Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 27, 2018 | |
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 | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-29 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 8,079,661 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED INCOME S
CONDENSED CONSOLIDATED INCOME STATEMENTS (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
CONDENSED CONSOLIDATED INCOME STATEMENTS (unaudited) | ||
Revenues | $ 99,476 | $ 88,171 |
Costs of services (exclusive of depreciation and amortization) | 69,391 | 62,581 |
Selling, general and administrative expenses | 21,650 | 18,716 |
Depreciation and amortization | 2,231 | 1,963 |
Income from operations | 6,204 | 4,911 |
Interest expense, net | (37) | (112) |
Other expense, net | (241) | (191) |
Income before provision for income taxes | 5,926 | 4,608 |
Provision for income taxes | 1,040 | 1,778 |
Net income | 4,886 | 2,830 |
Net loss attributable to noncontrolling interest, net of tax | 23 | |
Net income attributable to CRA International, Inc. | $ 4,886 | $ 2,853 |
Net income per share attributable to CRA International, Inc.: | ||
Basic (in dollars per share) | $ 0.59 | $ 0.34 |
Diluted (in dollars per share) | $ 0.57 | $ 0.33 |
Weighted average number of shares outstanding: | ||
Basic (in shares) | 8,285 | 8,419 |
Diluted (in shares) | 8,580 | 8,621 |
Dividends per share | $ 0.17 | $ 0.14 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | ||
Net income | $ 4,886 | $ 2,830 |
Other comprehensive income | ||
Foreign currency translation adjustment | 1,318 | 584 |
Comprehensive income | 6,204 | 3,414 |
Less: comprehensive loss attributable to noncontrolling interest | 23 | |
Comprehensive income attributable to CRA International, Inc. | $ 6,204 | $ 3,437 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 10,852 | $ 54,035 |
Accounts receivable, net of allowances of $6,912 at March 31, 2018 and $7,378 at December 30, 2017 | 77,504 | 79,803 |
Unbilled services, net of allowances of $2,659 at March 31, 2018 and $1,746 at December 30, 2017 | 42,687 | 33,530 |
Prepaid expenses and other current assets | 10,755 | 11,373 |
Forgivable loans | 6,651 | 5,540 |
Total current assets | 148,449 | 184,281 |
Property and equipment, net | 46,917 | 44,643 |
Goodwill | 89,527 | 89,000 |
Intangible assets, net | 8,881 | 9,208 |
Deferred income taxes | 8,686 | 8,713 |
Forgivable loans, net of current portion | 38,142 | 23,088 |
Other assets | 2,452 | 2,824 |
Total assets | 343,054 | 361,757 |
Current liabilities: | ||
Accounts payable | 19,472 | 18,473 |
Accrued expenses | 67,538 | 94,573 |
Deferred revenue and other liabilities | 4,798 | 6,896 |
Current portion of deferred compensation | 1,014 | 908 |
Current portion revolving line of credit | 10,000 | |
Current portion of deferred rent | 1,450 | 1,131 |
Total current liabilities | 104,272 | 121,981 |
Non-current liabilities: | ||
Deferred compensation and other non-current liabilities | 11,482 | 11,526 |
Deferred rent and facility-related non-current liabilities | 22,625 | 20,656 |
Deferred income taxes | 400 | 365 |
Total non-current liabilities | 34,507 | 32,547 |
Commitments and contingencies (Note 17) | ||
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; 8,221,403 and 8,297,172 shares issued and outstanding at March 31, 2018 and December 30, 2017, respectively | 39,401 | 47,414 |
Retained earnings | 173,131 | 169,390 |
Accumulated other comprehensive loss | (8,578) | (9,896) |
Total CRA International, Inc. shareholders' equity | 203,954 | 206,908 |
Noncontrolling interest | 321 | 321 |
Total shareholders' equity | 204,275 | 207,229 |
Total liabilities and shareholders' equity | $ 343,054 | $ 361,757 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 30, 2017 |
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | ||
Allowances for accounts receivable (in dollars) | $ 6,912 | $ 7,378 |
Allowance for unbilled services (in dollars) | $ 2,659 | $ 1,746 |
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 | 8,221,403 | 8,297,172 |
Common stock, shares outstanding | 8,221,403 | 8,297,172 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
OPERATING ACTIVITIES: | ||
Net income | $ 4,886 | $ 2,830 |
Adjustments to reconcile net income to net cash used in operating activities, net of effect of acquired businesses: | ||
Depreciation and amortization | 2,223 | 1,966 |
Deferred rent | 1,896 | 395 |
Deferred income taxes | (68) | 201 |
Share-based compensation expenses | 1,292 | 1,655 |
Accounts receivable allowances | 174 | 1,004 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,435 | 3,061 |
Unbilled services | (8,871) | (12,657) |
Prepaid expenses and other current asset, and other assets | 972 | 1,865 |
Forgivable loans | (16,045) | 2,150 |
Incentive cash awards | 684 | 245 |
Accounts payable, accrued expenses, and other liabilities | (31,117) | (23,086) |
Net cash used in operating activities | (40,539) | (20,371) |
INVESTING ACTIVITIES: | ||
Consideration paid for acquisitions, net | (16,163) | |
Purchases of property and equipment | (3,248) | (823) |
Net cash used in investing activities | (3,248) | (16,986) |
FINANCING ACTIVITIES: | ||
Issuance of common stock, principally stock options exercises | 535 | 1,266 |
Borrowings under revolving line of credit | 10,000 | 6,000 |
Tax withholding payments reimbursed by restricted shares | (1,783) | (703) |
Cash paid on dividend equivalents | (98) | (24) |
Cash dividends paid to stockholders | (1,423) | (1,188) |
Repurchases of common stock | (7,230) | |
Net cash provided by financing activities | 1 | 5,351 |
Effect of foreign exchange rates on cash and cash equivalents | 603 | 295 |
Net decrease in cash and cash equivalents | (43,183) | (31,711) |
Cash and cash equivalents at beginning of period | 54,035 | 53,530 |
Cash and cash equivalents at end of period | 10,852 | 21,819 |
Noncash investing and financing activities: | ||
Issuance of restricted common stock for acquired business | 3,000 | |
Repurchases of common stock payable | 1,095 | |
Purchases of property and equipment not yet paid for | 3,923 | 512 |
Purchases of property and equipment paid for by a third party | 153 | |
Asset retirement obligations | 223 | |
Supplemental cash flow information: | ||
Cash paid for income taxes | 212 | 281 |
Cash paid for interest | $ 60 | $ 78 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands | CRA International, Inc. Shareholders' Equity | Common Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest | Total |
BALANCE at Dec. 30, 2017 | $ 206,908 | $ 47,414 | $ 169,390 | $ (9,896) | $ 321 | $ 207,229 |
BALANCE (in shares) at Dec. 30, 2017 | 8,297,172 | 8,297,172 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net income | 4,886 | 4,886 | $ 4,886 | |||
Foreign currency translation adjustment | 1,318 | 1,318 | 1,318 | |||
Cumulative effect of a change in accounting principle related to ASC 606, net of tax | 366 | 366 | 366 | |||
Exercise of stock options | 535 | $ 535 | 535 | |||
Exercise of stock options (in shares) | 24,688 | |||||
Share-based compensation expense | 1,292 | $ 1,292 | 1,292 | |||
Restricted share vestings (in shares) | 97,722 | |||||
Redemption of vested employee restricted shares for tax withholding | (1,783) | $ (1,783) | (1,783) | |||
Redemption of vested employee restricted shares for tax withholding (in shares) | (35,287) | |||||
Shares repurchased | (8,057) | $ (8,057) | $ (8,057) | |||
Shares repurchased (in shares) | (162,892) | (162,892) | ||||
