Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 02, 2016 | Apr. 28, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | CRA INTERNATIONAL, INC. | |
Entity Central Index Key | 1,053,706 | |
Document Type | 10-Q | |
Document Period End Date | Apr. 2, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 8,966,780 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Income S
Condensed Consolidated Income Statements - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Condensed Consolidated Income Statements | ||
Revenues | $ 80,912 | $ 78,039 |
Costs of services | 55,515 | 53,819 |
Gross profit | 25,397 | 24,220 |
Selling, general and administrative expenses | 19,221 | 18,083 |
Depreciation and amortization | 1,850 | 1,661 |
Income from operations | 4,326 | 4,476 |
Interest income | 38 | 17 |
Interest expense | (145) | (142) |
NeuCo gain on extinguishment of debt | 606 | |
Other expense, net | (34) | (326) |
Total | 4,185 | 4,631 |
Provision for income taxes | (1,946) | (1,732) |
Net income | 2,239 | 2,899 |
Net loss (income) attributable to noncontrolling interest, net of tax | 184 | (120) |
Net income attributable to CRA International, Inc. | $ 2,423 | $ 2,779 |
Net income per share attributable to CRA International, Inc.: | ||
Basic (in dollars per share) | $ 0.27 | $ 0.30 |
Diluted (in dollars per share) | $ 0.27 | $ 0.30 |
Weighted average number of shares outstanding: | ||
Basic (in shares) | 8,871 | 9,190 |
Diluted (in shares) | 8,927 | 9,403 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Condensed Consolidated Statements of Comprehensive Income | ||
Net income | $ 2,239 | $ 2,899 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 23 | (2,262) |
Comprehensive income | 2,262 | 637 |
Less: comprehensive loss (income) attributable to noncontrolling interest | 184 | (120) |
Comprehensive income attributable to CRA International, Inc. | $ 2,446 | $ 517 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 02, 2016 | Jan. 02, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 22,581 | $ 38,139 |
Accounts receivable, net of allowances of $3,977 at April 2, 2016 and $3,648 at January 2, 2016 | 54,188 | 60,904 |
Unbilled services, net of allowances of $2,489 at April 2, 2016 and $2,354 at January 2, 2016 | 34,630 | 25,473 |
Prepaid expenses and other current assets | 10,308 | 11,876 |
Forgivable loans | 3,556 | 4,402 |
Total current assets | 125,263 | 140,794 |
Property and equipment, net | 35,243 | 31,338 |
Goodwill | 76,643 | 76,970 |
Intangible assets, net of accumulated amortization of $10,615 at April 2, 2016 and $10,454 at January 2, 2016 | 3,385 | 3,591 |
Deferred income taxes | 18,863 | 18,856 |
Forgivable loans, net of current portion | 37,968 | 40,283 |
Other assets | 1,611 | 1,885 |
Total assets | 298,976 | 313,717 |
Current liabilities: | ||
Accounts payable | 13,471 | 13,652 |
Accrued expenses | 45,260 | 65,118 |
Deferred revenue and other liabilities | 5,268 | 5,730 |
Current portion of deferred rent | 1,241 | 1,069 |
Current portion of deferred compensation | 551 | 814 |
Current portion of notes payable | 75 | |
Total current liabilities | 65,791 | 86,458 |
Deferred rent and facility-related noncurrent liabilities | 14,247 | 11,836 |
Deferred compensation and other noncurrent liabilities | 4,719 | 4,355 |
Total noncurrent liabilities | $ 18,966 | $ 16,191 |
Commitments and contingencies | ||
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; 8,900,775 shares and 8,859,231 shares issued and outstanding at April 2, 2016 and January 2, 2016, respectively | $ 66,614 | $ 65,731 |
Retained earnings | 157,698 | 155,275 |
Accumulated other comprehensive loss | (9,227) | (9,250) |
Total CRA International, Inc. shareholders' equity | 215,085 | 211,756 |
Noncontrolling interest | (866) | (688) |
Total shareholders' equity | 214,219 | 211,068 |
Total liabilities and shareholders' equity | $ 298,976 | $ 313,717 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Apr. 02, 2016 | Jan. 02, 2016 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, net of allowances (in dollars) | $ 3,977 | $ 3,648 |
Allowance for unbilled services (in dollars) | 2,489 | 2,354 |
Intangible assets, net of accumulated amortization (in dollars) | $ 10,615 | $ 10,454 |
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value ( in dollars per share ) | $ 0 | $ 0 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 8,900,775 | 8,859,231 |
Common stock, shares outstanding | 8,900,775 | 8,859,231 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
OPERATING ACTIVITIES: | ||
Net income | $ 2,239 | $ 2,899 |
