CRA International, Inc.
(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

	Quarter Ended						Fiscal Quarter Ended						Fiscal Year-to-Date Period Ended

	March 30, 2019			March 31, 2018			September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Revenues	$	105,849		$	99,476		$	115,686		$	103,871		$	332,108		$	308,885
Costs of services (exclusive of depreciation and amortization)		73,635			69,391			83,805			73,717			233,412			212,813
Selling, general and administrative expenses		22,743			21,650			22,449			22,293			68,929			67,682
Depreciation and amortization		2,616			2,231			2,527			2,636			7,696			7,300

Income from operations		6,855			6,204			6,905			5,225			22,071			21,090
Interest expense, net		(11	)		(37	)		(424	)		(222	)		(954	)		(560	)
Other expense, net		(744	)		(241	)
Other income (expense), net								210			(64	)		(379	)		72

Income before provision for income taxes		6,100			5,926			6,691			4,939			20,738			20,602
Provision for income taxes		1,435			1,040			952			1,031			4,754			4,969

Net income	$	4,665		$	4,886		$	5,739		$	3,908		$	15,984		$	15,633



Net income per share:
Basic	$	0.58		$	0.59		$	0.74		$	0.48		$	2.02		$	1.91



Diluted	$	0.56		$	0.57		$	0.71		$	0.46		$	1.94		$	1.81



Weighted average number of shares outstanding:
Basic		8,015			8,285			7,769			8,048			7,903			8,129



Diluted		8,346			8,580			8,050			8,548			8,205			8,615

	Quarter Ended				Fiscal Quarter Ended						Fiscal Year-to-Date Period Ended

	March 30, 2019		March 31, 2018		September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Net income	$	4,665	$	4,886	$	5,739		$	3,908		$	15,984		$	15,633
Other comprehensive income
Foreign currency translation adjustments		712		1,318		(1,488	)		(198	)		(1,429	)		(1,483	)

Comprehensive income	$	5,377	$	6,204	$	4,251		$	3,710		$	14,555		$	14,150

	March 30, 2019			December 29, 2018			September 28, 2019			December 29, 2018

ASSETS
Current assets:
Cash and cash equivalents	$	14,958		$	38,028		$	19,833		$	38,028
Accounts receivable, net of allowances of $3,820 at March 30, 2019 and $3,764 at December 29, 2018		89,268			94,525
Unbilled services, net of allowances of $632 at March 30, 2019 and $415 at December 29, 2018		44,963			36,060
Accounts receivable, net of allowances of $3,590 at September 28, 2019 and $3,764 at December 29, 2018								90,478			94,525
Unbilled services, net of allowances of $1,474 at September 28, 2019 and $415 at December 29, 2018								50,274			36,060
Prepaid expenses and other current assets		7,952			6,423			11,017			6,423
Forgivable loans		9,632			6,104			8,821			6,104

Total current assets		166,773			181,140			180,423			181,140
Property and equipment, net		48,409			48,088			57,788			48,088
Goodwill		88,508			88,208			87,813			88,208
Intangible assets, net		7,503			7,846			6,818			7,846
Right-of-Use Assets		81,480			—
Right-of-use assets								110,999			—
Deferred income taxes		9,304			9,330			9,193			9,330
Forgivable loans, net of current portion		46,770			34,190			49,046			34,190
Other assets		3,028			2,044			3,444			2,044

Total assets	$	451,775		$	370,846		$	505,524		$	370,846



LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	22,530			21,938		$	23,636		$	21,938
Accrued expenses		72,280			108,233			94,557			108,233
Deferred revenue and other liabilities		5,115			6,866			4,149			6,866
Current portion of lease liabilities		9,558			—			10,598			—
Current portion of deferred rent		—			1,810			—			1,810
Current portion of deferred compensation		941			3,650			3,214			3,650
Revolving line of credit		39,000			—			36,000			—

Total current liabilities		149,424			142,497			172,154			142,497
Non-current liabilities:
Deferred compensation and other non-current liabilities		7,847			7,957			12,046			7,957
Deferred rent and facility-related non-current liabilities		1,364			23,618			1,810			23,618
Non-current portion of lease liabilities		94,939			—			126,869			—
Deferred income taxes		311			302			293			302

Total non-current liabilities		104,461			31,877			141,018			31,877
Commitments and contingencies (Note 11)
Shareholders' equity:					—
Preferred stock, no par value; 1,000,000 shares authorized; none issued and outstanding								—			—
Common stock, no par value; 25,000,000 shares authorized; 8,005,898 and 8,010,480 shares issued and outstanding at March 30, 2019 and December 29, 2018, respectively		20,537			22,837
Common stock, no par value; 25,000,000 shares authorized; 7,707,886 and 8,010,480 shares issued and outstanding at September 28, 2019 and December 29, 2018, respectively								9,028			22,837
Retained earnings		189,235			186,229			197,347			186,229
Accumulated other comprehensive loss		(11,882	)		(12,594	)		(14,023	)		(12,594	)

Total shareholders' equity		197,890			196,472			192,352			196,472

Total liabilities and shareholders' equity	$	451,775		$	370,846		$	505,524		$	370,846

	Quarter Ended						Fiscal Year-to-Date Period Ended

	March 30, 2019			March 31, 2018			September 28, 2019			September 29, 2018
OPERATING ACTIVITIES:
Net income	$	4,665		$	4,886		$	15,984		$	15,633
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		2,611			2,223			7,696			7,305
Loss on disposal of property and equipment		5			—			5			—
Deferred rent		35			1,896
Deferred rent and facility related liabilities								83			3,650
Right-of-use asset amortization		2,209			—			7,832			—
Deferred income taxes		21			(68	)		117			(102	)
Share-based compensation expenses		911			1,292			2,641			3,704
Accounts receivable allowances		48			452			(160	)		233
Changes in operating assets and liabilities:
Accounts receivable		5,742			2,958			3,626			(8,939	)
Unbilled services		(8,666	)		(8,672	)
Unbilled services, net								(14,582	)		(9,976	)
Prepaid expenses and other current assets, and other assets		(2,162	)		972			(5,735	)		1,417
Forgivable loans		(16,957	)		(16,045	)		(18,942	)		(14,716	)
Incentive cash awards		1,214			684			3,628			2,367
Accounts payable, accrued expenses, and other liabilities		(42,489	)		(31,117	)		(16,274	)		(8,970	)
Lease liabilities		(3,754	)		—			(5,826	)		—