Accrued dividends on unvested shares | 10 | 10 | $ 10 | |||
Cash paid on dividend equivalents | (98) | (98) | (98) | |||
Cash dividends paid to stockholders | (1,423) | (1,423) | (1,423) | |||
BALANCE at Mar. 31, 2018 | $ 203,954 | $ 39,401 | $ 173,131 | $ (8,578) | $ 321 | $ 204,275 |
BALANCE (in shares) at Mar. 31, 2018 | 8,221,403 | 8,221,403 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2018 | |
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 services in two broad areas: litigation, regulatory, and financial consulting and management consulting. CRA operates in one business segment. CRA operates its business under its registered trade name, Charles River Associates. |
Basis of Presentation and Estim
Basis of Presentation and Estimates | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 and April 1, 2017, 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 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 CRA's 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 December 30, 2017 included in our Annual Report on Form 10-K filed with the SEC on March 12, 2018. The preparation of financial statements in conformity with GAAP requires management to make significant estimates and judgments that affect the reported amounts of assets and liabilities, as well as the related disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of consolidated revenues and expenses during the reporting period. Estimates in these condensed consolidated financial statements include, but are not limited to, allowances for accounts receivable and unbilled services, revenue recognition on fixed price contracts, 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 |
Mar. 31, 2018 | |
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, as more fully explained below, 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 in consolidation. 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." On April 13, 2016, a buyer acquired substantially all the business assets and assumed substantially all 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 received $3.8 million during the second quarter of fiscal 2016, of which $2.1 million is attributed to CRA. GNU was dissolved on December 15, 2017. Subsequent to the dissolution, CRA received a partial distribution of $0.6 million in accordance with the asset purchase agreement. The final distribution is expected to be received during fiscal 2018. |
Recent Accounting Standards Ado
Recent Accounting Standards Adopted | 3 Months Ended |
Mar. 31, 2018 | |
Recent Accounting Standards Adopted | |
Recent Accounting Standards Adopted | 4. Recent Accounting Standards Adopted Revenue from Contracts with Customers CRA adopted Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ( ASC 606) on December 31, 2017, using the modified retrospective method for all contracts not completed as of the date of adoption. The reported results for 2018 reflect the application of ASC 606 guidance while the reported results for 2017 were prepared under the guidance of ASC 605, Revenue Recognition (ASC 605). The cumulative effect of applying ASC 606 to all contracts with customers that were not completed as of December 30, 2017 amounted to $0.4 million. The cumulative effect adjustment resulted in an increase to CRA's opening balance of retained earnings of $0.4 million, net of tax. Prior periods were not retrospectively adjusted. Statement of Cash Flows (Topic 230): Restricted Cash CRA adopted 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 are not to be presented as cash flow activities in the statement of cash flows. The adoption of ASU 2016-18 did not have a material impact on CRA's financial position, results of operations, cash flows, or disclosures. Business Combinations (Topic 805): Clarifying the Definition of a Business CRA adopted 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. The adoption of ASU 2017-01 did not have a material impact on CRA's financial position, results of operations, cash flows, or disclosures. Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment CRA adopted 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 eliminates 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. The adoption of ASU 2017-04 did not have a material impact on CRA's financial position, results of operations, cash flows, or disclosures. Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting CRA adopted 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 adoption of ASU 2017-09 did not have a material impact on CRA's financial position, results of operations, cash flows, or disclosures. Staff Accounting Bulletin No. 118 (SAB 118) On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118, " Income Tax Accounting Implications of the Tax Cuts and Jobs Act " ("SAB 118"), to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act (the "Tax Act"). SAB 118 summarizes a three-step process to be applied at each reporting period to account for and disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (or adjustments to provisional amounts) for the effects of the change in tax law where accounting is not complete, but a reasonable estimate has been determined; and (3) current or deferred tax amounts reflected in accordance with law prior to the enactment of the change in tax law because the accounting of the effects of the change in tax law are not complete and a reasonable estimate has not been determined, together with qualitative disclosure of the effects of the changes in tax law for which the accounting is not compete, the reason why the accounting is not complete, and the additional information that is needed to be obtained, prepared or analyzed in order to complete the accounting. Because the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, CRA considers the accounting of deferred tax remeasurements and other items to be incomplete due to the forthcoming guidance and its ongoing analysis of final year-end data and tax positions. Adjustments to these preliminary amounts identified during the measurement period, as defined, will be included as an adjustment to tax expense from continuing operations in the period the amounts are determined. CRA believes that it has made a good faith effort to complete the accounting under ASC 740 with respect to the Tax Act. SAB 118 provides that the measurement period is complete when a company's accounting is complete and in no circumstances, should the measurement period extend beyond one year from the enactment date of the applicable change in tax law. |
Recent Accounting Standards Not
Recent Accounting Standards Not Yet Adopted | 3 Months Ended |
Mar. 31, 2018 | |
Recent Accounting Standards Not Yet Adopted | |
Recent Accounting Standards Not Yet Adopted | 5. Recent Accounting Standards Not Yet Adopted Leases (Topic 842) In February 2016, the Financial Accounting Standards Board ("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. |
Business Acquisitions
Business Acquisitions | 3 Months Ended |
Mar. 31, 2018 | |
Business Acquisitions | |
Business Acquisitions | 6. Business Acquisitions On January 31, 2017, CRA acquired C1 Consulting LLC, an independent consulting firm, and its wholly-owned subsidiary C1 Associates (collectively, "C1") for initial consideration comprised of cash 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 as a component of the purchase consideration, any adjustments to this initial valuation in future accounting periods will be reported as an adjustment to net income. The purchase price allocation resulted in the recognition of goodwill of $13.0 million and amortizable intangible assets of $8.5 million and contingent consideration liability of $2.4 million. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 3 Months Ended |