Adjustments to reconcile net income to net cash (used in) operating activities, net of effect of acquired businesses: | ||
Depreciation and amortization | 1,846 | 1,679 |
Loss on disposal of property and equipment | 16 | |
Deferred rent | 2,579 | 344 |
Deferred income taxes | 48 | |
Share-based compensation expenses | 1,655 | 1,609 |
Excess tax benefits from share-based compensation | (32) | (39) |
NeuCo gain on extinguishment of debt | (606) | |
Accounts receivable allowances | 339 | 1,086 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 6,237 | 245 |
Unbilled services | (9,178) | (7,557) |
Prepaid expenses and other current asset, and other assets | 2,086 | 666 |
Forgivable loans | 3,157 | (1,650) |
Accounts payable, accrued expenses, and other liabilities | (20,888) | (22,942) |
Net cash used in operating activities | (9,960) | (24,202) |
INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (5,073) | (2,364) |
Collections on notes receivable | 1,550 | |
Payments on notes receivable | (40) | |
Net cash used in investing activities | (5,073) | (854) |
FINANCING ACTIVITIES: | ||
Payments on notes payable | (75) | (300) |
Tax withholding payments reimbursed by restricted shares | (490) | (66) |
Excess tax benefits from share-based compensation | 32 | 39 |
Repurchase of common stock | (296) | (4,535) |
Net cash used in financing activities | (829) | (4,862) |
Effect of foreign exchange rates on cash and cash equivalents | 304 | (1,051) |
Net decrease in cash and cash equivalents | (15,558) | (30,969) |
Cash and cash equivalents at beginning of period | 38,139 | 48,199 |
Cash and cash equivalents at end of period | 22,581 | 17,230 |
Noncash investing and financing activities: | ||
Purchases of property and equipment not yet paid for | 2,022 | |
Supplemental cash flow information: | ||
Cash paid for income taxes | 281 | 168 |
Cash paid for interest | $ 155 | $ 78 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Shareholders' Equity - 3 months ended Apr. 02, 2016 - USD ($) $ in Thousands | CRA International, Inc. Shareholders' Equity | Common Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest | Total |
BALANCE at Jan. 02, 2016 | $ 211,756 | $ 65,731 | $ 155,275 | $ (9,250) | $ (688) | $ 211,068 |
BALANCE (in shares) at Jan. 02, 2016 | 8,859,231 | 8,859,231 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net income (loss) | 2,423 | 2,423 | (184) | $ 2,239 | ||
Foreign currency translation adjustment | 23 | 23 | 23 | |||
Share-based compensation expense for employees | 1,643 | $ 1,643 | 1,643 | |||
Share-based compensation expense for non-employees | 6 | $ 6 | 6 | |||
Restricted share vesting (in shares) | 67,704 | |||||
Redemption of vested employee restricted shares for tax withholding | (490) | $ (490) | (490) | |||
Redemption of vested employee restricted shares for tax withholding (in shares) | (24,996) | |||||
Tax benefit on stock option exercises and restricted shares vesting | 20 | $ 20 | 20 | |||
Shares repurchased | (296) | $ (296) | (296) | |||
Shares repurchased (in shares) | (1,164) | |||||
Change in ownership of NeuCo | 6 | 6 | ||||
BALANCE at Apr. 02, 2016 | $ 215,085 | $ 66,614 | $ 157,698 | $ (9,227) | $ (866) | $ 214,219 |
BALANCE (in shares) at Apr. 02, 2016 | 8,900,775 | 8,900,775 |
Description of Business
Description of Business | 3 Months Ended |
Apr. 02, 2016 | |
Description of Business | |
Description of Business | 1. Description of Business CRA International, Inc. ("CRA") 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 its services in two broad areas: litigation, regulatory, and financial consulting and management consulting. CRA operates in two business segments, which are consulting services and NeuCo. CRA operates its business under its registered trade name, Charles River Associates. |
Basis of Presentation and Estim
Basis of Presentation and Estimates | 3 Months Ended |
Apr. 02, 2016 | |
Basis Of Presentation And Estimates | |
