific customer collection issues. If the financial condition of any of CRA's customers were to deteriorate, resulting inrecorded within equity with an impairment of their ability or intent to make payment, additional allowances may be required. A rollforward of the accounts receivable allowance is as follows (in thousands): Fiscal Year-to-Date
Period Ended Fiscal Year
Ended September 30,
2017 December 31,
2016 $ 4,253 $ 3,648 6,076 2,761 (2,852 ) (2,156 ) 9 — $ 7,486 $ 4,253 A rollforward of the unbilled receivables allowance is as follows (in thousands): Fiscal Year-to-Date
Period Ended Fiscal Year
Ended September 30,
2017 December 31,
2016 $ 1,720 $ 2,354 1,727 2,102 (914 ) (2,736 ) (2 ) — $ 2,531 $ 1,720 Generally, accounts and unbilled receivables allowances are recorded as a reduction to revenues. During fiscal 2016, $1.1 million was recorded as a bad debt expense and reported as a component of selling, general and administrative expenses related to credit-related losses.CRA International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)13. Revenue Recognition (Continued) Revenues also include reimbursable expenses, which include travel and other out-of-pocket expenses, outside consultants, and other reimbursable expenses. Reimbursable expenses are as follows (in thousands): Quarter Ended Fiscal Year-to-Date
Period Ended September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 $ 9,675 $ 8,969 $ 29,463 $ 25,510 CRA collects goods and services and value added taxes from customers and records these amounts on a net basis, which is within the scope of ASC Topic 605-45,Principal Agent Considerations.14.8. Net Income perPer Shareand diluted earnings per common 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 and fiscal year-to-date periods ended July 1, 2023 and July 2, 2022.of the net earnings offor the period had been distributed. CRA's participating securities consist of unvested share-based payment awards that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders. Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares as of the balance sheet date, as adjusted for the potential dilutive effect of non-participating share-based awards. Net earnings allocable to these participating securities were not significantmaterial for the third quarter of fiscal 2017 and fiscal 2016. The following table presents a reconciliation from net income attributable to CRA International, Inc. to net income available to common shareholders (in thousands): Quarter Ended Fiscal Year-to-Date
Period Ended September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 $ 3,214 $ 3,193 $ 9,880 $ 10,830 21 24 66 74 $ 3,193 $ 3,169 $ 9,814 $ 10,756 CRA International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)14. Net Income per Share (Continued) The following table presents a reconciliation of basic to diluted weighted average shares of common stock outstanding (in thousands): Quarter Ended Fiscal Year-to-Date
Period Ended September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 8,149 8,177 8,332 8,581 204 132 198 72 8,353 8,309 8,530 8,653 For the third quarterquarters and fiscal year-to-date periods ended September 30, 2017,July 1, 2023 and July 2, 2022.Fiscal Quarter Ended Fiscal Year-to-Date
Period EndedJuly 1,
2023July 2,
2022July 1,
2023July 2,
2022Numerator: Net income — basic $ 9,508 $ 11,643 $ 18,426 $ 23,069 Less: net income attributable to participating shares 34 48 69 95 Net income — diluted $ 9,474 $ 11,595 $ 18,357 $ 22,974 Denominator: Weighted average shares outstanding — basic 6,983 7,263 $ 7,051 $ 7,311 Effect of dilutive stock options and restricted stock units 97 117 115 131 Weighted average shares outstanding — diluted 7,080 7,380 7,166 7,442 Net income per share: Basic $ 1.36 $ 1.60 $ 2.61 $ 3.15 Diluted $ 1.34 $ 1.57 $ 2.56 $ 3.09 share basedshare-based awards that were excluded from the calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding amounted to 40,43917,120 and 66,4704,329 shares, respectively. For the third quarter and fiscal year-to-date periods ended October 1, 2016, theThere were no 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 205,015 and 680,950 shares, respectively. These share-based awards were anti-dilutive because their exercise price exceededfor the average market price over the respective period. On March 21, 2016 and May 3, 2017, CRA's Board of Directors authorized the repurchase of up to an additional $20.0 million and $20.0 million, respectively, of CRA's common stock. Repurchases under these programs are discretionary and CRA may make repurchases under any of these programs in the open market (including under any Rule 10b5-1 plan adopted by CRA) or in privately negotiated transactions, in each case in accordance with applicable insider trading and other securities laws and regulations. CRA records the retirement of its repurchased shares as a reduction to common stock. During the third quarter of fiscal year 2017 and fiscal year-to-date period ended September 30, 2017, CRA repurchased and retired 165,629 shares and 554,708 shares, respectively, under these share repurchase programs at an average price per share of $36.63 and $35.23, respectively. During the third quarter and fiscal year-to-date period ended October 1, 2016, July 2, 2022.repurchased and retired 110,908 shares and 783,703 shares, respectively, under these share repurchase programs atINTERNATIONAL, INC.July 1, 2023 Level 1 Level 2 Level 3 Assets: Money market mutual funds $ — $ — $ — Total Assets $ — $ — $ — Liabilities: Contingent consideration liability $ — $ — $ 1,092 Total Liabilities $ — $ — $ 1,092 December 31, 2022 Level 1 Level 2 Level 3 Assets: Money market mutual funds $ — $ — $ — Total Assets $ — $ — $ — Liabilities: Contingent consideration liability $ — $ — $ 1,056 Total Liabilities $ — $ — $ 1,056 average price per share of $25.84 and $24.33, respectively. There was approximately $9.5 million available for future repurchases under these programs as of September 30, 2017.15. Income Taxes CRA's effective income tax rates were 41.7% and 37.7% forindependent consulting firm. The following table summarizes the third quarters of fiscal year 2017 and fiscal year 2016, respectively. The effective tax rate for the third quarter of fiscal year 2017 was higher than the prior year stemming from changes in the jurisdictional mixcontingent consideration liability (in thousands):Fiscal Year-to-Date
Period EndedFiscal Year Ended July 1, 2023 December 31, 2022 Beginning balance $ 1,056 $ — Acquisition-related contingent consideration — 1,056 Accretion 36 — Ending balance $ 1,092 $ 1,056 earnings, executive compensation expenses,August 19, 2022 (the "Credit Agreement") with Bank of America, N.A., as swingline lender, a letter of credit issuing bank and administrative agent, and with Citizens Bank, N.A., as a letter of credit issuing bank. The Credit Agreement provides CRA with a $250.0 million revolving credit facility, which may be decreased at CRA's option to $200.0 million during the correction ofperiod from July 16th in a prior year estimate. This increase in rate was partially offset by the tax benefits related to stock-based compensation of approximately $0.1 million as well as provision to return true-ups. The effective tax ratethrough January 15th in the third quarter of fiscal year 2017 was higher than the combined Federal and state statutory tax rate also due to higher executive compensation andCRA International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)15. Income Taxes (Continued)the correction of a prior year estimate. The effective tax rate in the third quarter of fiscal year 2016 was lower than the combined Federal and state statutory