Mar. 31, 2018 | |
Cash and Cash Equivalents | |
Cash and Cash Equivalents | 7. Cash and Cash Equivalents Cash equivalents consist principally of money market funds with maturities of three months or less when purchased. As of March 31, 2018, 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-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. |
Foreign Currency
Foreign Currency | 3 Months Ended |
Mar. 31, 2018 | |
Foreign Currency | |
Foreign Currency | 8. Foreign Currency Results of operations for our non-U.S. subsidiaries are translated from the designated functional currency to the reporting currency of the U.S. dollar. Revenues and expenses are translated at average exchange rates for each month, while assets and liabilities are translated at balance sheet date exchange rates. Resulting net translation adjustments are recorded as a component of stockholders' equity in "Accumulated other comprehensive income (loss)." Transaction gains and losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in "Foreign currency translation adjustments" on the Condensed Consolidated Statements of Comprehensive Income. Such transaction gains and losses may be realized or unrealized depending upon whether the transaction settled during the period or remains outstanding at the balance sheet date. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 9. 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 March 31, 2018 and December 30, 2017 that are measured and recorded in the financial statements at fair value on a recurring basis (in thousands): March 31, 2018 Quoted Prices in Active Markets Significant Other Significant Level 1 Level 2 Level 3 Assets: Money market funds $ $ — $ — Total Assets $ $ — $ — Liabilities: Contingent consideration liability $ — $ — $ Total Liabilities $ — $ — $ December 30, 2017 Quoted Prices in Active Markets Significant Other Significant Level 1 Level 2 Level 3 Assets: Money market funds $ $ — $ — Total Assets $ $ — $ — Liabilities: Contingent consideration liability $ — $ — $ Total Liabilities $ — $ — $ The fair values of CRA's money market funds are based on quotes received from third-party banks. The contingent consideration liabilities in the tables above are for estimated future contingent consideration payments related to prior acquisitions. The fair value measurement 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 consideration liability are CRA's measures of the estimated payouts based on internally generated financial projections and discount rates. The fair value of the contingent consideration liability is reassessed on a quarterly basis by CRA using additional information as it becomes available and any change in the fair value estimate is recorded in the earnings of that period. The following table summarizes the changes in the contingent consideration liability over the fiscal quarter ended March 31, 2018 and the fiscal year ended December 30, 2017 (in thousands): March 31, December 30, Beginning balance $ $ Acquisitions — Remeasurement of acquisition-related contingent consideration ) Accretion Payments — ) Effects of foreign currency translation — Ending balance $ $ |
Forgivable Loans
Forgivable Loans | 3 Months Ended |
Mar. 31, 2018 | |
Forgivable Loans | |
Forgivable Loans | 10. Forgivable Loans Forgivable loan activity for the fiscal quarter ended March 31, 2018 and the fiscal year ended December 30, 2017 is as follows (in thousands): March 31, December 30, Beginning balance $ $ Advances Repayments ) ) Reclassification to other assets — ) Amortization ) ) Effects of foreign currency translation Ending balance $ $ Current portion of forgivable loans $ $ Non-current portion of forgivable loans $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 11. Goodwill and Intangible Assets The changes in the carrying amount of goodwill during the fiscal quarter ended March 31, 2018, is as follows (in thousands): Goodwill, Accumulated Goodwill, Balance at December 30, 2017 $ $ ) $ Effect of foreign currency translation — Balance at March 31, 2018 $ $ ) $ Intangible assets that are separable from goodwill and have determinable useful lives are valued separately and amortized over their expected useful lives. There were no impairment losses related to intangible assets during the first quarter of fiscal 2018 or the first quarter of fiscal 2017. The components of acquired identifiable intangible assets are as follows (in thousands): March 31, December 30, Non-competition agreements, net of accumulated amortization of $490 and $464, respectively $ $ Customer relationships, net of accumulated amortization of $3,472 and $3,172, respectively Total, net of accumulated amortization of $3,962 and $3,636, respectively $ $ |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2018 | |
Accrued Expenses | |
Accrued Expenses | 12. Accrued Expenses Accrued expenses consist of the following (in thousands): March 31, December 30, Compensation and related expenses $ $ Income taxes payable Other Total $ $ As of March 31, 2018 and December 30, 2017, approximately $29.0 million and $63.8 million, respectively, of accrued bonuses were included above in "Compensation and related expenses". |
Credit Agreement
Credit Agreement | 3 Months Ended |
Mar. 31, 2018 | |
Credit Agreement | |
Credit Agreement | 13. Credit Agreement CRA is party to a credit agreement that provides CRA with a $125.0 million revolving credit facility and a $15.0 million sublimit for the issuance of letters of credit. CRA may use the proceeds of the revolving credit facility to provide working capital and for other general corporate purposes. CRA may repay any borrowings under the revolving credit facility at any time, but no later than October 24, 2022. There were $10.0 million in borrowings outstanding under this revolving credit facility as of March 31, 2018. There were no outstanding borrowings on this facility as of December 30, 2017. As of March 31, 2018, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $3.6 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 March 31, 2018 and December 30, 2017, CRA was in compliance with the covenants of its credit agreement. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2018 | |
Revenue Recognition | |