Basis of Presentation and Estimates | 2. Basis of Presentation and Estimates The accompanying unaudited condensed consolidated financial statements reflect the results of operations, financial position, cash flows, and stockholders' equity as of and for the quarters ending April 2, 2016 and April 4, 2015, respectively. These financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for Quarterly Reports on Form 10-Q. Accordingly, these financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America ("GAAP") for annual financial statements. In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair statement of our results of operations, financial position, cash flows, and stockholders' 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 year ended January 2, 2016 included in our Annual Report on Form 10-K. The preparation of financial statements in conformity with GAAP requires management to make significant estimates and judgments that affect the reported amounts of assets and liabilities, as well as the related disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates in these condensed consolidated financial statements include, but are not limited to, allowances for accounts receivable and unbilled services, revenue recognition on fixed price contracts, 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 CRA for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. CRA bases its estimates on historical experience and various other assumptions that CRA believes to be reasonable under the circumstances. Actual results may differ from those estimates if CRA's assumptions based on past experience or other assumptions do not turn out to be substantially accurate. |
Principles of Consolidation
Principles of Consolidation | 3 Months Ended |
Apr. 02, 2016 | |
Principles of Consolidation | |
Principles of Consolidation | 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 NeuCo, Inc. ("NeuCo"). All significant intercompany accounts have been eliminated. CRA's ownership interest in NeuCo was 55.89% for all periods presented. NeuCo's financial results have been consolidated with CRA's, and the portion of NeuCo's results allocable to its other owners is shown as "noncontrolling interest." Additionally, a member of CRA's board of directors holds a greater than 5% interest in NeuCo as of April 2, 2016. NeuCo'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 NeuCo. CRA does not believe that the reporting lag will have a significant impact on CRA's consolidated income statements or financial condition. On January 8, 2015, NeuCo entered into an agreement to settle a note payable of approximately $981,000 in exchange for aggregate payments of $375,000. NeuCo recorded a gain on the extinguishment of this debt in the first quarter of fiscal 2015 of approximately $606,000. Under the settlement order, the scheduled payments were made as follows: $150,000 on January 8, 2015 and $150,000 on February 28, 2015. The final payment of $75,000 was paid on February 16, 2016. |
Recent Accounting Standards Not
Recent Accounting Standards Not Yet Adopted | 3 Months Ended |
Apr. 02, 2016 | |
Recent Accounting Standards Not Yet Adopted | |
Recent Accounting Standards Not Yet Adopted | 4. Recent Accounting Standards Not Yet Adopted Improvements to Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (" ASU 2016-09"). ASU 2016-09 establishes new classification for excess tax benefits and deficiencies relating to share based payments. In addition, the new pronouncement allows for the option of estimating awards expected to vest or accounting for forfeitures when they occur. Cash paid by employers when withholding shares for tax withholding purposes will now be classified as a financing activity. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. CRA has not yet determined the effects, if any, that the adoption of ASU 2016-09 may have on its financial position, results of operations, cash flows, or disclosures. Principal versus Agent Considerations In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations ("ASU 2016-08"). ASU 2016-08 clarifies the provisions of principal versus agent implementation. ASU 2016-08 requires entities to determine whether they are a principal or agent for each distinct good or service they provide to customers. The new standard also clarifies the assessment necessary to determine whether the entity is acting as a principal or agent based on contract and customer. For a public entity, the amendments in this update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. CRA has not yet determined the effects, if any, that the adoption of ASU 2016-08 may have on its financial position, results of operations, cash flows, or disclosures. Leases (Topic 842) In February 2016, the FASB issued 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. Revenue from Contracts with Customers In August 2015, the 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 fiscal years, beginning after December 15, 2017. Early adoption is permitted for interim and annual periods beginning after December 15, 2016. 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. CRA has not yet determined the effects, if any, that the adoption of ASU 2015-14 may have on its financial position, results of operations, cash flows, or disclosures. Reporting of Going-Concern Uncertainties In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and provides guidance to an organization's management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures in the financial statement footnotes. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. CRA believes that the adoption of ASU 2014-15 will not have a material impact on its financial position, results of operations, cash flows, or disclosures |