Net cash used in operating activities		(56,567	)		(40,539	)		(19,907	)		(8,394	)
INVESTING ACTIVITIES:
Purchases of property and equipment		(774	)		(3,248	)		(12,548	)		(13,379	)

Net cash used in investing activities		(774	)		(3,248	)		(12,548	)		(13,379	)
FINANCING ACTIVITIES:
Issuance of common stock, principally stock options exercises		1,526			535			2,006			1,387
Borrowings under revolving line of credit		39,000			10,000			54,000			30,161
Repayments under revolving line of credit								(18,000	)		(24,599	)
Tax withholding payments reimbursed by shares		(388	)		(1,783	)		(388	)		(1,783	)
Cash paid on dividend equivalents		(35	)		(98	)		(35	)		(98	)
Cash dividends paid to shareholders		(1,616	)		(1,423	)		(4,742	)		(4,168	)
Repurchases of common stock		(4,349	)		(7,230	)		(18,068	)		(20,389	)
Distribution to noncontrolling interest								—			(41	)

Net cash provided by financing activities		34,138			1
Net cash provided by (used in) financing activities								14,773			(19,530	)
Effect of foreign exchange rates on cash and cash equivalents		133			603			(513	)		(869	)

Net decrease in cash and cash equivalents		(23,070	)		(43,183	)		(18,195	)		(42,172	)
Cash and cash equivalents at beginning of period		38,028			54,035			38,028			54,035

Cash and cash equivalents at end of period	$	14,958		$	10,852		$	19,833		$	11,863



Noncash investing and financing activities:
Repurchases of common stock payable	$	—		$	1,095
Purchases of property and equipment not yet paid for							$	3,461		$	1,852



Purchases of property and equipment not yet paid for	$	1,906		$	3,923
Purchases of property and equipment paid by a third party							$	126		$	—



Asset retirement obligations	$	—		$	223		$	427		$	217



Right-of-use assets obtained in exchange for lease obligations	$	713		$	—		$	37,298		$	—



Right-of-use assets related to the adoption of ASC 842	$	82,329		$	—		$	82,329		$	—



Lease liabilities related to the adoption of ASC 842							$	106,765		$	—



Supplemental cash flow information:
Cash paid for taxes	$	298		$	212		$	6,078		$	3,409



Cash paid for interest	$	59		$	60		$	848		$	380

FOR THE ~~QUARTER~~FISCAL YEAR-TO-DATE PERIOD ENDED ~~MARCH 30,~~SEPTEMBER 28, 2019 (unaudited)

	Common Stock															Common Stock

	Common Stock									Accumulated Other Comprehensive Loss						Common Stock									Accumulated Other Comprehensive Loss
	Shares Issued			Amount			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity			Shares Issued			Amount			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
BALANCE AT DECEMBER 29, 2018		8,010,480		$	22,837		$	186,229		$	(12,594	)	$	196,472			8,010,480		$	22,837		$	186,229		$	(12,594	)	$	196,472
Net income		—			—			4,665			—			4,665			—			—			4,665			—			4,665
Foreign currency translation adjustment		—			—			—			712			712			—			—			—			712			712
Exercise of stock options		64,700			1,526			—			—			1,526			64,700			1,526			—			—			1,526
Share-based compensation expense		—			911			—			—			911			—			911			—			—			911
Restricted shares vestings		25,484			—			—			—			—			25,484			—			—			—			—
Redemption of vested employee restricted shares for tax withholding		(8,157	)		(388	)		—			—			(388	)		(8,157	)		(388	)		—			—			(388	)
Shares repurchased		(86,609	)		(4,349	)		—			—			(4,349	)		(86,609	)		(4,349	)		—			—			(4,349	)
Accrued dividends on unvested shares		—			—			(8	)		—			(8	)		—			—			(8	)		—			(8	)
Cash paid on dividend equivalents		—			—			(35	)		—			(35	)		—			—			(35	)		—			(35	)
Cash dividends paid to shareholders ($0.20 per share)		—			—			(1,616	)		—			(1,616	)		—			—			(1,616	)		—			(1,616	)

BALANCE AT MARCH 30, 2019		8,005,898		$	20,537		$	189,235		$	(11,882	)	$	197,890			8,005,898		$	20,537		$	189,235		$	(11,882	)	$	197,890

Net income																	—			—			5,580			—			5,580
Foreign currency translation adjustment																	—			—			—			(653	)		(653	)
Share-based compensation expense																	—			848			—			—			848
Restricted shares vestings																	513			—			—			—			—
Shares repurchased																	(177,101	)		(7,161	)		—			—			(7,161	)
Accrued dividends on unvested shares																	—			—			(44	)		—			(44	)
Cash dividends paid to shareholders ($0.20 per share)																	—			—			(1,580	)		—			(1,580	)

BALANCE AT JUNE 29, 2019																	7,829,310		$	14,224		$	193,191		$	(12,535	)	$	194,880

Net income																	—			—			5,739			—			5,739
Foreign currency translation adjustment																	—			—			—			(1,488	)		(1,488	)
Exercise of stock options																	21,224			480			—			—			480
Share-based compensation expense																	—			882			—			—			882
Restricted shares vestings																	14,754			—			—			—			—
Shares repurchased																	(157,402	)		(6,558	)		—			—			(6,558	)
Accrued dividends on unvested shares																	—			—			(37	)		—			(37	)
Cash dividends paid to shareholders ($0.20 per share)																	—			—			(1,546	)		—			(1,546	)

BALANCE AT SEPTEMBER 28, 2019																	7,707,886		$	9,028		$	197,347		$	(14,023	)	$	192,352

CRA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

FOR THE ~~QUARTER~~FISCAL YEAR-TO-DATE PERIOD ENDED ~~MARCH 31,~~SEPTEMBER 29, 2018 (unaudited)

(In thousands, except share ~~data and per share~~ data)

	Common Stock												CRA International, Inc. Shareholders' Equity								Common Stock