Revenue Recognition | 14. Revenue Recognition CRA offers consulting services in two broad areas: litigation, regulatory, and financial consulting and management consulting. Together, these two service areas comprised all of CRA's consolidated revenues during the fiscal quarter ended March 31, 2018. CRA recognizes all project revenue on a gross basis based on consideration of the criteria set forth in ASC Topic 606-10-55, Principal versus Agent Considerations . CRA evaluates its revenue contracts with customers based on the five-step model under ASC 606: (1) Identify the contract with the customer; (2) Identify the performance obligations in the contract; (3) Determine the transaction price; (4) Allocate the transaction price to separate performance obligations; and (5) Recognize revenue when (or as) each performance obligation is satisfied. CRA evaluates its contracts for legal enforceability at contract inception and subsequently throughout the CRA's relationship with its customers. If legal enforceability with regards to the rights and obligations exist for both CRA and the customer, then CRA has an enforceable contract and revenue recognition is permitted subject to the satisfaction of the other criteria. If, at the outset of an arrangement, CRA determines that a contract with enforceable rights and obligations does not exist, revenues are deferred until all criteria for an enforceable contract are met. Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised consulting services are transferred to customers. Revenue is measured as the amount of consideration CRA expects to receive in exchange for transferring consulting services to a customer ("transaction price"). To the extent the transaction price includes variable consideration, CRA estimates the amount of variable consideration that should be included in the transaction price utilizing the most likely amount to which it expects to be entitled. Variable consideration is included in the transaction price if, in CRA's judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of CRA's anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, CRA does not assess whether a significant financing component exists if the period between when it performs its obligations under the contract and when the customer pays is one year or less. None of the CRA's contracts contained a significant financing component as of March 31, 2018. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised consulting services underlying each performance obligation. CRA determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, CRA estimates the standalone selling price considering all available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Contracts are often modified to account for changes in project scope. Contract modifications exist when the modification either creates new or changes the existing enforceable rights and obligations. Generally, contract modifications for consulting services are not distinct from the existing contract as the modification expands CRA's consulting services and thus are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue on a cumulative catch-up basis. Consulting services revenue is generally recognized over time as the services are delivered to the customer based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the consulting services to be provided. Depending on which better depicts the transfer of value to the customer, CRA generally measures its progress using either right-to-invoice for time and materials projects, or cost-to-cost for fixed-price projects. CRA uses the right-to-invoice measure of progress when it has a right to invoice the customer for an amount that corresponds directly with the value to the customer of its performance to date. Under the right-to-invoice measure of progress, revenues are recorded equal to the amount CRA could invoice the customer. CRA uses the cost-to-cost measure of progress when it best depicts the transfer of value to the customer which occurs as it incurs costs on its contract. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. Consulting Services Revenues The contracts CRA enters into and operates under specify whether the engagements are 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 based on the ratio of costs incurred (input method), 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 our employee consultants on the engagement plus all direct expenses incurred to complete the engagement, including any amounts billed to CRA by its non-employee experts. Disaggregation of Revenue The following table disaggregates CRA's revenue by major business line and timing of transfer of its consulting services. Refer to Note 12 to CRA's consolidated financial statements included in the annual report on Form 10-K for fiscal 2017, which was filed with the SEC on March 12, 2018, for further detail on revenues by geographical location (in thousands). Fiscal Quarter Ended March 31, April 1, Type of Contract Consulting services revenues Fixed Price $ $ Time-and-materials Total $ $ Fiscal Quarter Ended March 31, April 1, Geographic Breakdown Consulting services revenues United States $ $ United Kingdom Other Total $ $ (1) As noted above, prior period amounts have not been adjusted under the modified retrospective method. Reserves for Variable Consideration and Credit Risk Revenues from our consulting services are recorded at the net sales price, or transaction price, which includes estimates of variable consideration for which reserves are established and result from price concessions that are extended to our customers. These reserves on the variable consideration components subject to constraint are classified as reductions of accounts receivable. These calculated estimates take into consideration CRA's historical experiences of prior period revenues which were subsequently reversed due to these price concessions. Overall, these reserves reflect CRA's best estimates of the amount of consideration to which it is entitled based on the terms of its contracts with its customers. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from its estimates. If actual results in the future vary from the its estimates, CRA adjusts these estimates, which would affect net revenue and earnings in the period such variances become known. 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. Generally, accounts and unbilled receivables allowances are recorded as a reduction to revenues. During the first quarter of 2018, $0.3 million was recorded as a bad debt expense and reported as a component of selling, general and administrative expenses related to credit-related losses. 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): Fiscal Quarter March 31, April 1, 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 606-10-55, Principal versus Agent Considerations. Transaction Price Allocated to Future Performance Obligations ASC 606 requires that CRA disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of March 31, 2018. The guidance provides certain practical expedients that limit this requirement for (1) contracts with an original expected length of one year or less and (ii) contracts for which revenue is recognized at the amount to which CRA has the right to invoice for consulting services performed. Given the nature of its business, CRA does not disclose the value of unsatisfied performance obligations as the practical expedients apply to its unsatisfied performance obligations as of March 31, 2018. Contract Balances from Contracts with Customers The following table presents changes in CRA's contract assets and contract liabilities during the fiscal quarter ended March 31, 2018 (in thousands): Fiscal Quarter Ended Balance at Additions Deductions Balance at Contract assets: Accounts receivable $ $ $ $ Allowance for doubtful accounts Accounts receivable, net of allowances $ $ $ $ Unbilled services $ $ $ $ Unbilled receivables allowance Unbilled services, net of allowances $ $ $ $ Contract liabilities: Deferred revenue $ $ $ $ During the fiscal quarter ended March 31, 2018, CRA recognized the following revenue as a result of changes in the contract asset and the contract liability balances (in thousands): March 31, Revenue recognized in the period from: Amounts included in the contract liability at the beginning of the period $ Performance obligations satisfied in previous periods $ The timing of revenue recognition, billings and cash collections results in billed receivables, contract assets and contract liabilities on the condensed consolidated balance sheets. When consideration is received, or such consideration is unconditionally due from a customer prior to transferring consulting services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the consulting services are transferred to the customer and all revenue recognition criteria have been met. Costs to Obtain or Fulfill a Customer Contract Prior to the adoption of ASC 606, CRA expensed bonuses paid to its employees. Under ASC 606, bonuses are not linked or paid based on specific contract billings or revenues and therefore do not represent incremental costs of obtaining a contract with a customer. Furthermore, even if the bonuses paid were incremental, the practical expedient in paragraph 340-40-25-4 would apply, allowing for incremental costs of obtaining contracts to be expensed as incurred if the amortization period of the assets that it otherwise would have recognized is one year or less. As such, these costs are included in both cost of services and selling, general, and administrative expenses. |