Cash and Cash Equivalents
Cash and Cash Equivalents | 3 Months Ended |
Apr. 02, 2016 | |
Cash and Cash Equivalents | |
Cash and Cash Equivalents | 5. Cash and Cash Equivalents Cash equivalents consist principally of money market funds with maturities of three months or less when purchased. As of April 2, 2016 and April 4, 2015, a substantial portion of CRA's cash accounts was concentrated at a single financial institution, which potentially exposes CRA to credit risks. The financial institution has a short-term credit rating of A 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. CRA's cash on deposit is fully liquid and CRA continually monitors the credit ratings of the institution. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Apr. 02, 2016 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 6. 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). The following table shows CRA's financial instruments as of April 2, 2016 and January 2, 2016 that are measured and recorded in the financial statements at fair value on a recurring basis (in thousands): April 2, 2016 Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs Unobservable Inputs Level 1 Level 2 Level 3 Assets: Money market funds $ $ — $ — Total Assets $ $ — $ — Liabilities: Contingent acquisition liability $ — $ — $ Total Liabilities $ — $ — $ January 2, 2016 Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs Unobservable Inputs Level 1 Level 2 Level 3 Assets: Money market funds $ $ — $ — Total Assets $ $ — $ — Liabilities: Contingent acquisition liability $ — $ — $ Total Liabilities $ — $ — $ The fair values of CRA's money market funds are based on quotes received from third-party banks. The contingent acquisition liability in the table above is for estimated future contingent consideration payments related to a prior acquisition. The fair value measure of this liability is based on significant inputs not observed in the market and thus represents a Level 3 measurement. The significant unobservable inputs used in the fair value measurements of this contingent acquisition liability are CRA's measures of the estimated payouts based on internally generated financial projections and discount rates. The fair value of the contingent acquisition liability is reassessed on a quarterly basis by CRA using additional information as it becomes available and any change in the fair value estimate is recorded in the earnings of that period. |
Forgivable Loans
Forgivable Loans | 3 Months Ended |
Apr. 02, 2016 | |
Forgivable Loans. | |
Forgivable Loans | 7. Forgivable Loans Forgivable loan activity for the fiscal quarter ended April 2, 2016 is as follows (in thousands): Forgivable Loans Balance at January 2, 2016 $ Advances Repayments ) Amortization ) Effect of foreign currency translation Balance at April 2, 2016 $ Current portion of forgivable loans $ Non-current portion of forgivable loans $ |
Goodwill
Goodwill | 3 Months Ended |
Apr. 02, 2016 | |
Goodwill | |
Goodwill | 8. Goodwill The changes in the carrying amount of goodwill during the fiscal quarter ended April 2, 2016, are as follows (in thousands): Goodwill, gross Accumulated impairment losses Goodwill, net Balance at January 2, 2016 $ $ ) $ Effect of foreign currency translation ) — ) Balance at April 2, 2016 $ $ ) $ |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Apr. 02, 2016 | |
Accrued Expenses. | |
Accrued Expenses | 9. Accrued Expenses Accrued expenses consist of the following (in thousands): April 2, 2016 January 2, 2016 Compensation and related expenses $ $ Income taxes payable Other Total $ $ As of April 2, 2016 and January 2, 2016, approximately $21.7 million and $44.9 million, respectively, of accrued bonuses were included above in "Compensation and related expenses". |
Credit Agreement
Credit Agreement | 3 Months Ended |
Apr. 02, 2016 | |
Credit Agreement | |