	Common Stock									Accumulated Other Comprehensive Loss											Common Stock									Accumulated Other Comprehensive Loss			CRA International, Inc. Shareholders' Equity
	Shares Issued			Amount			Retained Earnings			Accumulated Other Comprehensive Loss						CRA International, Inc. Shareholders' Equity		Total Shareholders' Equity			Shares Issued			Amount			Retained Earnings			Accumulated Other Comprehensive Loss			CRA International, Inc. Shareholders' Equity			Noncontrolling Interest			Total Shareholders' Equity
BALANCE AT DECEMBER 30, 2017		8,297,172		$	47,414		$	169,390		$	(9,896	)	$	206,908				$	207,229			8,297,172		$	47,414		$	169,390		$	(9,896	)	$	206,908		$	321		$	207,229



Balance at December 31, 2017, as previously reported		8,297,172		$	47,414		$	169,390		$	(9,896	)		206,908		$	321	$	207,229			8,297,172		$	47,414		$	169,390		$	(9,896	)		206,908		$	321		$	207,229
Cumulative effect of a change in accounting principle related to ASC 606		—			—			366			—			366			—		366			—			—			366			—			366			—			366

Balance at December 31, 2017, as adjusted		8,297,172		$	47,414		$	169,756		$	(9,896	)		207,274		$	321	$	207,595			8,297,172		$	47,414		$	169,756		$	(9,896	)		207,274		$	321		$	207,595



Net income		—			—			4,886			—			4,886			—		4,886			—			—			4,886			—			4,886			—			4,886
Foreign currency translation adjustment		—			—			—			1,318			1,318			—		1,318			—			—			—			1,318			1,318			—			1,318
Exercise of stock options		24,688			535			—			—			535			—		535			24,688			535			—			—			535			—			535
Share-based compensation expense		—			1,292			—			—			1,292			—		1,292			—			1,292			—			—			1,292			—			1,292
Restricted shares vestings		97,722			—			—			—			—			—		—			97,722			—			—			—			—			—			—
Redemption of vested employee restricted shares for tax withholding		(35,287	)		(1,783	)		—			—			(1,783	)		—		(1,783	)		(35,287	)		(1,783	)		—			—			(1,783	)		—			(1,783	)
Shares repurchased		(162,892	)		(8,057	)		—			—			(8,057	)		—		(8,057	)		(162,892	)		(8,057	)		—			—			(8,057	)		—			(8,057	)
Accrued dividends on unvested shares		—			—			10			—			10			—		10			—			—			10			—			10			—			10
Cash paid on dividend equivalents		—			—			(98	)		—			(98	)		—		(98	)		—			—			(98	)		—			(98	)		—			(98	)
Cash dividends paid to shareholders ($0.17 per share)		—			—			(1,423	)		—			(1,423	)		—		(1,423	)		—			—			(1,423	)		—			(1,423	)		—			(1,423	)

BALANCE AT MARCH 31, 2018		8,221,403		$	39,401		$	173,131		$	(8,578	)	$	203,954		$	321	$	204,275			8,221,403		$	39,401		$	173,131		$	(8,578	)	$	203,954		$	321		$	204,275

Net income																						—			—			6,839			—			6,839			—			6,839
Foreign currency translation adjustment																						—			—			—			(2,603	)		(2,603	)		—			(2,603	)
Exercise of stock options																						19,395			381			—			—			381			—			381
Share-based compensation expense																						—			1,146			—			—			1,146			—			1,146
Restricted shares vestings																						513			—			—			—			—			—			—
Shares repurchased																						(215,585	)		(12,064	)		—			—			(12,064	)		—			(12,064	)
Accrued dividends on unvested shares																						—			—			(44	)		—			(44	)		—			(44	)
Cash dividends paid to shareholders ($0.17 per share)																						—			—			(1,372	)		—			(1,372	)		—			(1,372	)

BALANCE AT JUNE 30, 2018																						8,025,726		$	28,864		$	178,554		$	(11,181	)	$	196,237		$	321		$	196,558

Net income																						—			—			3,908			—			3,908			—			3,908
Foreign currency translation adjustment																						—			—			—			(198	)		(198	)		—			(198	)
Exercise of stock options																						21,374			471			—			—			471			—			471
Share-based compensation expense																						—			1,266			—			—			1,266			—			1,266
Restricted shares vestings																						17,410			—			—			—			—			—			—
Shares repurchased																						—			—			—			—			—			—			—
Distribution to noncontrolling interest																						—			—			—			—			—			(41	)		(41	)
Accrued dividends on unvested shares																						—			—			(48	)		—			(48	)		—			(48	)
Cash dividends paid to shareholders ($0.17 per share)																						—			—			(1,373	)		—			(1,373	)		—			(1,373	)

BALANCE AT SEPTEMBER 29, 2018																						8,064,510		$	30,601		$	181,041		$	(11,379	)	$	200,263		$	280		$	200,543

CRA International, Inc. ("~~CRA~~CRA" or the "Company") is a worldwide leading consulting services firm that applies advanced analytic techniques and in-depth industry knowledge to complex engagements for a broad range of clients. CRA offers services in two broad areas: litigation, regulatory, and financial consulting and management consulting. CRA operates in one business segment. CRA operates its business under its registered trade name, Charles River Associates.

The consolidated financial statements include the accounts of CRA and its wholly owned subsidiaries. In addition, for periods prior to December 30, 2018, the 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.

The accompanying unaudited condensed consolidated financial statements reflect the results of operations, financial position, cash flows, and shareholders' equity as of and for the fiscal quarters and fiscal year-to-date periods ending ~~March 30,~~September 28, 2019 and ~~March 31,~~September 29, 2018, 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 shareholders' equity for the interim periods presented in conformity with GAAP. Results of operations for the interim periods presented herein are not necessarily indicative of results of operations for a full year. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 29, 2018 included in CRA's Annual Report on Form 10-K filed with the SEC on February 28, 2019 (the "2018 Form 10-K").