tax rate due to a favorable geographical mix of earnings. CRA's effective income tax rates were 38.0% and 34.3%next year. Additionally, for the fiscal year-to-date periods ended September 30, 2017 and October 1, 2016, respectively. The effective tax rate forperiod from January 16th to July 15th of each calendar year, CRA may elect to not increase the fiscal year-to-date period ended September 30, 2017 was higher than the prior year primarily due to a non-recurring item in the prior year that drove the rate down and was not replicated in the current year. Other drivers of a higher year-to-date fiscal year 2017 effective tax rate are executive compensation expenses and unfavorable discrete items, which were partially offset by a tax benefit related to stock-based compensation of approximately $0.4 million, as well as the tax implications associated with the reversal of contingent consideration. The effective tax rate for the fiscal year-to-date period ended September 30, 2017 was lower than the combined Federal and state statutory tax rate primarily due to a favorable geographical mix of earnings, as well as the tax benefit related to stock-based compensation and the tax implications associated with the reversal of contingent consideration, offset partially by executive compensation and other discrete unfavorable items. The effective tax rate fiscal year-to-date period ended October 1, 2016 was lower than the combined Federal and state statutory tax rate primarily due to a favorable geographical mix of earnings, as well as the sale of GNU's business assets. CRA has not provided for deferred income taxes or foreign withholding taxes on undistributed earnings from its foreign subsidiaries as of September 30, 2017 because such earnings are considered to be indefinitely reinvested. CRA does not rely on these unremitted earnings as a source of funds for its domestic business, as it expects to have sufficient cash flow from operations and availability from its U.S. revolving credit facility to fund its U.S. operational$250.0 million. The revolving credit facility includes a $25.0 million sublimit for the issuance of letters of credit.strategic needs.16.no borrowings outstanding as of December 31, 2022. As of July 1, 2023, the amount available under the revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $4.4 million.management'smanagement’s opinion, based on current knowledge, CRA believes it has adequate legal defenses and/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.17. Business SegmentoperationsGeographic Information CRA is a leading consulting firm specializing in providing economic, financial and management consulting services. It offers consulting services in two broad areas: litigation, regulatory, and financial consulting and management consulting. These two areas represented approximately 100% of our consolidated revenues for fiscal 2017 and 2016. CRA manages its business on an integrated basis through its international network of offices and areas of functional expertise. Many of CRA's practice areas are represented in several of its offices and are managed across geographic borders. When CRA evaluated its business, and possible operating segments, CRA reviewed the manner in which it is organized and managed, composition and responsibilities of its management team, the identification of its chief operating decision maker, as well as the availability of discrete financial information for its various business components and geographic areas. During fiscal 2017 and the majority of fiscal 2016, it determined that CRA operated in one business segment, its consulting services business. Priorsubject to the sale of substantially all of GNU's business assets on April 13, 2016, CRA operated in two operating
inherent uncertainties.CRA International, Inc.Notes to Condensed Consolidated Financial Statements (Continued)(Unaudited)17. Business Segment and Geographic Information (Continued)segments. GNU's financial information is included below and is immaterial to the overall consolidated financial statements. Revenue based on the physical location of the operation to which the revenues relate, are as follows (in thousands): Quarter
Ended
September 30,
2017 Quarter
Ended
October 1,
2016 Fiscal Year-to-
Date Ended
September 30,
2017 Fiscal Year-to-
Date Ended
October 1,
2016 $ 70,910 $ 63,955 $ 217,608 $ 189,832 13,572 12,463 40,444 40,421 6,843 5,273 15,007 14,957 20,415 17,736 55,451 55,378 $ 91,325 $ 81,691 $ 273,059 $ 245,210 Long-lived assets by physical location are as follows (in thousands): September 30,
2017 December 31,
2016 $ 34,005 $ 30,735 5,560 5,253 1,497 393 7,057 5,646 $ 41,062 $ 36,381 18. 12.Subsequent EventsOctober 26, 2017,August 3, 2023, CRA announced that its Board of Directors declared a quarterly cash dividend of $0.17$0.36 per common share, payable on December 15, 2017September 8, 2023 to shareholders of record as of November 28, 2017. On October 24, 2017, the Company extended its $125.0 million revolving credit facility for five years. The Company may use the proceeds of the revolving credit facility to provide working capital and for other general corporate purposes. Other than the letters of credit of approximately $3.6 million that had been issued under the previous credit agreement, no other outstanding borrowings existed at the time of the extension.Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations"Risk“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.("SEC"). You can read these documents at www.sec.gov.Significant Estimates The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with generally acceptedprinciples inpolicies involving the U.S. ("U.S. GAAP"). The preparation of these financial statements requires us to makemore significant estimates and judgments that affectused in the reported amountspreparation of assets and liabilities, as well as the related disclosure of contingent assets and liabilities, at the date of theour financial statements and the reported amountsas of revenues and expenses during the reporting period. Estimates in these condensed consolidated financial statements include, but are not limitedJuly 1, 2023 remain unchanged from December 31, 2022. Please refer to allowances for accounts receivable and unbilled services, revenue recognition on fixed price contracts, depreciation of property and equipment, share-based compensation, valuation of acquired intangible assets, impairment of long lived assets, goodwill, accrued and deferred income taxes, valuation allowances on deferred tax assets, accrued compensation, accrued exit costs, and other accrued expenses. These items are monitored and analyzed by management 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. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if our assumptions based on past experience or our other assumptions do not turn out to be substantially accurate. Apart from the additional business combinations accounting policy included below, we have described our significant accounting policies in Note 1 to our consolidated financial statements included in our annual report on Form 10-K for fiscal 2016, which was filed with the SEC on March 15, 2017. We have reviewed our accounting policies, identifying those that we believe to be critical to the preparation and understanding of our consolidated financial statements in the list set forth below. See the disclosure under the heading "Critical Accounting Policies" inPart II, Item 7, “Management’s Discussion and Analysis of Part IIFinancial Condition and Results of our Annual Report on Form 10-K for fiscal 2016 for a detailed descriptionOperations” of these policies and their potential effects on our results of operations and financial condition.