Credit Agreement | 10. Credit Agreement CRA is party to a credit agreement that provides CRA with a $125.0 million revolving credit facility and a $15 million sublimit for the issuance of letters of credit. CRA may use the proceeds of the revolving credit facility for working capital and 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 amounts outstanding under this revolving line of credit as of April 2, 2016 and January 2, 2016. As of April 2, 2016, the amount available under this revolving line of credit was reduced by certain letters of credit outstanding, which amounted to $2.1 million. Under the credit agreement, CRA must comply with various financial and non-financial covenants. Compliance with these financial covenants is tested on a fiscal quarterly basis. As of April 2, 2016 and January 2, 2016, CRA was in compliance with the covenants of its credit agreement. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Apr. 02, 2016 | |
Revenue Recognition | |
Revenue Recognition | 11. Revenue Recognition CRA offers consulting services in two broad areas: litigation, regulatory, and financial consulting and management consulting. Together, these two service areas comprised approximately 99.1% of the consolidated revenues for the fiscal quarter ended April 2, 2016, and approximately 0.9% of the consolidated revenues came from CRA's NeuCo subsidiary. 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 using a proportional performance method based on the ratio of costs incurred, substantially all of which are labor-related, to the total estimated project costs. In general, project costs are classified in costs of services 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'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 in 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): Quarter Ended April 2, 2016 Balance at January 2, 2016 $ Increases to reserve Amounts written off ) Effects of foreign currency translation ) Balance at April 2, 2016 $ A rollforward of the unbilled receivables allowance is as follows (in thousands): Quarter Ended April 2, 2016 Balance at January 2, 2016 $ Increases to reserves Amounts written off ) Effects of foreign currency translation ) Balance at April 2, 2016 $ Amounts deemed uncollectible are recorded as a reduction to revenues. 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 April 2, 2016 April 4, 2015 Reimbursable expenses $ $ 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. |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Apr. 02, 2016 | |
Net Income Per Share | |
Net Income Per Share | 12. Net Income per Share CRA calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of the net earnings for the period had been distributed. CRA's participating securities consist of unvested share-based payment awards that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders. Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares 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 significant for the first quarter of fiscal 2016 or fiscal 2015. The following table presents a reconciliation from net income to the net income available to common shareholders (in thousands): April 2, 2016 April 4, 2015 Net income, as reported $ $ Less: net income attributable to participating shares Net income available to common shareholders $ $ The following is a reconciliation of basic to diluted weighted average shares of common stock outstanding (in thousands) for the first quarter of fiscal 2016 and fiscal 2015: April 2, 2016 April 4, 2015 Basic weighted average shares outstanding Common stock equivalents: Stock options, restricted stock, and restricted stock units Diluted weighted average shares outstanding For the first quarter ended April 2, 2016, the anti-dilutive share based awards that were excluded from the calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding amounted to 346,245 shares. For the first quarter ended April 4, 2015, the anti-dilutive share based awards that were excluded from the calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding amounted to 391,733 shares. These share-based awards each period were anti-dilutive because their exercise price exceeded the average market price over the respective period. On October 23, 2014 and March 21, 2016, CRA's Board of Directors authorized the repurchase of up to $30.0 million and $20.0 million, respectively, of CRA's common stock. Repurchases under these programs are discretionary and CRA may make such 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 first quarter ended April 2, 2016, there were no shares repurchased or retired under these share repurchase programs. During the first quarter ended April 4, 2015, CRA repurchased and retired 144,900 shares under these share repurchase programs at an average price per share of $31.33. As of April 2, 2016, there was approximately $28.1 million shares available for future repurchases under these programs. On February 22, 2016, CRA announced the commencement of a modified "Dutch auction" self-tender offer to purchase for cash up to $30.0 million in value of shares of its common stock at a price within (and including) the range of $18.00 to $19.75 per share. The tender offer expired on Monday, March 21, 2016. A total of 1,164 shares of common stock were tendered at the final purchase price of $19.75 per share. |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 02, 2016 | |