Prior to liquidation of GNU on December 18, 2018, CRA's ownership interest in GNU was 55.89%. For periods prior to December 30, 2018, GNU's financial results have been consolidated with CRA, and the portion of GNU's results allocable to its other owners is shown as "noncontrolling interest." GNU did not contribute to CRA's results of operations during the fiscal ~~quarter~~quarters or fiscal year-to-date periods ended ~~March 30,~~September 28, 2019 or ~~March 31,~~September 29, 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~~

reported amounts of consolidated revenues and expenses during the reporting period. Estimates in these condensed consolidated financial statements include, but are not limited to, allowances for accounts receivable and unbilled services, revenue recognition on fixed price contracts, variable consideration to be included in the transaction price of revenue contracts, depreciation of property and equipment, measurement of operating lease right-of-use assets and liabilities, share-based compensation, valuation of ~~the~~ contingent consideration ~~liability,~~liabilities, valuation of acquired intangible assets, impairment of ~~long-lived~~long lived assets and goodwill, accrued and deferred income taxes, valuation allowances on deferred tax assets, accrued incentive compensation, and certain other accrued ~~expenses~~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.

CRA adopted Accounting Standard Update ("~~ASU ")~~ASU") No. 2016-02,Leases (Topic 842), which established Accounting Standards Codification ("ASC") Topic 842 ("ASC 842") and supersedes ASC Topic 840,Leases ("ASC 840"), on December 30, 2018 using the additional modified retrospective transition method provided by ASC 842. The cumulative effect of the transition adjustments was recognized as of the date of adoption.

CRA elected the package of practical expedients provided by ASC 842, which allowed CRA to forgo reassessing the following upon adoption of the new standard: (1) whether contracts contain leases for any expired or existing contracts, (2) the lease classification for any expired or existing leases, and (3) initial direct costs for any existing or expired leases. In addition, CRA elected an accounting policy to exclude from the consolidated balance sheets the right-of-use ("ROU") assets and lease liabilities related to short-term leases, which are those leases with an initial lease term of twelve months or less that do not include an option to purchase the underlying asset that CRA is reasonably certain to exercise. Refer to Note 10 for further discussion of CRA's lease accounting policy.

The reported results for 2019 reflect the application of ASC 842 guidance, whereas comparative periods and their respective disclosures prior to the adoption of ASC 842 are presented using the legacy guidance of ASC 840. As a result of adopting the new standard, CRA recognized ROU assets of $82.3 million and lease liabilities of $106.8 million. The difference between the amount of ROU assets and lease liabilities recognized was an adjustment to deferred rent. There was no ~~adjustment~~change to net deferred ~~taxes~~tax assets as a result of CRA's adoption of ASC 842. The adoption of ASC 842 did not have a material impact on CRA's results of operations or cash flows, nor did it have an impact on any of CRA's existing debt covenants.

Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting

CRA adopted ASU No. 2018-07,Compensation—Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting (Topic 718) ("ASU 2018-07") on December 30, 2018.

ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this update specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used effectively to provide financing to the issuer or awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606,Revenue from Contracts with Customers. The new guidance requires a remeasurement of nonemployee awards at fair value as of the adoption date. The adoption of ASU 2018-07 did not have a material impact on CRA's financial position, results of operations, cash flows, or disclosures.

Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-13,Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 replaces the methodology that recognizes impairment of financial instruments when losses have been incurred with a methodology that recognizes impairment of financial instruments when losses are expected. The amendment requires entities to use a forward-looking "expected loss" model for most financial instruments, including accounts receivable and loans, ~~that~~which is based on historical information, current information, and reasonable and supportable forecasts. For available-for-sale debt securities with unrealized losses, credit losses will be recognized as an allowance rather than as a reduction in the amortized cost of the debt securities. ASU 2016-13 is effective for CRA for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for interim and annual periods beginning after December 15, 2018. Adoption of ASU 2016-13 will be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period after adoption.

In November 2018, the FASB issued ASU No. 2018-19,Codification Improvements to Topic 326, Financial Instruments—Credit Losses ("ASU 2018-19"). ASU 2018-19 changes the required adoption date for nonpublic business entities and clarifies that receivables arising from operating leases are not within the scope of Topic 326.

CRA ~~has not yet determined~~is in the process of determining the effects, if any, that the adoption of the amendments may have on its financial position, results of operations, cash flows, or disclosures. CRA plans to adopt the amendments during the first quarter of 2020.

In August 2018, the FASB issued ASU No. 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ("ASU No. 2018-13").

The ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements from ASC ~~820.~~820,Fair Value Measurements and Disclosures (Topic 820). Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair

value measurement. The new standard is effective for interim and annual periods beginning after December 15, 2019. Entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. CRA has not yet determined the effects, if any, that the adoption of ASU 2018-13 may have on its financial position, results of operations, cash flows, or disclosures. CRA plans to adopt ASU 2018-13 during the first quarter of 2020.

In August 2018, the FASB issued ASU No. 2018-15,Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). ASU 2018-15 clarifies the accounting for implementation costs in a cloud computing arrangement that is a service contract and aligns the requirements for capitalizing those costs with the capitalization requirements for costs incurred to develop or obtain internal-use software. The new standard is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted. CRA is currently evaluating the effects, if any, the adoption of ASU 2018-15 may have on its financial position, results of operations, cash flows, or disclosures. CRA plans to adopt ASU 2018-15 during the first quarter of 2020.

~~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 tables show CRA's financial instruments as of March 30, 2019 and December 29, 2018 that are measured and recorded in the condensed consolidated financial statements at fair value on a recurring basis (in thousands):

March 30, 2019

Quoted Prices in Active
Markets for Identical
Assets or Liabilities Significant Other
Observable Inputs Significant
Unobservable
Inputs

Level 1 Level 2 Level 3
Assets:

Money market mutual funds
$ 148 $ — $ —

Total Assets
$ 148 $ — $ —

Liabilities:

Contingent consideration liability
$ — $ — $ 5,980

Total Liabilities
$ — $ — $ 5,980

The following tables show CRA's financial instruments as of September 28, 2019 and December 29, 2018 that are measured and recorded in the condensed consolidated financial statements at fair value on a recurring basis (in thousands):

	September 28, 2019

	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3
Assets:
Money market mutual funds	$	149	$	—	$	—

Total Assets	$	149	$	—	$	—



Liabilities:
Contingent consideration liability	$	—	$	—	$	9,632

Total Liabilities	$	—	$	—	$	9,632

	December 29, 2018

	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3
Assets:
Money market mutual funds	$	18,029	$	—	$	—