•Revenue recognition and allowances for accounts receivable and unbilled services•Share-based compensation expense•Deferred compensation•Valuation of goodwill and other intangible assets•Accounting for income taxes We did not adopt any changes in the fiscal year-to-date period ended September 30, 2017 that had a material effect on these critical accounting policies nor did we make any changes to our accounting policies in the fiscal year-to-date period ended September 30, 2017 that changed these critical accounting policies. Business Combinations. We recognize and measure identifiable assets acquired, and liabilities assumed, of our acquirees as of the acquisition date at fair value. Fair value measurements require extensive use of estimates and assumptions, including estimates of future cash flows to be generated by the acquired assets. In addition, we recognize and measure contingent consideration at fair value as of the acquisition date. Contingent consideration obligations that are classified as liabilities are remeasured at fair value each reporting period with the changes in fair value resulting from either the passage of time, revised expectations of performance, or ultimate settlement to the amount or timing of the initial measurement recognized in the consolidated statements of comprehensive income.Recent Accounting Standards See Note 5 to our condensed consolidated financial statements included in this quarterly report on Form 10-Q for a discussion of recent accounting standards that we have not yet adopted. Additionally, Note 5 should be read in conjunction with the disclosure under the heading "Recent Accounting Standards" contained in Note 1 of the consolidated financial statements and the notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.September 30, 2017,July 1, 2023, Compared to the Fiscal Quarter and Fiscal Year-to-Date Period Ended October 1, 2016Fiscal Quarter
EndedFiscal Year-to-Date
Period EndedJuly 1,
2023July 2,
2022July 1,
2023July 2,
2022Revenues 100.0 % 100.0 % 100.0 % 100.0 % Costs of services (exclusive of depreciation and amortization) 70.0 69.1 70.3 69.6 Selling, general and administrative expenses 18.4 18.8 18.5 18.1 Depreciation and amortization 1.8 2.0 1.8 2.0 Income from operations 9.8 10.1 9.4 10.3 Interest expense, net (1.0) (0.3) (0.7) (0.2) Foreign currency gains (losses), net (0.4) 1.1 (0.4) 0.6 Income before provision for income taxes 8.4 10.9 8.3 10.7 Provision for income taxes 2.5 3.1 2.5 2.9 Net income 5.9 % 7.8 % 5.9 % 7.8 % Quarter Ended Fiscal Year-to-
Date Period
Ended September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 100.0 % 100.0 % 100.0 % 100.0 % 68.4 70.8 69.7 69.9 22.8 20.4 21.9 21.5 2.7 2.3 2.4 2.4 6.2 6.5 6.0 6.2 — — 0.1 1.5 (0.1 ) (0.2 ) (0.2 ) (0.1 ) 0.0 (0.1 ) (0.1 ) (0.1 ) 6.1 6.2 5.9 7.6 (2.5 ) (2.3 ) (2.2 ) (2.6 ) 3.5 3.9 3.6 5.0 0.0 0.1 0.0 (0.5 ) 3.5 % 3.9 % 3.6 % 4.4 % September 30, 2017July 1, 2023, Compared to the Fiscal Quarter Ended October 1, 2016$9.6$12.9 million, or 11.8%8.6%, to $91.3$162.0 million for the thirdsecond quarter of fiscal 20172023 from $81.7$149.1 million for the thirdsecond quarter of fiscal 2016. Revenues increased primarily in our business consulting practice. The increase in net revenue was a result of an increase in gross revenues of $10.5 million as compared2022. Utilization decreased to 72% for the thirdsecond quarter of fiscal 2016, offset by an increase in write-offs and reserves of $0.9 million as compared to the third quarter of 2016. Utilization was up 1% to 74%2023 from 77% for the thirdsecond quarter of fiscal 20172022, while consultant headcount grew 12.5% from 73% in the third quarter of fiscal 2016, while overall headcount increased from863 at the end of the thirdsecond quarter of fiscal 20162022 to 971 at the end of the thirdsecond quarter of fiscal 2017 by 98 consultants, driven by the addition of 84 consultants from the C1 acquisition and other recruiting activities in the quarter ended September 30, 2017.totalnet revenues for the third quartersecond quarters of fiscal 20172023 and the third quarter of fiscal 2016.2022, respectively. Revenues derived from fixed-price engagements increasedprojects decreased to 25%17% of totalnet revenues for the thirdsecond quarter of fiscal 20172023 compared with 18% of net revenues for the thirdsecond quarter of fiscal 2016. These percentages2022. The percentage of revenue derived from fixed-price engagements dependprojects 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. This increase in revenues derived from fixed-price engagements was primarily attributable to the acquisition of C1.Services.Services (exclusive of depreciation and amortization). Costs of services (exclusive of depreciation and amortization) increased by $4.6$10.2 million, or 8.0%10.0%, to $62.4$113.3 million for the thirdsecond quarter of fiscal 20172023 from $57.8$103.1 million for the thirdsecond quarter of fiscal 2016.2022. The increase in costs of services was due primarily to an increase of $4.4 million in employee compensation and fringe benefit costs attributable to salaries and benefits for our increased consulting headcount, which was attributable to the C1 acquisition, as well as a $0.4 millionresult of a higher headcount, an increase in accretion related to contingent consideration from prior acquisitions. Additionally, client reimbursable expenses increased by $0.7of $0.8 million, in the third quarter of fiscal 2017 compared to the third quarter of fiscal 2016. Partially offsetting these increases was a $1.0 million decrease in retention and incentive compensation. Despite the overallan increase in costforgivable loan amortization of services, as$0.7 million. As a percentage of revenues, costs of services decreased(exclusive of depreciation and amortization) increased to 68.4%70.0% for the thirdsecond quarter of fiscal 20172023 from 70.8%69.1% for the thirdsecond quarter of fiscal 2016, as this increase in cost of services was outpaced by the increase in revenue in the third quarter of fiscal 2017 compared to the third quarter of fiscal 2016.$4.1$1.8 million, or 24.6%6.7%, to $20.8$29.8 million for the thirdsecond quarter of fiscal 20172023 from $16.7$28.0 million for the thirdsecond quarter of fiscal 2016. Significant contributors to2022. Within this increase were an increase in commissions to our non-employee expertscategory of $0.4 million for the third quarter of fiscal 2017 as compared to the third quarter of fiscal 2016, asexpenses, there was a higher percentage of our revenue for the third quarter of fiscal 2017 was sourced by our non-employee experts, as well as a $1.4$0.8 million increase in other professional fees,rent expense, a $0.7 million increase in travel and entertainment, a $0.5 million increase in employee compensation and fringe benefit costs, a $0.6 million increase in travel and entertainment expenses, a $0.5 million increase in design costs related to capitalized software, a $0.2 million increase in rent expense, and a $0.2 million increase in bad debt reservesexpense, a $0.4 million increase in legal and write-offsprofessional fees, and a $0.3 million increase in software subscription and data services. Partially offsetting the increase in these expenses was a $1.4 million decrease in commissions to our non-employee experts for loans to employees in the thirdsecond quarter of fiscal 20172023 as compared to the thirdsecond quarter of fiscal 2016.increaseddecreased to 22.8%18.4% for the thirdsecond quarter of fiscal 20172023 from 20.4%18.8% for the thirdsecond quarter of fiscal 2016, due primarily to the aforementioned increase in selling, general and administrative expenses modestly outpacing the increase in revenues in the third quarter of fiscal 2017 as compared with the third quarter of fiscal 2016.2022. Commissions to our non-employee experts increaseddecreased to 2.5%2.3% of revenues for the thirdsecond quarter of fiscal 20172023 compared to 2.4%3.5% of revenues for thirdthe second quarter of fiscal 2016, as more revenue was sourced by non-employee experts in the third quarter of fiscal 2017.