Net Income per Share
Net Income per Share | 3 Months Ended |
Mar. 31, 2018 | |
Net Income per Share | |
Net Income per Share | 15. 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 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 2018 or fiscal 2017. The following table presents a reconciliation from net income to the net income available to common shareholders (in thousands): March 31, April 1, Net income, as reported $ $ Less: net income attributable to participating shares Net income available to common shareholders $ $ The following presents a reconciliation of basic to diluted weighted average shares of common stock outstanding (in thousands): March 31, April 1, Basic weighted average shares outstanding Stock options and restricted stock units Diluted weighted average shares outstanding For the first quarter ended March 31, 2018, 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 5,689 shares. For the first quarter ended April 1, 2017, 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 8,234 shares. These share-based awards each period were anti-dilutive because their exercise price exceeded the average market price over the respective period. On May 3, 2017 and February 15, 2018, CRA announced its 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 such purchases 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 March 31, 2018, CRA repurchased and retired 162,892 shares under these share repurchase programs at an average price per share of $51.13 and in the first quarter ended April 1, 2017, there were no shares repurchased or retired under these share repurchase programs. As of March 31, 2018, there was approximately $21.2 million available for future repurchases under these programs. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes | |
Income Taxes | 16. Income Taxes Effects of the Tax Cuts and Jobs Act On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into U.S. law. The Tax Act significantly changes the Internal Revenue Code of 1986, as amended. The Tax Act, among other things, includes changes to the U.S. corporate tax rate, expands limitations on the deductibility of meals and entertainment, eliminates the exception to the section 162(m) limitation on the deductibility of the compensation paid to certain executive officers for "qualified performance-based compensation," allows for the expensing of capital expenditures, the migration from a "worldwide" system of taxation to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. ASC Topic 740, " Accounting for Income Taxes ," requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017, or in the case of certain other provisions of the law, January 1, 2018. Given the significance of the legislation, the U.S. Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which allows registrants to record provisional amounts during a one year "measurement period" similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared, and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared, or analyzed. SAB 118 summarizes a three-step process to be applied at each reporting period to account for and disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (or adjustments to provisional amounts) for the effects of the change in tax law where accounting is not complete, but a reasonable estimate has been determined; and (3) current or deferred tax amounts reflected in accordance with law prior to the enactment of the change in tax law because the accounting of the effects of the change in tax law are not complete and a reasonable estimate has not been determined, together with qualitative disclosure of the effects of the changes in tax law for which the accounting is not compete, the reason why the accounting is not complete, and the additional information that is needed to be obtained, prepared or analyzed in order to complete the accounting. CRA is applying the guidance in SAB 118 when accounting for the enactment-date effects of the Tax Act. As of March 31, 2018, CRA has not completed its accounting for all the tax effects of the Tax Act; however, in certain cases, as described below, aspects of accounting are complete. Additionally, CRA has made a reasonable estimate of other effects. As further discussed below, during the three-month period ended March 31, 2018, CRA recognized an adjustment of $53,000 to the provisional amounts recorded at December 30, 2017 and included this adjustment as a component of income tax expense from continuing operations. In all cases, CRA will continue to make and refine its calculations as additional analysis is completed. CRA's estimates may also be affected as it gains a more thorough understanding of the tax law. These changes could be material to income tax expense. Deferred tax assets and liabilities: CRA remeasured its U.S. related deferred tax assets and liabilities based on the expected rates at which they may reverse in the future, which is generally 21%. CRA recorded a provisional amount of $3.6 million as of December 30, 2017 related to the remeasurement of its deferred tax balances. Upon refinement of its calculations during the three months ended March 31, 2018, CRA adjusted its provisional amount by $53,000, which is included as a component of income tax expense from continuing operations. CRA will continue to analyze and refine its calculations related to the measurement of our deferred tax balances. Foreign Tax Effects The Tax Act includes a one-time mandatory repatriation transition tax on the net accumulated earnings and profits of a U.S. taxpayer's foreign subsidiaries. At December 30, 2017, CRA did not record any transition tax liability as it believes it is in an accumulated deficit position with respect to its foreign subsidiaries based on its E&P analysis. CRA considers its accounting for the transition tax to be complete. The Tax Act subjects a US shareholder to current tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI resulting from those items in the year the tax is incurred. Given the complexity of the GILTI provisions, we are still evaluating the effects of the GILTI provisions and have not yet determined our accounting policy. At March 31, 2018, because we are still evaluating the GILTI provisions and our analysis of future taxable income that is subject to GILTI, we have included GILTI related to current-year operations only in our