Income Taxes | |
Income Taxes | 13. Income Taxes CRA's effective tax rates for the fiscal quarters ended April 2, 2016 and April 4, 2015 were 46.5% and 37.4%, respectively. The effective tax rate for the first quarter of 2016 was higher than the prior year primarily due to a non-recurring benefit for the use of valuation allowances in the prior year, the geographical mix of earnings and state taxes. The effective tax rate in the first quarter of fiscal 2016 was higher than the combined Federal and state statutory tax rate primarily due to a loss in NeuCo for the quarter that was not benefited, as well as other permanent items, offset partially by a benefit for jurisdictional mix of earnings. The effective tax rate in the first quarter of fiscal 2015 was lower than the combined Federal and state statutory tax rate primarily due to the geographical mix of earnings. Additionally, the effective tax rate in the first quarter of fiscal 2015 included a benefit for the release of a valuation allowance as a result of the current-year utilization of certain historical foreign net operating losses that previously had a valuation allowance, as well a discrete provision in connection with income taxes payable for a state examination that is nearing conclusion, offset partially by a discrete benefit due to the release of reserves in connection with the finalization of the tax examination in France for fiscal years 2011 and 2012. |
Contingencies
Contingencies | 3 Months Ended |
Apr. 02, 2016 | |
Contingencies | |
Contingencies | 14. Contingencies CRA is subject to legal actions arising in the ordinary course of business. In management's opinion, CRA believes it has adequate legal defenses and/or insurance coverage with respect to the eventuality of such actions. CRA does not believe any settlement or judgment relating to any pending legal action would materially affect its financial position or results of operations. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Apr. 02, 2016 | |
Subsequent Events | |
Subsequent Events | 15. Subsequent Events CRA voted in favor of the sale of substantially all of its NeuCo subsidiary's business assets for cash and other consideration, including the buyer's assumption of certain liabilities, subject to certain contingent liabilities of NeuCo related to various representations and warranties. The transaction closed on April 13, 2016. On April 27, 2016, CRA drew down $5.0 million on its existing revolving line of credit to fund operations and capital investments. These borrowings will be repaid in accordance with the terms of the agreement. |
Fair value of Financial Instr23
Fair value of Financial Instruments (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Fair Value of Financial Instruments | |
Financial instruments that are measured and recorded at fair value on a recurring basis | The following table shows CRA's financial instruments as of April 2, 2016 and January 2, 2016 that are measured and recorded in the financial statements at fair value on a recurring basis (in thousands): April 2, 2016 Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs Unobservable Inputs Level 1 Level 2 Level 3 Assets: Money market funds $ $ — $ — Total Assets $ $ — $ — Liabilities: Contingent acquisition liability $ — $ — $ Total Liabilities $ — $ — $ January 2, 2016 Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs Unobservable Inputs Level 1 Level 2 Level 3 Assets: Money market funds $ $ — $ — Total Assets $ $ — $ — Liabilities: Contingent acquisition liability $ — $ — $ Total Liabilities $ — $ — $ |
Forgivable Loans (Tables)
Forgivable Loans (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Forgivable Loans. | |
Schedule of forgivable loans activity | Forgivable loan activity for the fiscal quarter ended April 2, 2016 is as follows (in thousands): Forgivable Loans Balance at January 2, 2016 $ Advances Repayments ) Amortization ) Effect of foreign currency translation Balance at April 2, 2016 $ Current portion of forgivable loans $ Non-current portion of forgivable loans $ |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Goodwill | |