Total Assets	$	18,029	$	—	$	—



Liabilities:
Contingent consideration liability	$	—	$	—	$	6,197

Total Liabilities	$	—	$	—	$	6,197

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

The contingent consideration liabilities in the tables above are for estimated future ~~contingent consideration~~ payments related to ~~prior acquisitions.~~an acquisition that occurred on January 31, 2017. The asset purchase agreement provided for additional purchase consideration to be paid over a period of up to four years following the closing of the transaction in the form of an earnout, subject to the satisfaction of specific revenue performance targets. The fair value measurement of these liabilities is based on significant inputs not observed in the market and thus represent a Level 3 measurement. The significant unobservable inputs used in the fair value measurements of these contingent consideration liabilities are ~~CRA's measures of the estimated payouts based on~~ internally generated ~~financial~~ projections of sourced revenue and discount rates. The fair value of the contingent consideration was determined using a Monte Carlo simulation. The fair value of these contingent consideration liabilities ~~are~~is reassessed on a quarterly basis by CRA using additional information as it becomes available, and any change in the fair value estimates are recorded in costs of services (exclusive of depreciation and amortization) on the condensed consolidated income statement of that period.

~~The following table summarizes the changes in the contingent consideration liabilities over the fiscal quarter ended March 30, 2019 and the fiscal year ended December 29, 2018 (in thousands):~~

The following table summarizes the changes in the contingent consideration liabilities over the fiscal year-to-date period ended September 28, 2019 and the fiscal year ended December 29, 2018 (in thousands):

Forgivable loan activity for the fiscal ~~quarter~~year-to-date period ended ~~March 30,~~September 28, 2019 and the fiscal year ended December 29, 2018 is as follows (in thousands):

	March 30, 2019			December 29, 2018			September 28, 2019			December 29, 2018

Beginning balance	$	40,294		$	28,628		$	40,294		$	28,628
Advances		21,930			30,572			33,404			30,572
Repayments		(400	)		(3,396	)		(1,106	)		(3,396	)
Reclassification to other assets / from accrued expenses		(1,421	)		—
Reclassification from accrued expenses								(1,121	)		—
Amortization		(4,274	)		(15,329	)		(13,313	)		(15,329	)
Effects of foreign currency translation		273			(181	)		(291	)		(181	)

Ending balance	$	56,402		$	40,294		$	57,867		$	40,294



Current portion of forgivable loans	$	9,632		$	6,104		$	8,821		$	6,104



Non-current portion of forgivable loans	$	46,770		$	34,190		$	49,046		$	34,190

At ~~March 30,~~September 28, 2019 and December 29, 2018, CRA had other loans to current and former employees included in other assets on the condensed consolidated balance sheet amounting to $0.3 million and $0.1 million, respectively, net of allowances.

The changes in the carrying amount of goodwill during the fiscal ~~quarter~~year-to-date period ended ~~March 30,~~September 28, 2019, isare as follows (in thousands):

	Goodwill, gross		Accumulated impairment losses			Goodwill, net		Goodwill, gross			Accumulated impairment losses			Goodwill, net

Balance at December 29, 2018	$	164,625	$	(76,417	)	$	88,208	$	164,625		$	(76,417	)	$	88,208
Effects of foreign currency translation		300		—			300		(395	)		—			(395	)

Balance at March 30, 2019	$	164,925	$	(76,417	)	$	88,508
Balance at September 28, 2019								$	164,230		$	(76,417	)	$	87,813

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 year-to-date period ended September 28, 2019 or ~~during the fiscal year ended December~~September 29, 2018.

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

	March 30, 2019		December 29, 2018		September 28, 2019		December 29, 2018

Non-competition agreements, net of accumulated amortization of $160 and $544, respectively	$	164	$	180
Customer relationships, net of accumulated amortization of $4,781 and $4,454, respectively		7,339		7,666
Non-competition agreements, net of accumulated amortization of $190 and $544, respectively					$	134	$	180
Customer relationships, net of accumulated amortization of $5,436 and $4,454, respectively						6,684		7,666

Total, net of accumulated amortization of $4,941 and $4,998, respectively	$	7,503	$	7,846
Total, net of accumulated amortization of $5,626 and $4,998, respectively					$	6,818	$	7,846

	March 30, 2019		December 29, 2018		September 28, 2019		December 29, 2018

Compensation and related expenses	$	55,886	$	90,711	$	75,319	$	90,711
Income taxes payable		649		514		702		514
Commissions due to senior consultants						8,752		9,624
Direct project accruals						1,882		684
Accrued leasehold improvements						2,321		132
Other		15,745		17,008		5,581		6,568

Total	$	72,280	$	108,233	$	94,557	$	108,233

As of ~~March 30,~~September 28, 2019 and December 29, 2018, approximately ~~$30.0~~$59.9 million and $73.9 million, respectively, of accrued bonuses were included above in "Compensation and related expenses". Additionally, as of March 30, 2019, "Other" accrued expenses included $9.4 million of commissions due to senior consultants, $0.2 million of direct project accruals, $6.0 million of operating expense accruals and $0.1 million of accrued leasehold improvements. As of December 29, 2018, "Other" accrued expenses consisted principally of $9.6 million of commissions due to senior consultants, $0.7 million of direct project accruals, $6.6 million of operating expense accruals and $0.1 million of accrued leasehold improvements.expenses."

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 ~~$39.0~~$36.0 million in borrowings outstanding under this revolving credit facility as of ~~March 30,~~September 28, 2019. There were no outstanding borrowings onunder this facility as of December 29, 2018.

As of ~~March 30,~~September 28, 2019, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to ~~$3.9~~$4.4 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 30, 2019 and December 29, 2018, CRA was in compliance with the covenants of its credit agreement.~~

covenants is tested on a fiscal quarterly basis. As of September 28, 2019 and December 29, 2018, CRA was in compliance with the covenants of its credit agreement.