$2.3$4.1 million and the effective tax rate ("ETR") was 41.7%,30.1% for the thirdsecond quarter of fiscal 20172023 compared to $1.9$4.6 million and 37.7%28.3% for the thirdsecond quarter of fiscal 2016.2022. The effective tax rateETR for the thirdcurrent fiscal quarter of fiscal 2017 was higher than the prior year stemming from changesfiscal quarter primarily due to an increase in nondeductible meals and entertainment expenses and an increase in the jurisdictional mixU.K. statutory rate from 19% to 25% effective April 1, 2023, with a blended rate of earnings, executive compensation expenses, and true-ups to prior year estimates. This23.5% for the fiscal year. The increase in ratethe tax impact of the meals expense is a result of the expiration of the relief provided by The Consolidated Appropriations Act, 2021, whereby the deduction for business meals from restaurants was partially offset by tax benefits related100% during 2021 and 2022 and reverted back to stock-based compensation of approximately $0.1 million as well as provision to return true-ups.50% in 2023. The effective tax rate inETR for the thirdsecond quarter of fiscal 20172023 was comparable to the combined Federal and state statutory tax rate. The effective tax rate in the third quarter of fiscal 2016 was lowerhigher than the combined Federalfederal and state statutory tax rate primarily due to a favorable geographical mix of earnings. Net Income Attributablenondeductible compensation paid to Noncontrolling Interest, Net of Tax. Our ownership interest in GNU was 55.89%executive officers and nondeductible meals and entertainment expenses.third quarters of fiscal 2017 and fiscal 2016. GNU's financial results are consolidated with ours, and allocations of the noncontrolling interest's share of GNU's net income result in deductions to our net income, while allocations of the noncontrolling interest's share of GNU's net loss result in additions to our net income. The results of operations of GNU allocable to its other owners was a net income of $11 thousand for the thirdsecond quarter of fiscal 20172022 was higher than the combined federal and a net loss of $42 thousandstate statutory tax rate primarily due to nondeductible items including compensation paid to executive officers and entertainment expenses, along with an increase in the valuation allowance, partially offset by the U.S. benefit from foreign-derived intangible income ("FDII").thirdsecond quarter of fiscal 2016. Net Income Attributable to CRA International, Inc. Net income attributable to CRA International, Inc. remained flat at $3.22023 from $11.6 million for the thirdsecond quarter of fiscal 2017 and for the third quarter of fiscal 2016.2022. The net income per diluted share was $0.38$1.34 per share for the thirdsecond quarter of fiscal 2017 and2023, compared to $1.57 of net income per diluted share for the thirdsecond quarter of fiscal 2016. Diluted weighted2022. Weighted average diluted shares outstanding increaseddecreased by approximately 44,000300,000 shares to approximately 8,353,0007,080,000 shares for the thirdsecond quarter of fiscal 20172023 from approximately 8,309,0007,380,000 shares for the thirdsecond quarter of fiscal 2016.2022. The increasedecrease indiluted weighted average diluted shares outstanding was primarily due to the issuance orrepurchase of shares of our common stock since July 2, 2022, offset in part by the vesting of shares of restricted stock and time-vesting restricted stock units and the exercise of stock options since the third quarterJuly 2, 2022.September 30, 2017July 1, 2023, Compared to the Fiscal Year-to-Date Period Ended October 1, 2016$27.9$17.3 million, or 11.4%5.8%, to $273.0$314.8 million for the fiscal year-to-date period ended September 30, 2017July 1, 2023 from $245.2$297.5 million for the fiscal year-to-date period ended October 1, 2016. Revenues increased primarily in our business consulting service line. The increase in net revenue was a result of an increase in gross revenues of $31.7 million as comparedJuly 2, 2022. Utilization decreased to the fiscal year-to-date period ended October 1, 2016, offset by an increase in write-offs and reserves of $3.3 million as compared to the fiscal year-to-date period ended October 1, 2016. Notwithstanding a reduction in utilization to 74%71% for the fiscal year-to-date period ended September 30, 2017July 1, 2023 from 75% for the fiscal year-to-date period ended October 1, 2016, revenue growth followed an increase in consultingJuly 2, 2022, while consultant headcount increased 12.5% from 863 at the end of the thirdsecond quarter of fiscal 20162022 to 971 at the end of the thirdsecond quarter of fiscal 2017 of 98, principally driven by the addition of 84 consultants from the C1 acquisition and other recruiting activities in the fiscal year-to-date period ended September 30, 2017. Offsetting this increase, GNU had a decrease in revenue of $0.8 million in the fiscal year-to-date period ended September 30, 2017 compared with the fiscal year-to-date period ended October 1, 2016, principally due to the cessation of its operations in April 2016.23%July 2, 2022, respectively. Revenues derived from fixed-price projects decreased to 17% of totalnet revenues for the fiscal year-to-date period ended September 30, 2017 and the fiscal year-to-date period ended OctoberJuly 1, 2016, respectively. Revenues derived from fixed-price engagements were 25% and 17%2023 compared with 19% of totalnet revenues for the fiscal year-to-date period ended September 30, 2017 and the fiscal year-to-date period ended October 1, 2016, respectively. These percentagesJuly 2, 2022. The percentage of revenue derived from fixed-price engagements dependprojects 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. The increase in the fiscal year-to-date period ended September 30, 2017 compared with the fiscal year-to-date period ended October 1, 2016 is primarily attributable to the acquisition of C1 and the performance of certain of our other practices.Services.Services (exclusive of depreciation and amortization). Costs of services (exclusive of depreciation and amortization) increased by $18.9$14.1 million, or 11.0%6.8%, to $190.2$221.2 million for the fiscal year-to-date period ended September 30, 2017July 1, 2023 from $171.3$207.1 million for the fiscal year-to-date period ended October 1, 2016.July 2, 2022. The increase in costs of services was due primarily to an increase of $11.4$13.1 million in employee compensation and fringe benefit costs attributable to salariesprimarily as a result of a higher headcount and benefits associated with our increased consulting headcount, primarily attributable to the C1 acquisition, an increase in incentive and retention compensation costsforgivable loan amortization of $3.3$2.4 million, andpartially offset by a $0.7 million increasedecrease in accretion related to contingent consideration from prior acquisitions. Additionally, client reimbursable expenses increased by $4.0 million in the fiscal year-to-date period ended September 30, 2017 compared to the fiscal year-to-date period ended October1, 2016. Partially offsetting these increases, cost of services for GNU decreased by $0.3 million for the fiscal year-to-date period ended September 30, 2017, due to the sale of its business assets and cessation of operations in April 2016.