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill during the fiscal quarter ended April 2, 2016, are as follows (in thousands): Goodwill, gross Accumulated impairment losses Goodwill, net Balance at January 2, 2016 $ $ ) $ Effect of foreign currency translation ) — ) Balance at April 2, 2016 $ $ ) $ |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Accrued Expenses. | |
Schedule of accrued expenses | Accrued expenses consist of the following (in thousands): April 2, 2016 January 2, 2016 Compensation and related expenses $ $ Income taxes payable Other Total $ $ |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Revenue Recognition | |
Schedule of activity of accounts receivable allowance | A rollforward of the accounts receivable allowance is as follows (in thousands): Quarter Ended April 2, 2016 Balance at January 2, 2016 $ Increases to reserve Amounts written off ) Effects of foreign currency translation ) Balance at April 2, 2016 $ |
Schedule of activity of the unbilled receivables allowance | A rollforward of the unbilled receivables allowance is as follows (in thousands): Quarter Ended April 2, 2016 Balance at January 2, 2016 $ Increases to reserves Amounts written off ) Effects of foreign currency translation ) Balance at April 2, 2016 $ |
Schedule of reimbursable expenses included in revenues | Reimbursable expenses are as follows (in thousands): Quarter Ended April 2, 2016 April 4, 2015 Reimbursable expenses $ $ |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Net Income Per Share | |
Schedule of reconciliation from net income to net income available to common shareholders | The following table presents a reconciliation from net income to the net income available to common shareholders (in thousands): April 2, 2016 April 4, 2015 Net income, as reported $ $ Less: net income attributable to participating shares Net income available to common shareholders $ $ |
Schedule of reconciliation of basic to diluted weighted average shares of common stock outstanding | The following is a reconciliation of basic to diluted weighted average shares of common stock outstanding (in thousands) for the first quarter of fiscal 2016 and fiscal 2015: April 2, 2016 April 4, 2015 Basic weighted average shares outstanding Common stock equivalents: Stock options, restricted stock, and restricted stock units Diluted weighted average shares outstanding |
Description of Business (Detail
Description of Business (Details) | 3 Months Ended |
Apr. 02, 2016item | |
Description of Business | |
Number of broad areas of services | 2 |
Number of business segments | 2 |
Principles of Consolidation (De
Principles of Consolidation (Details) - USD ($) | Jan. 08, 2015 | Apr. 02, 2016 | Apr. 04, 2015 |
NeuCo Interest | |||
Repayments of Notes Payable | $ 75,000 | $ 300,000 | |
NeuCo gain on extinguishment of debt | 606,000 | ||
NeuCo, Inc. | |||
NeuCo Interest | |||
Percentage of ownership interest held by the entity | 55.89% | ||
Notes Payable | $ 981,000 | ||
Repayments of Notes Payable | $ 375,000 | ||
NeuCo gain on extinguishment of debt | $ 606,000 | ||
NeuCo, Inc. | Repayments of Notes payable on January 2015 | |||
NeuCo Interest | |||
Repayments of Notes Payable | $ 150,000 | ||
NeuCo, Inc. | Repayments of Notes payable on February 2015 | |||
NeuCo Interest | |||
Repayments of Notes Payable | 150,000 | ||
NeuCo, Inc. | Repayments of Notes Payable on February 2016 | |||
NeuCo Interest | |||
Repayments of Notes Payable | $ 75,000 | ||
NeuCo, Inc. | Board of directors | Minimum | |||
NeuCo Interest | |||
Percentage of ownership interest held by the entity | 5.00% |
Fair Value of Financial Instr31
Fair Value of Financial Instruments (Details) - Recurring - USD ($) $ in Thousands | Apr. 02, 2016 | Jan. 02, 2016 |
Level 1 | ||
Fair Value of Financial Instruments. | ||
Total Assets | $ 17 | $ 6,015 |
Level 1 | Money market funds | ||
Fair Value of Financial Instruments. | ||
Cash and cash equivalents | 17 | 6,015 |
Level 3 | ||
Fair Value of Financial Instruments. | ||
Contingent acquisition liability | 814 | 773 |
Total Liabilities | $ 814 | $ 773 |
Forgivable Loans (Details)
Forgivable Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Jan. 02, 2016 | |
Forgivable loans activity | ||
Beginning balance | $ 44,685 | |
Advances | 1,157 | |
Repayments | (257) | |
Amortization | (4,065) | |
Effect of foreign currency translation | 4 | |
Ending balance | 41,524 | |
Current portion of forgivable loans | 3,556 | $ 4,402 |