CRA offers ~~consulting services in two broad lines: (1)~~functional expertise across a variety of litigation, regulatory, financial, industry and ~~financial consulting; and (2)~~ management ~~consulting.~~consulting services. Together, these ~~two service lines~~services comprised all of CRA's consolidated revenues during the fiscal ~~quarter~~quarters and fiscal year-to-date periods ended ~~March 30, 2019.~~September 28, 2019 and September 29, 2018. 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.

The following table disaggregates CRA's revenue by ~~major business line~~type of contract and ~~timing of transfer of its consulting services~~geographic location (in thousands):

	Fiscal Quarter Ended				Fiscal Quarter Ended				Fiscal Year-to-Date Period Ended

Type of Contract	March 30, 2019		March 31, 2018		September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
Consulting services revenues:
Fixed Price	$	21,386	$	20,714	$	30,057	$	25,047	$	76,622	$	66,440
Time-and-materials		84,463		78,762		85,629		78,824		255,486		242,445

Total	$	105,849	$	99,476	$	115,686	$	103,871	$	332,108	$	308,885

	Fiscal Quarter Ended				Fiscal Quarter Ended				Fiscal Year-to-Date Period Ended

Geographic Breakdown	March 30, 2019		March 31, 2018		September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
Consulting services revenues:
United States	$	83,529	$	76,860	$	92,217	$	80,721	$	263,221	$	244,878
United Kingdom		18,507		17,505		17,116		17,253		53,027		47,317
Other		3,813		5,111		6,353		5,897		15,860		16,690

Total	$	105,849	$	99,476	$	115,686	$	103,871	$	332,108	$	308,885

Revenues from CRA's consulting services are recorded at the net transaction price, which includes estimates of variable consideration for which reserves are established. Variable consideration reserves are based on actual price concessions and those expected to be extended to CRA customers and are recorded as a component of the allowances for accounts receivable and unbilled services. During each of the fiscal quarters ended March 30, 2019 and March 31, 2019, $1.4 million of adjustments were recorded to these allowances.

Bad debt expense is reported as a component of selling, general and administrative expense. During the fiscal quarter ended March 30, 2019, no bad debt expense was reported. During the fiscal quarter ended March 31, 2018, $0.3 million of bad debt expense was reported.

recorded as a component of the allowances for accounts receivable and unbilled services. Adjustments to the variable consideration reserves are as follows (in thousands):

Bad debt expense is reported as a component of selling, general and administrative expense. Bad debt expense is as follows (in thousands):

Revenues also include reimbursements for costs incurred by CRA in fulfilling its performance obligations, including travel and other out-of-pocket expenses, fees for outside consultants and other reimbursable expenses. CRA recovers substantially all of these costs. The following expenses are subject to reimbursement (in thousands):

	Fiscal Quarter Ended				Fiscal Quarter Ended				Fiscal Year-to-Date Period Ended

	March 30, 2019		March 31, 2018		September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
Reimbursable expenses	$	12,835	$	11,229	$	13,978	$	11,422	$	38,991	$	34,737

CRA collects goods and services (GST/HST) and value added taxes (VAT) 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.~~basis.

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 30,~~September 28, 2019. The guidance provides certain practical expedients that limit this requirement for (1) contracts with an original expected length of one year or less and (2) 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 30,~~September 28, 2019.

CRA defines contract assets as assets for which it has recorded revenue because it determines that it is probable that it will earn a performance based or contingent fee, but is not yet entitled to receive a fee, because certain events, such as completion of the measurement period or client approval, must occur. These contract assets are included in accounts receivable, net and unbilled services, net within the consolidated balance sheets. The contract assets balance was immaterial as of ~~March 30,~~September 28, 2019 and December 29, 2018.

CRA defines contract liabilities as advance payments from or billings to its clients for services that have not yet been performed or earned and retainers. These liabilities are recorded within deferred revenues and are recognized as services are provided. 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.

The following table presents the opening and closing balances of CRA's contract liability (in thousands):

	Contract Liability				Fiscal Year-to-Date Period Ended		December 29, 2018

					Contract Liability
							Fiscal Year Ended
					Fiscal Year-to-Date Period Ended		Fiscal Year Ended
	Quarter Ended March 30, 2019		Year Ended December 29, 2018		September 28, 2019		December 29, 2018
Balance at the beginning of the period	$	5,453	$	3,287	$	5,453	$	3,287
Balance at the end of the period	$	3,606	$	5,453	$	2,502	$	5,453

During the fiscal quarter and fiscal year-to-date period ended ~~March 30,~~September 28, 2019, CRA recognized the following revenue as a result of changes in the contract liability balance (in thousands):


Revenue recognized in the period from:	Quarter Ended March 30, 2019
			Fiscal Quarter Ended
			Fiscal Quarter Ended		Fiscal Year-to-Date Period Ended
			September 28, 2019		Fiscal Year-to-Date Period Ended
			September 28, 2019		September 28, 2019
Amounts included in contract liabilities at the beginning of the period	$	3,663	$	2,405	$	4,900
Performance obligations satisfied in previous periods	$	2,412	$	3,395	$	3,606

The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled services and contract liabilities on the condensed consolidated balance sheets.

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 outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards. Net earnings allocable to these participating securities were not ~~significant~~material for the ~~first quarter of~~ fiscal quarters and fiscal year-to-date periods ended September 28, 2019 ~~or fiscal~~and September 29, 2018.

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

	March 30, 2019		March 31, 2018		September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018

					Fiscal Quarter Ended				Fiscal Year-to-Date Period Ended
Net income, as reported	$	4,665	$	4,886	$	5,739	$	3,908	$	15,984	$	15,633
Common stock equivalents:
Less: net income attributable to participating shares		16		29		12		15		47		82

Net income available to common shareholders	$	4,649	$	4,857	$	5,727	$	3,893	$	15,937	$	15,551

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

For the fiscal quarter and fiscal year-to-date period ended September 28, 2019, 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 63,164 and 47,169 shares, respectively. For the fiscal quarter and fiscal year-to-date period ended September 29, 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 8,256 and 13,443 shares, respectively. These share-based awards each period were anti-dilutive because their exercise price exceeded the average market price over the respective period.

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

For the fiscal quarter ended March 30, 2019, 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 20,078 shares. For the fiscal 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. These share-based awards each period were anti-dilutive because their exercise price exceeded the average market price over the respective period.