$1.4 million. As a percentage of revenues, costs of services remained essentially flat at 69.7%(exclusive of depreciation and amortization) increased to 70.3% for the fiscal year-to-date period ended September 30, 2017 andJuly 1, 2023 from 69.6% for the fiscal year-to-date period ended October 1, 2016.$7.1$4.4 million, or 13.5%8.3%, to $59.8$58.2 million for three quarters ofthe fiscal 2017year-to-date period ended July 1, 2023 from $52.7$53.8 million for three quartersthe fiscal year-to-date period ended July 2, 2022. Within this category of fiscal 2016. The primary contributors to this increase were anexpenses, there was a $2.0 million increase in other professional fees of $2.9travel and entertainment, a $1.2 million increase in rent expense, a $1.0$1.1 million increase in employee compensation and fringe benefit costs, a $1.1$1.0 million increase in travelmiscellaneous and entertainment expenses,other costs, a $0.5$0.8 million increase in designcosts related to capitalized software subscription and data services, and a $0.5$0.7 million increase in intangible impairments, a $0.6 millionbad debt expense. Partially offsetting the increase in rent expense relatedthese expenses was a $2.4 million decrease in commissions to the additional office space attributed to the C1 acquisition incurred in the fiscal year-to-date period ended September 30, 2017, and an increase in other operating expenses of $1.4 million. Additionally, selling, general and administrative expenses for GNU decreased by $0.5 millionour non-employee experts for the fiscal year-to-date period ended September 30, 2017, dueJuly 1, 2023 as compared to the sale of its business assets and cessation of operations in April 2016.21.9%18.5% for the fiscal year-to-date period ended September 30, 2017July 1, 2023 from 21.5%18.1% for the fiscal year-to-date period ended October 1, 2016 due primarily to the quarter over quarter increase selling, general and administrative expenses outpacing the quarter over quarter revenue increase.July 2, 2022. Commissions to our non-employee experts decreased to 2.7%2.3% of revenues for the fiscal year-to-date period ended September 30, 2017July 1, 2023 compared to 2.8%3.3% of revenues for fiscal year-to-date period ended October 1, 2016 as less revenue was sourced by non-employee experts in the fiscal year-to-date period ended September 30, 2017. GNU Gain on Sale of Business Assets. On April 13, 2016, a buyer acquired substantially all of the business assets and assumed substantially all of the liabilities of GNU for a purchase price of $1.35 million. Of this amount, $1.1 million was received at closing, with the remaining $0.25 million payable on or after April 13, 2017, subject to contingencies, as outlined in the asset purchase agreement, which remaining amount was paid in full on May 3, 2017. GNU recognized a gain on sale of its business assets of $0.25 million during the second quarter of fiscal 2017, of which $0.14 million is attributed to CRA, and $3.8 million during the second quarter of fiscal 2016, of which $2.1 million is attributed to CRA. For the first three quarters of fiscal 2017, our The income tax provision was $6.1$7.8 million and the effective tax rateETR was 38.0%,29.7% for the fiscal year-to-date period ended July 1, 2023, compared to a provision of $6.4$8.7 million and an effective tax rate of 34.3%27.4% for the first three quarters of fiscal 2016.year-to-date period ended July 2, 2022. The effective tax rateETR for the first three quarters ofcurrent fiscal 2017year-to-date period was higher than the prior yearfiscal year-to-date period primarily due to a non-recurring itemdecrease in the prior year that drove the rate down and was not replicated in the current year. Other drivers of a higher year-to-date fiscal 2017 effective tax rate are executive compensation expenses and unfavorable discrete items, which were partially offset by a tax benefit related to stock-basedshare-based compensation, an increase in nondeductible meals and entertainment expenses, and an increase in the U.K. statutory rate from 19% to 25% effective April 1, 2023, with a blended rate of approximately $0.4 million, as well as23.5% for the fiscal year. The increase in the tax implications associated withimpact of the reversalmeals expense is a result of contingent consideration.the expiration of the relief provided by The effective tax rateConsolidated Appropriations Act, 2021, whereby the deduction for business meals from restaurants was 100% during 2021 and 2022 and reverted back to 50% in 2023. The ETR for the first three quarters ofcurrent fiscal 2017year-to-date period was lowerhigher than the combined Federalfederal and state statutory tax rate primarily due to a favorable geographical mix of earnings, as well asnondeductible compensation paid to executive officers and nondeductible meals and entertainment expenses, partially offset by the tax benefit related to stock-based compensation and the tax implications associated with the reversal of contingent consideration, offset partially by executive compensation and other discrete unfavorable items.share-based compensation. The effective tax rate in the first three quarters of fiscal 2016 was lower than the combined Federal and state statutory tax rate primarily due to a favorable geographical mix of earnings, as well as the sale of GNU's business assets. Net Income Attributable to Noncontrolling Interest, Net of Tax. Our ownership interest in GNU was 55.89%ETR for the fiscal year-to-date period ended September 30, 2017July 2, 2022 was approximately the same as the combined federal and state statutory tax rate and included offsetting items primarily related to the fiscal year-to-date period ended October 1, 2016. GNU's financial results are consolidated with ourstax benefit for share-based compensation and allocations of the noncontrolling interest's share of GNU's netnondeductible compensation paid to executive officers.result in deductionsdecreased by $4.7 million to our net income, while allocations of the noncontrolling interest's share of GNU's net loss result in additions to our net income. The results of operations of GNU allocable to its other owners was net income of $82 thousand for the fiscal year-to-date period ended September 30, 2017, and net income of $1.3 million, primarily as a result of the gain on sale attributable to its other owners of $1.7$18.4 million for the fiscal year-to-date period ended OctoberJuly 1, 2016. Net Income Attributable to CRA International, Inc. Net income attributable to CRA International, Inc. decreased by $0.9 million to $9.92023 from $23.1 million for the fiscal year-to-date period endedSeptember 30, 2017 from $10.8 million for the fiscal year-to-date period ended October 1, 2016. July 2, 2022. The diluted net income per share was $1.15$2.56 for the fiscal year-to-date period ended September 30, 2017,July 1, 2023, compared to diluted net income per share of $1.24 per share$3.09 for the fiscal year-to-date period ended October 1, 2016. Diluted weightedJuly 2, 2022. Weighted average diluted shares outstanding decreased by approximately 123,000276,000 to approximately 8,530,0007,166,000 shares for the fiscal year-to-date period ended September 30, 2017July 1, 2023 from approximately 8,653,0007,442,000 shares for the fiscal year-to-date period ended October 1, 2016.July 2, 2022. The decrease in diluted weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since October 1, 2016,July 2, 2022, offset in part by the issuance or vesting of shares of restricted stock and time-vesting restricted stock units and the exercise of stock options that