estimated annual effective tax rate ("EAETR") and have not provided additional GILTI on deferred items. The Tax Act allows US Corporations to take a deduction related to its foreign-derived intangible income ("FDII") produced in the US. CRA expects to be able to take FDII deduction for the year ended December 29, 2018. CRA has made sufficient progress in its calculations to reasonably estimate the effect on its estimated annual effective tax rate but will continue to refine its calculations, which may result in changes to this amount. CRA's effective income tax rates were 17.5% and 38.6% for the first quarters of fiscal 2018 and fiscal 2017, respectively. The effective tax rate for the first quarter of fiscal 2018 was lower than the prior year primarily due to a lower statutory US corporate tax rate of 21% as well as an increased tax benefit on stock-based compensation related to the adoption of ASU 2016-09, partially offset by higher non-deductible items as a result of the Tax Act, including limitations on the deductibility of compensation paid to executive officers, and limitations on the deductibility of meals and entertainment. The effective tax rate in the first quarter of fiscal 2018 was lower than the combined federal and state statutory tax rate primarily due to the tax benefit on stock-based compensation related to the adoption of ASU 2016-09, partially offset by non-deductible items referenced above as a result of the Tax Act. The effective tax rate in the first quarter of fiscal 2017 was lower than the combined federal and state statutory tax rate due to a favorable geographical mix of earnings. CRA has not provided for deferred income taxes or foreign withholding taxes on undistributed earnings and other basis differences that may exist from its foreign subsidiaries as of March 31, 2018 because such earnings are considered to be indefinitely reinvested. CRA does not rely on these unremitted earnings as a source of funds for its domestic business as it expects to have sufficient cash flow in the U.S. to fund its U.S. operational and strategic needs. If CRA were to repatriate its foreign earnings that are indefinitely reinvested, it would accrue substantially no additional tax expense. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Contingencies | |
Contingencies | 17. 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. |
Correction
Correction | 3 Months Ended |
Mar. 31, 2018 | |
Correction | |
Correction | 18. Correction During the first quarter, CRA discovered the December 30, 2017 balances of deferred compensation and other non-current liabilities of $20,656 thousand and deferred rent and facility-related non-current liabilities of $11,526 thousand had been transposed. These immaterial offsetting errors had a net effect of $0 on non-current liabilities and total liabilities and have been revised as follows in the presentation of the December 30, 2017 balance sheet in this quarterly report on Form 10-Q (in thousands): As As revised Deferred compensation and other non-current liabilities $ $ Deferred rent and facility-related non-current liabilities |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events | |
Subsequent Events | 19. Subsequent Events On April 26, 2018, CRA's Board of Directors declared a quarterly cash dividend of $0.17 per share of CRA's common stock, payable on June 15, 2018 to shareholders of record as of May 29, 2018. During the month of April 2018, CRA made borrowings of $13.0 million in the U.S. and £5.0 million in the U.K. on its existing revolving line of credit to fund operations. These borrowings are expected to be repaid over the next twelve months in accordance with the terms of the agreement. During the month of April 2018, CRA repurchased and retired 215,585 shares under its share repurchase program at an average price per share of $55.99. As of May 8, 2018, there was approximately $9.1 million available for future repurchases under this program. |
Fair value of Financial Instr27
Fair value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 and December 30, 2017 that are measured and recorded in the financial statements at fair value on a recurring basis (in thousands): March 31, 2018 Quoted Prices in Active Markets Significant Other Significant Level 1 Level 2 Level 3 Assets: Money market funds $ $ — $ — Total Assets $ $ — $ — Liabilities: Contingent consideration liability $ — $ — $ Total Liabilities $ — $ — $ December 30, 2017 Quoted Prices in Active Markets Significant Other Significant Level 1 Level 2 Level 3 Assets: Money market funds $ $ — $ — Total Assets $ $ — $ — Liabilities: Contingent consideration liability $ — $ — $ Total Liabilities $ — $ — $ |
Summary of the changes in the contingent consideration liability | The following table summarizes the changes in the contingent consideration liability over the fiscal quarter ended March 31, 2018 and the fiscal year ended December 30, 2017 (in thousands): March 31, December 30, Beginning balance $ $ Acquisitions — Remeasurement of acquisition-related contingent consideration ) Accretion Payments — ) Effects of foreign currency translation — Ending balance $ $ |
Forgivable Loans (Tables)
Forgivable Loans (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Forgivable Loans | |
Schedule of forgivable loan activity | Forgivable loan activity for the fiscal quarter ended March 31, 2018 and the fiscal year ended December 30, 2017 is as follows (in thousands): March 31, December 30, Beginning balance $ $ Advances Repayments ) ) Reclassification to other assets — ) Amortization ) ) Effects of foreign currency translation Ending balance $ $ Current portion of forgivable loans $ $ Non-current portion of forgivable loans $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets | |
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill during the fiscal quarter ended March 31, 2018, is as follows (in thousands): Goodwill, Accumulated Goodwill, Balance at December 30, 2017 $ $ ) $ Effect of foreign currency translation — Balance at March 31, 2018 $ $ ) $ |
Schedule of components of acquired identifiable intangible assets | The components of acquired identifiable intangible assets are as follows (in thousands): March 31, December 30, Non-competition agreements, net of accumulated amortization of $490 and $464, respectively $ $ Customer relationships, net of accumulated amortization of $3,472 and $3,172, respectively Total, net of accumulated amortization of $3,962 and $3,636, respectively $ $ |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accrued Expenses | |
Schedule of accrued expenses | Accrued expenses consist of the following (in thousands): March 31, December 30, Compensation and related expenses $ $ Income taxes payable Other Total $ $ |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue Recognition | |
Schedule of company's disaggregation of revenue by major business line and Geographic Breakdown | Refer to Note 12 to CRA's consolidated financial statements included in the annual report on Form 10-K for fiscal 2017, which was filed with the SEC on March 12, 2018, for further detail on revenues by geographical location (in thousands). Fiscal Quarter Ended March 31, April 1, Type of Contract Consulting services revenues Fixed Price $ $ Time-and-materials Total $ $ Fiscal Quarter Ended March 31, April 1, Geographic Breakdown Consulting services revenues United States $ $ United Kingdom Other Total $ $ (1) As noted above, prior period amounts have not been adjusted under the modified retrospective method. |