CRA's effective income tax rates were ~~23.5%~~14.2% and ~~17.5%~~20.9% for the ~~first quarters~~third quarter of fiscal 2019 and fiscal 2018, respectively. The effective tax rate for the ~~first~~third quarter of fiscal 2019 was ~~higher~~lower than the prior year primarily due to the release of tax reserves as a ~~reduced~~result of expiration of statutes of limitation, partially offset by a decrease in the tax benefit related to ~~the accounting for stock-based~~share-based compensation. The effective tax rate in the ~~first~~third quarter of fiscal 2019 was lower than the combined federal and state statutory tax rate primarily due to the reversal of tax reserves as a result of expiration of statutes of limitation, the tax benefit ~~related to~~on share-based compensation, and the ~~accounting for stock-based compensation,~~remeasurement of U.S deferred tax assets and liabilities based on expected fiscal 2019 applicable state apportionment and statutory rates, partially offset by non-deductible items resulting from limitations on the deductibility of compensation paid to executive officers and the deductibility of meals and entertainment. The effective tax rate in the ~~first~~third quarter of fiscal 2018 was lower than the combined federal and state statutory tax rate primarily due to the tax benefit on share-based compensation and the remeasurement of U.S deferred tax assets and liabilities based on expected fiscal 2018 applicable state apportionment and statutory rates.

CRA's effective income tax rates were 22.9% and 24.1% for the fiscal year-to-date periods ended September 28, 2019 and September 29, 2018, respectively. The effective tax rate for the fiscal year-to-date period ended September 28, 2019 was lower than the prior year primarily due to the release of tax reserves as a result of expiration of statutes of limitation, partially offset by a decrease in the tax benefit related to share-based compensation. The effective tax rate in the ~~accounting~~fiscal year-to-date period ended September 28, 2019 was lower than the combined federal and state statutory tax rate primarily due to the release of tax reserves as a result of expiration of statutes of limitation, the tax benefit on share-based compensation, and the remeasurement of U.S deferred tax assets and liabilities based on the expected fiscal 2019 applicable state apportionment and statutory rates, partially offset by non-deductible items resulting from limitations on the deductibility of compensation paid to executive officers and the deductibility of meals and entertainment. The effective tax rate for ~~stock-based~~the fiscal year-to-date period ended September 29, 2018 was lower than the combined federal and state statutory tax rate primarily due to the tax benefit on share-based compensation, partially offset by the non-deductible items referenced above.

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 30,~~September 28, 2019, 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.

CRA is a lessee under certain operating leases for office space and equipment. Prior to adopting ASC 842, CRA followed the lease accounting guidance as issued in ASC 840. Under ASC 840, CRA classified its leases as operating or capital leases based on evaluation of certain criteria of the lease agreement. For leases that contained rent escalations or rent holidays, CRA recorded the total rent expense during the lease term on a straight-line basis over the term of the lease and recorded the difference between the rents paid and the straight-line rent expense as deferred rent on the balance

sheet. Any tenant improvement allowances received from the lessor were recorded as a reduction to rent expense over the term of the lease.

ASC 842, which CRA adopted on December 30, 2018, requires lessees to recognize leases on the balance sheet as a lease liability with a corresponding ~~right-of-use~~ROU asset, ~~("ROU"),~~ subject to certain permitted accounting policy elections. As a result of adopting the new standard, CRA recognized ROU assets of $82.3 million and lease liabilities of $106.8 million related to its operating leases as of December 30, 2018. The difference between the amount of ROU assets and lease liabilities recognized was an adjustment to eliminate the deferred rent balance, which was a component of ASC 840.

Under ASC 842, CRA determines whether a contract is a lease at the inception of the ~~contract, whether the contract~~contract. This determination is ~~or contains a lease~~ based on whether the contract provides CRA the right to control the use of a physically distinct asset or substantially all of the capacity of an asset. Leases with an initial noncancelable term of twelve months or less that do not include an option to purchase the underlying asset that CRA is reasonably certain to exercise are classified as short-term leases. CRA has elected as an accounting policy to exclude from the consolidated balance sheets the ROU assets and lease liabilities related to short-term leases. CRA recognizes rent expense for its operating leases on a straight-line basis over the term of the lease.

Many of CRA's equipment leases are short-term or cancellable with notice. CRA's office space leases have remaining lease terms between one and approximately twelve years, many of which include one or more options to extend the term for periods of up to five years for each option. Certain leases contain options to terminate the lease early, which may include a penalty for exercising the option. Many of the termination options require notice within a specified period, after which the option is no longer available to CRA if not exercised. The extension options and termination options may be exercised at CRA's sole discretion. CRA does not consider in the measurement of ROU assets and lease liabilities an option to extend or terminate a lease if CRA is not reasonably certain to exercise the option. As of ~~March 30,~~September 28, 2019, CRA has not included any options to extend or terminate in its measurement of ROU assets or lease liabilities.

Certain of CRA's leases include covenants that oblige CRA, at its sole expense, to repair and maintain the leased asset periodically during the lease term. CRA is not a party to any leases that contain residual value guarantees nor is CRA a party to any leases that provide an option to purchase the underlying asset.

Many of CRA's office space leases include fixed and variable payments. Variable payments relate to real estate taxes, insurance, operating expenses, and common area maintenance, which are usually billed at actual amounts incurred proportionate to CRA's rented square feet of the building. Variable payments that do not depend on an index or rate are expensed by CRA as they are incurred and are not included in the measurement of the lease liability.

Many of CRA's leases contain both lease and non-lease components. ~~Fixed~~For office space leases, the Company has elected as an accounting policy to account for lease and nonlease components as a single component. For equipment leases, fixed and variable payments are allocated to each component relative to observable or estimated standalone prices. CRA measures its variable lease costs as the portion of variable payments that are allocated to lease components.

CRA measures its lease liability for each leased asset as the present value of lease payments, as defined in ASC 842, allocated to the lease component, discounted using an incremental borrowing rate

specific to the underlying asset. CRA's ROU assets are equal to the lease liability, adjusted for lease incentives received, including tenant improvement allowances, and payments made to the lessor prior to the lease commencement date. CRA estimates its incremental borrowing rate for each leased asset based on the interest rate CRA would incur to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment.