have been exercised, since October 1, 2016.September 30, 2017 existing revolving credit facility will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months. In During the fiscal year-to-date period ended September 30, 2017,July 1, 2023, cash and cash equivalents decreased by $32.6$17.2 million. We completed the period with cash and cash equivalents of $20.9 million$14.3 million. The principal drivers of the decrease of cash and cash equivalents was payment of a significant portion of our fiscal 2022 performance bonuses in the first and second quarters of fiscal 2023, the repurchase of shares, and the payment of dividends, offset by net borrowings of $80.0 million.of $60.6decreased by $16.0 million to $15.7 million. The principal driversdecrease in working capital was principally due to an increase in borrowings of the reduction of cash was payment of$80.0 million and a significant portion of our fiscal 2016 performance bonuses, the buildout of new leased office space, the repurchase and retirement of shares of our common stock, and cash paid for the C1 acquisition. Of the totaldecrease in cash and cash equivalents of $20.9$17.2 million. Partially offsetting these decreases to working capital was a decrease in accrued expenses of $48.7 million, at September 30, 2017, $6.4an increase in accounts receivable and unbilled services of $18.1 million, a decrease in accounts payable of $4.7 million, a decrease in deferred revenue and other liabilities of $3.0 million, an increase in prepaid expenses and other current assets of $2.5 million, an increase in the current portion of our forgivable loans of $2.5 million, and a decrease in the current portion of deferred compensation of $2.2 million.cashliquidity in the U.S., including cash flow from operations and availability on our revolving line of credit facility to fund U.S. activities.September 30, 2017,July 1, 2023, net cash provided byused in operating activities was $7.8$65.0 million. Net income was $10.0$18.4 million for the fiscal year-to-date period ended September 30, 2017. The primary factorJuly 1, 2023. Uses of cash for operating activities included a $8.9 million decrease in cash used in operations was thelease liabilities, a net increase of $8.4$16.4 million in the "accounts receivable"accounts receivable and "accounts receivable allowances" line item of the cash flow statementunbilled receivables, and ana $3.2 million increase in the "unbilled services" line item of the cash flow statement of $15.5 million due to the increase in unbilled amounts.prepaid expenses and other current assets. Other uses of cash included a decrease of $1.2 million in the "accountsaccounts payable, accrued expenses, and other liabilities" line itemliabilities of $69.7 million, primarily due to the cash flow statement. Offsetting these usespayment of cash was a $6.5 million decrease in the "prepaid expensessignificant portion of our fiscal 2022 performance bonuses and other current assets,performance awards, and other assets" line item of the cash flow statement. Cash provided by operations included non-cash items related to depreciation and amortization expense of $6.6 million and to share-based compensation expenses of $4.6 million. The changean increase in forgivable loans for the period of $2.4$4.4 million, which was primarily driven by $10.3 million of forgivable loan amortization, $3.0 million repayments and reclassifications, net of $10.8$17.0 million of forgivable loan issuances, net of repayments, offset by $12.6 million of forgivable loan amortization.accruals.September 30, 2017,July 1, 2023, net cash used in investing activities was $21.3$1.9 million, which included $16.2$0.6 million inof net consideration relating topaid for the C1 acquisitionacquisitions of Welch Consulting and $5.4bSG, and $1.3 million for capital expenditures, primarily related to purchases of computer equipment and leasehold improvements for new office leased space. We used $20.8 million of net cash in financing activities duringequipment.September 30, 2017,July 1, 2023, net cash provided by financing activities was $49.2 million, primarily foras a result of net borrowings under the repurchase and retirementrevolving credit facility of shares$80.0 million. Offsetting these increases in cash provided by financing activities were repurchases of our common stock of $19.5$23.6 million, the payment of $3.5 million in cash dividends to shareholders,of $5.2 million, and $0.7 million in vested employeetax withholding payments reimbursed by restricted shares on vesting of $2.0 million.tax withholdings. Offsettingoffice 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 other liabilities on our condensed consolidated balance sheets and are recorded at a value based on their estimated discounted cash flows. We do not expect to incur asset retirement obligation or redecoration obligation costs over the next twelve months. At July 1, 2023, the remainder of our asset retirement obligations and redecoration obligations are approximately $2.8 million and are expected to be paid between fiscal year 2026 and fiscal year 2031 when the underlying leases terminate or when the respective lease agreement requires redecoration. We expect to satisfy these uses oflease and related obligations as they become due from cash was $3.0 million received upon the issuance of shares of common stock related to the exercise of stock options.generated from operations. We areagreement thatissuing bank and administrative agent, and with Citizens Bank, N.A., as a letter of credit issuing bank. The Credit Agreement provides usCRA with a $125.0$250.0 million revolving credit facility, andwhich may be decreased at CRA's option to $200.0 million during the period from July 16th in a $15.0year through January 15th in the next year. Additionally, for the period from January 16th to July 15th of each calendar year, CRA may elect to not increase the revolving credit facility to $250.0 million. The revolving credit facility includes a $25.0 million sublimit for the issuance of letters of credit.facility to provide working capital andloans under the Credit Agreement for other general corporate purposes. Generally, wepurposes and may repay any borrowings under the revolving credit facility at any time, but any borrowings must repay all borrowingsbe repaid no later than April 24, 2018. There were no borrowings outstanding under this revolving credit facility as of September 30, 2017. The amount available under this revolving credit facility is reduced by certain letters of credit outstanding, which amounted to $3.6 million and $2.2 million, respectively, as of September 30, 2017 and December 31, 2016. of either (i) the adjusted base rate, as defined in the credit agreement, plus an applicable margin whichas described below: (i) in the case of borrowings in U.S. dollars by us, the Base Rate (as defined in the Credit Agreement), (ii) in the case of borrowings in U.S. dollars, a rate based on Term SOFR (as defined in the Credit Agreement) for the applicable interest period, (iii) in the case of borrowings in Euros, EURIBOR (as defined in the Credit Agreement) for the applicable interest period, (iv) in the case of borrowings in Pounds Sterling, a daily rate based on SONIA (as defined in the Credit Agreement), (v) in the case of borrowings in Canadian Dollars, CDOR (as defined in the Credit Agreement) for the applicable interest period, (vi) in the case of borrowings in Swiss Francs, a daily rate based on SARON (as defined in the Credit Agreement), or (vii) in the case of borrowings in any other Alternate Currency (as defined in the Credit Agreement), the relevant daily or term rate determined as provided in the Credit