Schedule of reimbursable expenses included in revenues | Reimbursable expenses are as follows (in thousands): Fiscal Quarter March 31, April 1, Reimbursable expenses $ $ |
Schedule of changes in the company's contract assets and contract liabilities | The following table presents changes in CRA's contract assets and contract liabilities during the fiscal quarter ended March 31, 2018 (in thousands): Fiscal Quarter Ended Balance at Additions Deductions Balance at Contract assets: Accounts receivable $ $ $ $ Allowance for doubtful accounts Accounts receivable, net of allowances $ $ $ $ Unbilled services $ $ $ $ Unbilled receivables allowance Unbilled services, net of allowances $ $ $ $ Contract liabilities: Deferred revenue $ $ $ $ During the fiscal quarter ended March 31, 2018, CRA recognized the following revenue as a result of changes in the contract asset and the contract liability balances (in thousands): March 31, Revenue recognized in the period from: Amounts included in the contract liability at the beginning of the period $ Performance obligations satisfied in previous periods $ |
Net Income per Share (Tables)
Net Income per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Net Income per Share | |
Schedule of reconciliation from net income to the net income available to common shareholders | The following table presents a reconciliation from net income to the net income available to common shareholders (in thousands): March 31, April 1, 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 presents a reconciliation of basic to diluted weighted average shares of common stock outstanding (in thousands): March 31, April 1, Basic weighted average shares outstanding Stock options and restricted stock units Diluted weighted average shares outstanding |
Correction (Tables)
Correction (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Correction | |
Schedule of corrections in the presentation of the December 30, 2017 balance sheet | These immaterial offsetting errors had a net effect of $0 on non-current liabilities and total liabilities and have been revised as follows in the presentation of the December 30, 2017 balance sheet in this quarterly report on Form 10-Q (in thousands): As As revised Deferred compensation and other non-current liabilities $ $ Deferred rent and facility-related non-current liabilities |
Description of Business (Detail
Description of Business (Details) | 3 Months Ended |
Mar. 31, 2018segmentitem | |
Description of Business | |
Number of broad areas of consulting services | item | 2 |
Number of business segment | segment | 1 |
Principles of Consolidation (De
Principles of Consolidation (Details) - USD ($) $ in Thousands | May 03, 2017 | Apr. 13, 2016 | Mar. 31, 2018 | Jul. 01, 2017 | Jul. 02, 2016 |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | GNU | |||||
Sale of GNU interest | |||||
Purchase price | $ 1,350 | ||||
Purchase price received | $ 250 | $ 1,100 | |||
GNU | Disposal Group, Disposed of by Sale, Not Discontinued Operations | GNU | |||||
Sale of GNU interest | |||||
GNU gain on sale of business assets | $ 250 | $ 3,800 | |||
GNU | |||||
GNU Interest | |||||
Percentage of ownership interest held by the entity | 55.89% | ||||
CRA | Disposal Group, Disposed of by Sale, Not Discontinued Operations | GNU | |||||
Sale of GNU interest | |||||
GNU gain on sale of business assets | $ 140 | $ 2,100 | |||
GNU partial distribution gain received on sale of business assets | $ 600 |
Recent Accounting Standards A36
Recent Accounting Standards Adopted (Details) - USD ($) $ in Thousands | Dec. 30, 2017 | Mar. 31, 2018 |
Recent Accounting Standards Adopted | ||
Increase in cumulative effect adjustment on opening balance of retained earnings | $ 366 | |
ASU 2016-09 | ||
Recent Accounting Standards Adopted | ||
Increase in cumulative effect adjustment on opening balance of retained earnings | $ 400 |
Business Acquisitions (Details)
Business Acquisitions (Details) - USD ($) $ in Thousands | Jan. 31, 2017 | Mar. 31, 2018 | Dec. 30, 2017 |
Business Acquisitions | |||
Goodwill | $ 89,527 | $ 89,000 | |
C1 Consulting LLC | |||
Business Acquisitions | |||
Maximum period for additional purchase consideration to be paid | 4 years | ||
Goodwill | $ 13,000 | ||
Amortizable intangible assets | 8,500 | ||
Contingent consideration | $ 2,400 |
Fair Value of Financial Instr38
Fair Value of Financial Instruments (Details) - Recurring - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Dec. 30, 2017 | Mar. 31, 2018 | Dec. 30, 2017 | |
Level 1 | ||||
Fair Value of Financial Instruments | ||||
Total Assets | $ 24 | $ 5,006 | ||
Level 1 | Money market funds | ||||
Fair Value of Financial Instruments | ||||
Cash and cash equivalents | 24 | 5,006 | ||
Level 3 | ||||
Fair Value of Financial Instruments | ||||
Contingent consideration liability | $ 5,137 | $ 549 | 5,030 | 5,137 |
Total Liabilities | $ 5,030 | $ 5,137 | ||
Summary of changes in contingent consideration liability | ||||
Beginning balance | 5,137 | 549 | ||
Acquisitions | 2,357 | |||
Remeasurement of acquisition-related contingent consideration | (264) | 1,155 | ||
Accretion | 157 | 1,328 | ||
Payments | (299) | |||
Effects of foreign currency translation | 47 | |||
Ending balance | $ 5,030 | $ 5,137 |
Forgivable Loans (Details)
Forgivable Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 30, 2017 | |
Forgivable loan activity | ||
Beginning balance | $ 28,628 | $ 33,962 |
Advances | 23,028 | 11,672 |
Repayments | (3,333) | (2,135) |
Reclassification to other assets | (1,100) | |
Amortization | (3,552) | (14,155) |
Effects of foreign currency translation | 22 | 384 |
Ending balance | 44,793 | 28,628 |
Current portion of forgivable loans | 6,651 | 5,540 |
Non-current portion of forgivable loans | $ 38,142 | $ 23,088 |
Goodwill and Intangible Asset40
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Changes in the carrying amount of goodwill | ||
Balance at the beginning of the period, Goodwill gross | $ 165,417 | |
Effect of foreign currency translation | 527 | |
Balance at the end of the period, Goodwill gross | 165,944 | |
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, Goodwill, net | 89,000 | |
Balance at the end of the period, Goodwill, net | 89,527 | |
Intangible assets impairment losses | $ 0 | $ 0 |
Goodwill and Intangible Asset41
Goodwill and Intangible Assets - Acquired and Amortization (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 30, 2017 |
Acquired identifiable intangible assets | ||
Acquired identifiable intangible assets, net of accumulated amortization | $ 8,881 | $ 9,208 |
Accumulated amortization | 3,962 | 3,636 |
Non-competition agreements | ||
Acquired identifiable intangible assets | ||
Acquired identifiable intangible assets, net of accumulated amortization | 233 | 260 |
Accumulated amortization | 490 | 464 |
Customer relationships | ||
Acquired identifiable intangible assets | ||
Acquired identifiable intangible assets, net of accumulated amortization | 8,648 | 8,948 |
Accumulated amortization | $ 3,472 | $ 3,172 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 30, 2017 |
Accrued Expenses | ||
Compensation and related expenses | $ 51,346 | $ 80,105 |
Income taxes payable | 275 | 153 |
Other | 15,917 | 14,315 |
Total | 67,538 | 94,573 |
Compensation and related expenses | ||
Accrued bonuses | $ 29,000 | $ 63,800 |
Credit Agreement (Details)
Credit Agreement (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 30, 2017 |