Non-current portion of forgivable loans | $ 37,968 | $ 40,283 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | 3 Months Ended |
Apr. 02, 2016USD ($) | |
Changes in the carrying amount of goodwill | |
Balance at the beginning of the period, gross | $ 153,387 |
Effect of foreign currency translation | (327) |
Balance at the end of the period, gross | 153,060 |
Balance at the beginning of the period, Accumulated impairment losses | (76,417) |
Balance at the end of the period, Accumulated impairment losses | (76,417) |
Balance at the beginning of the period, net | 76,970 |
Balance at the end of the period, net | $ 76,643 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Apr. 02, 2016 | Jan. 02, 2016 |
Accrued Expenses. | ||
Compensation and related expenses | $ 38,010 | $ 57,963 |
Income taxes payable | 120 | 323 |
Other | 7,130 | 6,832 |
Total | 45,260 | 65,118 |
Accrued bonuses | $ 21,700 | $ 44,900 |
Credit Agreement (Details)
Credit Agreement (Details) - USD ($) $ in Millions | Apr. 02, 2016 | Jan. 02, 2016 |
Revolving credit facility | ||
Senior Loan Agreement | ||
Revolving credit facility, maximum capacity | $ 125 | |
Amount of borrowings outstanding under revolving line of credit | 0 | $ 0 |
Amounts outstanding under letters of credit | 2.1 | |
Letters of credit | ||
Senior Loan Agreement | ||
Revolving credit facility, maximum capacity | $ 15 |
Revenue Recognition (Details)
Revenue Recognition (Details) | 3 Months Ended |
Apr. 02, 2016item | |
Number of broad areas of consulting services | 2 |
Consulting Services | |
Percentage of revenue | 99.1 |
NeuCo, Inc. | |
Percentage of revenue | 0.9 |
Revenue Recognition (Details 2)
Revenue Recognition (Details 2) $ in Thousands | 3 Months Ended |
Apr. 02, 2016USD ($) | |
A rollforward of the accounts receivable allowance | |
Balance at January 2, 2016 | $ 3,648 |
Increases to reserve | 836 |
Amounts written off | (503) |
Effects of foreign currency translation | (4) |
Balance at April 2, 2016 | $ 3,977 |
Revenue Recognition (Details 3)
Revenue Recognition (Details 3) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
A rollforward of the unbilled receivables allowance | ||
Balance at January 2, 2016 | $ 2,354 | |
Increases to reserves | 668 | |
Amounts written off | (531) | |
Effects of foreign currency translation | (2) | |
Balance at April 2, 2016 | 2,489 | |
Reimbursable expenses | $ 8,030 | $ 8,872 |
Net Income per Share (Details)
Net Income per Share (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Net income available to common shareholders | ||
Net income, as reported | $ 2,423 | $ 2,779 |
Less: net income attributable to participating shares | 18 | 4 |
Net income available to common shareholders | $ 2,405 | $ 2,775 |
Reconciliation of basic to diluted weighted average shares of common stock outstanding | ||
Basic weighted average shares outstanding | 8,871,000 | 9,190,000 |
Common stock equivalents: | ||
Stock options and restricted stock and restricted stock units (in shares) | 56,000 | 213,000 |
Diluted weighted average shares outstanding | 8,927,000 | 9,403,000 |
Calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding | ||
Anti-dilutive securities excluded from EPS computation (in shares) | 346,245 | 391,733 |
Net Income per Share (Details 2
Net Income per Share (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||||
Apr. 02, 2016 | Apr. 04, 2015 | Mar. 21, 2016 | Feb. 22, 2016 | Aug. 23, 2014 | |
Share Repurchase Program | |||||
Share repurchase program, amount authorized to be repurchased | $ 20,000 | $ 30,000 | |||
Number of shares repurchased and retired | 144,900 | ||||
Average repurchase price per share (in dollars per share) | $ 31.33 | ||||
Amount available for future repurchases | $ 28,100 | ||||
Repayments of Notes Payable | $ 75 | $ 300 | |||
Modified Dutch Auction | |||||
Share Repurchase Program | |||||
Share repurchase program, amount authorized to be repurchased | $ 30,000 | ||||
Number of common stock tendered | 1,164 | ||||
Minimum | Modified Dutch Auction | |||||
Share Repurchase Program | |||||
Share price (in dollars per share) | $ 18 | ||||
Maximum | Modified Dutch Auction | |||||
Share Repurchase Program | |||||
Share price (in dollars per share) | $ 19.75 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Reconciliation of tax rates with federal statutory rate | ||
Effective tax rate (as a percent) | 46.50% | 37.40% |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Apr. 27, 2016USD ($) |
Revolving credit facility | Subsequent events | |
Subsequent Event | |
Line of credit draw downs | $ 5 |