Agreement. The applicable margin on borrowings based on the Base Rate varies between 0.50% and 1.50%within a range of 0.25% to 1.00% depending on our totalconsolidated net leverage ratio, as determined underand the credit agreement, or (ii) the adjusted eurocurrency rate, as defined in the credit agreement, plus an applicable margin whichon borrowings based on any of the other rates described above varies between 1.50% and 2.50%within a range of 1.25% to 2.00% depending on our totalconsolidated net leverage ratio.0.25%0.175% and 0.375%0.250% depending on our totalconsolidated net 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 $26.4 million in net assets as of September 30, 2017.credit agreement, weCredit Agreement, CRA must comply with various financial and non-financial covenants. Compliance with theseThe primary financial covenants is testedconsist of a maximum consolidated net leverage ratio of 3.0 to 1 and a minimum consolidated interest coverage ratio of 2.5 to 1. The primary non-financial covenants include, but are not limited to, restrictions on a fiscal quarterly basis.CRA's ability to incur future indebtedness, engage in acquisitions or dispositions, pay dividends or repurchase capital stock, and enter into business combinations. Any indebtedness outstanding under the revolving credit facility may become immediately due and payable uponourCRA's failure to pay principal, interest or fees, or a violationupon the breach of any financial covenant. The financialAs of July 1, 2023, CRA was in compliance with the 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. On October 24, 2017, the Company extended its $125.0 million revolving credit facility for five years. The Company may use the proceeds of the revolving credit facility to provide working capital and for other general corporate purposes. Other than the letters of credit of approximately $3.6 million that had been issued under the previous credit agreement, no other outstanding borrowings existed at the time of the extension. and Term Loanscollateralized.collateralized by key person life insurance. The forgivable loans have terms that are generally between threetwo and eightsix 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.incentive performance awards to certain of our employees and non-employee experts and employeesthat 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 throughduring the respectiveapplicable measurement periods. Changes in the estimated awardawards are expensed prospectively over the remaining service period. We believe that we will have sufficient funds to satisfy any cash obligations related to the incentive performance awards. We expect to fund theseany cash payments if any, from existing cash resources, cash generated from operations, or borrowings available on our existing revolving credit facility.current senior loancredit agreement, will depend on several factors, including our future profitability, the levels of our debt and equity, restrictions under our existing revolving line of credit with our bank,facility, and the overall credit and equity market environments. SeeWe completed two business acquisitions during the first and fourth quarters of fiscal 2022, which are further described in Note 6 Business Acquisitions to the condensed consolidated financial statements to2, "Business Acquisitions” in Part I, Item I, “Financial Statements” of this Form 10-Q for further details of the C1 acquisition. On21, 2016, and May 3, 20172023, we announced that our Board of Directors authorized thean expansion of our existing share repurchase program of up to an additional $20.0 million and $20.0 million, respectively, of our common stock. RepurchasesWe may repurchase shares under these programs are discretionary and we may make such repurchases under any of these programsthis program in the open market purchases (including underthrough any Rule 10b5-1 plan adopted by us) or in privately negotiated transactions in each case in accordance with applicable insider trading and other securities laws and regulations.thirdfiscal quarter ofand fiscal 2017,year-to-date period ended July 1, 2023, we repurchased and retired 165,62931,090 shares and 211,971 shares, respectively, under theseour share repurchase programsprogram at an average price per share of $36.63. Approximately $9.5$96.49 and $111.23, respectively. During the fiscal quarter and fiscal year-to-date period ended July 2, 2022, we repurchased and retired 211,345 shares and 268,010 shares under our share repurchase program at an average price per share of $83.63 and $84.44, respectively. was available for future repurchases as of September 30, 2017.willplan to finance these programsfuture repurchases with available cash, cash from future operations, and funds fromborrowings available under our existing revolving credit facility. We expect to continue to repurchase shares under these programs.futuresuch dividends isremain subject to the discretion of our boardBoard of directors.repurchases;bankrevolving 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.and Contractual Obligations On April 21, 2017, we entered into the first amendment of the lease with 1411 IC-SIC Property, LLC to extend the term of previously leased space of 25,261 square feet, for an additional twenty-three months to April 30, 2028 for office space located on the 35th floor, and to lease additional space of 16,587 square feet on the 25th floor expiring on the same date, of the office building located at 1411 Broadway in New York, New York. The amendment includes a base rent abatement of approximately $1.2 million, as well as a tenant improvement allowance of approximately $1.4 million. Following an initial rent abatement period, the annual base rent will be approximately $1.2 million per year, subject to annual increases of approximately 8% after five years. On May 8, 2017, we entered into the first amendment of the lease with John Hancock Life Insurance Company (U.S.A.), to extend the term of the currently leased space of 41,642 square feet, for an additional ten years ending on July 31, 2028 for office space located on the 33rd and 34th floor of the office building located at 1 South Wacker Drive in Chicago, Illinois. The amendment includes a base rent abatement of approximately $0.9 million, as well as a tenant improvement allowance of approximately $2.3 million. Following an initial rent abatement period, the annual base rent will be approximately $1.1 million per year, subject to annual increases of approximately 2.5% per year. On July 21, 2017, CRA entered into the first amendment of the San Francisco, CA lease for an additional 9,206 square feet of office space and to extend the terms for an additional eight years ending on September 30, 2025. Beginning on October 1, 2017, the annual base rent will be approximately $0.9 million per year, subject to annual increases of approximately 3.0% per year. The amendment includes a base rent abatement of approximately $0.5 million, as well as a tenant improvement allowance of approximately $1.2 million.Quarterly Report on Form 10-Q,report, as well as a description of material risks we face, are set forth below under the heading "Risk Factors"“Risk Factors” and included in Part I—I, Item 1A, “Risk Factors” of our Annual Report on2022 Form 10-K for the year ended December 31, 2016 filed with the SEC on March 15, 2017.10-K. 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 7A. QuantitativePart II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," inRisk” of our Annual Report on2022 Form 10-K for the fiscal year ended December 31, 2016.10-K.reportreport. This is done in order to provide reasonable assuranceensure that we record, process, summarize and report the information we mustare required to disclose in the reports that we fileare filed or submitsubmitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC'sSEC’s rules and forms. Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2017, due to the material weaknesses in internalJuly 1, 2023.control over financial reporting related to the inadequate design and execution of controls over revenue and related reserve processes, compensation-related processes, and certain non-routine technical accounting processes described in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Notwithstanding the material weaknesses, managementManagement 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.thirdsecond quarter of fiscal 2017. Other than changes effected in accordance with the ongoing remediation, as further described below, of the material weaknesses in internal controls over financial reporting related to inadequate design and execution of controls over revenue and related reserve processes, compensation-related processes, and certain non-routine technical accounting processes in the financial statement close process pursuant to the plan described in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, there2023. There were no changes in our internal control over financial reporting identified in connection with the above evaluation that occurred during the thirdsecond quarter of fiscal 20172023 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.Plan for Remediation of Material Weakness Management has initiated a remediation plan which includes, but is not limited to, the following actions:•We have established a Special Internal Controls Committee reporting to the Audit Committee, led by our CEO. The Committee and other members of management have prepared an overall assessment of our financial accounting systems, accounting policies, procedures and controls. This assessment is the basis of the detailed remediation plan.•We hired additional technical accounting personnel.•On April 25, 2017, Douglas C. Miller was appointed to the position of Chief Accounting Officer. cost limitations, 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.in anyto these risk factors previously disclosed in our Annual Report on Form 10-K forduring the yearquarter ended December 31, 2016 filed with the SEC on March 15, 2017. See "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 for a complete description of the material risks we face.July 1, 2023. table provides information about our repurchases of shares of our common stock during the fiscal quarter ended September 30, 2017.July 1, 2023. 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 thirdsecond quarter of fiscal 2017.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)
Approximate
Dollar Value of
Shares that May Yet
Be Purchased
Under the Plans
or Programs(2)April 2, 2023 to April 29, 2023 1,237 $ 109.55 — $ 22,277,111 April 30, 2023 to May 27, 2023 31,090 $ 96.49 31,090 $ 19,277,193 May 28, 2023 to July 1, 2023 — $ — — $ 19,277,193 (a)
Total Number of
Shares
Purchased(1) (b)
Average Price
Paid per Share (c)
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs(1) (d)
Maximum Number
(or Approximate
Dollar Value) of
Shares that May Yet
Be Purchased
Under the Plans
or Programs(1) 40,629 $ 36.22 per share 40,629 $ 15,560,261 — — — $ 14,087,417 125,000 $ 36.75 per share 125,000 $ 9,493,667
this program.(1)21, 2016 and May 3, 2017,2, 2023, we announced that our Board of Directors approvedauthorized an expansion to our existing share repurchase programsprogram of up to an additional $20.0 million and $20.0 million, respectively,of outstanding shares of our common stock. We may repurchase shares under these programsthis program in open market purchases (including underthrough 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 July 29, 2017,May 27, 2023, we repurchased and retired 40,62931,090 shares under these programsthis program at an average price per share of $36.22. During the five weeks ended September 30, 2017, we repurchased and retired 125,000 shares under these programs at an average price per share of $36.75.$96.49. Approximately $9.5$19.3 million was available for future repurchases under these programsthis program as of September 30, 2017.July 1, 2023. We expect to continue to repurchase shares under these programs. On July 21, 2017, CRA amended its lease with Columbia REIT—221 Main, LLC, as landlord, for CRA's office space located at 221 Main Street, San Francisco, California. Underamendment, CRA will lease an additional 9,206 square feet of office space and relocate to the building's 16th floor. The amendment extends the base termperiod ended June 30, 2023, no director or officer of the lease for an additional eight years ending on September 30, 2025. Beginning on October 1, 2017, the annual base rent for the new office space through the new endCompany adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of the lease's base term, exclusive of customary operating costs and expenses, will be approximately $0.9 million per year, subject to annual increases of approximately 3.0% per year. The amendment includes a base rent abatement of approximately $0.5 million, as well as a tenant improvement allowance of approximately $1.2 million. The amendment gives CRA a right of first offer to rent certain additional office space in the building if it becomes available. If CRA expands the leased office space and is leasing the entire 16th floor of the building, subject to certain conditions, the new base term of the lease will be extendible by CRA for one five-year period. A copy of the lease amendment is attached as Exhibit 10.2 to this quarterly report on Form 10-Q and is incorporated herein by reference.Regulation S-K).EXHIBIT INDEXItem No. Filed with this Form 10-Q Description 3.1 10.13.2 10.1
31.110.2X10.3Addendum No. 6 to Lease dated July 11, 2016 by and between CRA International, Inc. and 1201 F Street, L.P.31.1
Rule 13a-14(a)/15d-14(a) certification, as adopted pursuant to Section 302 of principal executive officerthe Sarbanes-Oxley Act of 2002.
31.231.2X
32.132.1X
32.2101X101 X 's’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017,July 1, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language), as follows: (i) Condensed Consolidated Income Statements of Operations (unaudited) for the fiscal quarters and the fiscal year-to-date periods ended September 30, 2017July 1, 2023 and October 1, 2016,July 2, 2022, (ii) Condensed Consolidated Statements of Comprehensive Income (unaudited) for the fiscal quarters and the fiscal year-to-date periods ended September 30, 2017July 1, 2023 and October 1, 2016,July 2, 2022, (iii) Condensed Consolidated Balance Sheets (unaudited) as at September 30, 2017July 1, 2023 and December 31, 2016,2022, (iv) Condensed Consolidated Statements of Cash Flows (unaudited) for the fiscal year-to-date periods ended September 30, 2017July 1, 2023 and October 1, 2016,July 2, 2022, (v) Condensed Consolidated Statement of Shareholders'Shareholders’ Equity (unaudited) for the fiscal year-to-date periodperiods ended September 30, 2017,July 1, 2023 and July 2, 2022, and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). *Management contract or compensatory planCRA INTERNATIONAL, INC. Date: October 31, 2017August 3, 2023
By:By:
/s/ PAUL A. MALEHPaul A. Maleh President and Chief Executive Officer Date: October 31, 2017August 3, 2023
By:By:
/s/ CHAD M. HOLMESChad M. Holmes
DANIEL K. MAHONEYDaniel K. Mahoney Chief Financial Officer, Executive Vice President
and TreasurerDate: October 31, 2017By:/s/ DOUGLAS C. MILLERDouglas C. MillerVice President and Chief Accounting Officer