Revolving credit facility | ||
Senior Loan Agreement | ||
Revolving credit facility, maximum capacity | $ 125 | |
Amount of borrowings under revolving credit facility | 10 | $ 0 |
Letters of credit | ||
Senior Loan Agreement | ||
Revolving credit facility, maximum capacity | 15 | |
Amounts outstanding under letters of credit | $ 3.6 |
Revenue Recognition - General (
Revenue Recognition - General (Details) | Mar. 31, 2018item |
Concentration Risk | |
Number of broad areas of consulting services | 2 |
Revenue Benchmark | Revenue Concentration Risk | |
Concentration Risk | |
Number of broad areas of consulting services | 2 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Disaggregation of Revenue | ||
Consulting services revenues | $ 99,476 | $ 88,171 |
United States | ||
Disaggregation of Revenue | ||
Consulting services revenues | 76,860 | 72,628 |
United Kingdom | ||
Disaggregation of Revenue | ||
Consulting services revenues | 17,505 | 10,542 |
Countries Other Than United States, United Kingdom | ||
Disaggregation of Revenue | ||
Consulting services revenues | 5,111 | 5,001 |
Fixed Price | ||
Disaggregation of Revenue | ||
Consulting services revenues | 20,714 | 18,774 |
Time-and-materials | ||
Disaggregation of Revenue | ||
Consulting services revenues | $ 78,762 | $ 69,397 |
Revenue Recognition - Reserves
Revenue Recognition - Reserves for Variable Consideration and Credit Risk (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Reimbursable expenses | $ 11,229 | $ 9,140 |
Selling, general and administrative expenses | ||
Bad debt expense | $ 300 |
Revenue Recognition - Contract
Revenue Recognition - Contract assets and contract liabilities (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Contract assets: | |
Balance at Beginning of Period, Accounts receivable | $ 87,181 |
Additions, Accounts receivable | 97,956 |
Deductions, Accounts receivable | 100,721 |
Balance at End of Period, Accounts receivable | 84,416 |
Balance at beginning of period, Allowance for doubtful accounts | 7,378 |
Additions, Allowance for doubtful accounts | 1,031 |
Deductions, Allowance for doubtful accounts | 1,497 |
Balance at end of period, Allowance for doubtful accounts | 6,912 |
Balance at Beginning of Period, Accounts receivable, net of allowances | 79,803 |
Additions, Accounts receivable, net of allowances | 96,925 |
Deductions, Accounts receivable, net of allowances | 99,224 |
Balance at End of Period, Accounts receivable, net of allowances | 77,504 |
Balance at Beginning of Period, Unbilled services | 35,276 |
Additions, Unbilled services | 148,308 |
Deductions, Unbilled services | 138,238 |
Balance at End of Period, Unbilled services | 45,346 |
Balance at Beginning of Period, Unbilled receivables allowance | 1,746 |
Additions, Unbilled receivables allowance | 1,583 |
Deductions, Unbilled receivables allowance | 670 |
Balance at End of Period, Unbilled receivables allowance | 2,659 |
Balance at Beginning of Period, Unbilled services, net of allowances | 33,530 |
Additions, Unbilled services, net of allowances | 146,725 |
Deductions, Unbilled services, net of allowances | 137,568 |
Balance at End of Period, Unbilled services, net of allowances | 42,687 |
Contract liabilities: | |
Balance at Beginning of Period, Deferred revenue | 6,896 |
Additions, Deferred revenue | 15,301 |
Deductions, Deferred revenue | 17,399 |
Balance at End of Period, Deferred revenue | 4,798 |
Revenue recognized in the period from: | |
Amounts included in the contract liability at the beginning of the period | 2,858 |
Performance obligations satisfied in previous periods | $ 2,135 |
Net Income per Share (Details)
Net Income per Share (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Net income available to common shareholders | ||
Net income, as reported | $ 4,886 | $ 2,853 |
Less: net income attributable to participating shares | 29 | 20 |
Net income available to common shareholders | $ 4,857 | $ 2,833 |
Reconciliation of basic to diluted weighted average shares of common stock outstanding | ||
Basic weighted average shares outstanding | 8,285,000 | 8,419,000 |
Stock options and restricted stock units | 295,000 | 202,000 |
Diluted weighted average shares outstanding | 8,580,000 | 8,621,000 |
Calculation of common stock equivalents for purposes of computing diluted weighted average shares outstanding | ||
Anti-dilutive securities excluded from EPS computation (in shares) | 5,689 | 8,234 |
Net Income per Share - Share Re
Net Income per Share - Share Repurchase Programs (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |||
Mar. 31, 2018 | Apr. 01, 2017 | Feb. 15, 2018 | May 03, 2017 | |
Share Repurchase Program | ||||
Share repurchase program, amount authorized to be repurchased | $ 20 | $ 20 | ||
Number of shares repurchased and retired | 162,892 | 0 | ||
Average repurchase price per share (in dollars per share) | $ 51.13 | |||
Amount available for future repurchases | $ 21.2 |
Income Taxes - Income taxes (De
Income Taxes - Income taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | Dec. 30, 2017 | |
Income Taxes | |||
Amount of provision | $ 53,000 | ||
Federal statutory rate (as a percent) | 21.00% | ||
Remeasurement of deferred tax balances | $ 3,600,000 | ||
Effective tax rate (as a percent) | 17.50% | 38.60% |
Correction (Details)
Correction (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 30, 2017 |
Correction | ||
Non-current liabilities | $ 34,507 | $ 32,547 |
Deferred compensation and other non-current liabilities | 11,482 | 11,526 |
Deferred rent and facility-related non-current liabilities | 22,625 | $ 20,656 |
As previously reported | ||
Correction | ||
Deferred compensation and other non-current liabilities | 20,656 | |
Deferred rent and facility-related non-current liabilities | 11,526 | |
As revised | ||
Correction | ||
Non-current liabilities | 0 | |
Total liabilities | 0 | |
Deferred compensation and other non-current liabilities | 11,526 | |
Deferred rent and facility-related non-current liabilities | $ 20,656 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Thousands, £ in Millions | Apr. 26, 2018$ / shares | Apr. 30, 2018GBP (£)shares | Apr. 30, 2018USD ($)$ / sharesshares | Mar. 31, 2018USD ($)$ / shares | Apr. 01, 2017USD ($)$ / shares | May 08, 2018USD ($) |
Subsequent Events | ||||||
Common stock quarterly cash dividend declared (in dollars per share) | $ / shares | $ 0.17 | $ 0.14 | ||||
Borrowings under revolving line of credit | $ 10,000 | $ 6,000 | ||||
Amount available for future repurchases | $ 21,200 | |||||
Subsequent Events | ||||||
Subsequent Events | ||||||
Common stock quarterly cash dividend declared (in dollars per share) | $ / shares | $ 0.17 | |||||
Shares repurchased under share repurchase program | shares | 215,585 | 215,585 | ||||
Shares retired under share repurchase program | shares | 215,585 | 215,585 | ||||
Share repurchases, Average price per share (in dollars per share) | $ / shares | $ 55.99 | |||||
Amount available for future repurchases | $ 9,100 | |||||
Subsequent Events | Revolving credit facility | United States | ||||||
Subsequent Events | ||||||
Borrowings under revolving line of credit | $ 13,000 | |||||
Period of the borrowing is expected to be repaid | 12 months | 12 months | ||||
Subsequent Events | Revolving credit facility | United Kingdom | ||||||
Subsequent Events | ||||||
Borrowings under revolving line of credit | £ | £ 5 | |||||
Period of the borrowing is expected to be repaid | 12 months | 12 months |