The components of CRA's lease expenses, ~~for the fiscal quarter ended March 30, 2019,~~ which are included in the condensed consolidated income statement, are as follows (in thousands):

	March 30, 2019		September 28, 2019		September 28, 2019

			Fiscal Quarter Ended		Fiscal Year-to-Date Period Ended
Operating lease cost	$	3,211	$	4,052	$	11,276
Short-term lease cost		108		106		295
Variable lease cost		936		1,181		3,150

Total lease cost	$	4,255	$	5,339	$	14,721

Supplemental cash flow information related to CRA's leases ~~for the fiscal quarter ended March 30, 2019 is~~are as follows (in thousands):

March 30,
2019
Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases
$ 4,627
Right-of-use assets obtained in exchange for lease obligations

Operating leases
$ 713

		Fiscal Year-to-Date Period Ended

		September 28, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases		$12,053
Right-of-use assets obtained in exchange for lease obligations
Operating leases		$37,298

The following table presents supplemental balance sheet information related to CRA's operating leases ~~as of March 30, 2019~~ (in thousands):

March 30,
2019
Assets:

Operating lease right-of-use assets
$ 81,480
Liabilities:

Current portion of lease liabilities
$ 9,558
Non-current portion of lease liabilities
94,939

Total operating lease liabilities
$ 104,497

Weighted average remaining lease term—operating leases

9.0 years
Weighted average discount rate—operating leases
3.7 %

		September 28, 2019

Assets:
Operating lease right-of-use assets		$110,999



Liabilities:
Current portion of lease liabilities		$10,598
Non-current portion of lease liabilities		126,869

Total operating lease liabilities		$137,467



Weighted average remaining lease term—operating leases		9.8 years
Weighted average discount rate—operating leases		3.7%

At ~~March 30,~~September 28, 2019, CRA had the following maturities of lease liabilities related to office space and equipment, all of which are under non-cancellable operating leases (in thousands):

Fiscal Year			Operating Lease Commitments

2019 (excluding the three months ended March 30, 2019)	10,988
2019 (excluding the nine months ended September 28, 2019)			$	2,505
2020	14,083			16,883
2021	14,028			16,802
2022	14,070			16,907
2023	14,178			17,024
Thereafter	55,320			96,285

Total lease payments	122,667			166,406
Less: imputed interest	(18,170	)		(28,939	)

Total	104,497		$	137,467

As of ~~March 30,~~September 28, 2019, CRA had additional operating leases for office space that have not yet commenced that have minimum rental commitments of ~~$52.7~~$28.8 million. These operating leases will commence in fiscal year 2019 and 2020 and have lease terms of approximately ~~five~~six years to eleven years, ~~which exclude~~subject to certain ~~options to extend these leases.~~extension options.

CRA is subject to legal actions arising in the ordinary course of business. In management's opinion, based on current knowledge, CRA 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. However, the outcome of such legal actions is inherently unpredictable and subject to inherent uncertainties.

During the fourth quarter of fiscal 2018, CRA determined that the change in accounts receivable allowances presented onin the ~~December 30, 2017~~March 31, 2018 condensed consolidated ~~balance sheet~~statement of cash flows required adjustment. ~~This adjustment~~These adjustments in disclosure isare immaterial and had no effect on the amount of accounts receivable presented on the ~~December 30, 2017~~March 31, 2018 condensed consolidated balance sheet. As a result of ~~the adjustment,~~these adjustments, a classification change was required within the operating activities portion of the condensed consolidated statement of cash flows. As of December 29, 2018, these adjustments were corrected and the accounts receivable and accounts receivable allowances were properly presented within the consolidated financial statements. Since the correction was discovered in the second quarter of fiscal 2018, the consolidated statement of cash flows for the first quarter of fiscal 2018 requires adjustment. These adjustments are immaterial and have no effect on the net cash used in operating activities.

The following table presents the total classification changes required related to these adjustments for the fiscal year-to-date period ended September 29, 2018 (in thousands):

	As previously reported			As revised			As previously reported			As revised

	For the quarter ended March 31, 2018
Accounts receivable allowances	$	174		$	452		$	884		$	233
Accounts receivable	$	3,435		$	2,958		$	(9,391	)	$	(8,939	)
Unbilled services	$	(8,871	)	$	(8,672	)	$	(10,175	)	$	(9,976	)
Net cash used in operating activities	$	(40,539	)	$	(40,539	)	$	(8,394	)	$	(8,394	)

On ~~May 2,~~October 31, 2019, CRA announced that its Board of Directors declared a quarterly cash dividend of ~~$0.20~~$0.23 per common share, payable on ~~June 14,~~December 13, 2019 to shareholders of record as of ~~May 28,~~November 26, 2019.

During the month of ~~April~~October 2019, CRA ~~made borrowings of $6.0~~repaid $10.0 million ~~in the U.S.~~ on its existing borrowings under its revolving line of ~~credit to fund operations. These~~credit. After this repayment, $26.0 million of borrowings ~~are expected to be repaid over the next twelve months.~~remain outstanding.

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

Except for historical facts, the statements in this quarterly report are forward-looking statements. Forward-looking statements are merely our current predictions of future events. These statements are inherently uncertain, and actual events could differ materially from our predictions. Important factors that could cause actual events to vary from our predictions include those discussed below under the heading "Risk Factors." We assume no obligation to update our forward-looking statements to reflect new information or developments. We urge readers to review carefully the risk factors described in the other documents that we file with the Securities and Exchange Commission, or SEC. You can read these documents at www.sec.gov.

Our principal Internet address is www.crai.com. Our website provides a link to a third-party website through which our annual, quarterly, and current reports, and amendments to those reports, are available free of charge. We believe these reports are made available as soon as reasonably practicable after we file them electronically with, or furnish them to, the SEC. We do not maintain or provide any information directly to the third-party website, and we do not check its accuracy.

Our website also includes information about our corporate governance practices. The Investor Relations page of our website provides a link to a web page where you can obtain a copy of our code of business conduct and ethics applicable to our principal executive officer, principal financial officer, and principal accounting officer.

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. ("U.S. GAAP"). The preparation of these financial statements requires us 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, variable consideration to be included in the transaction price of revenue contracts, depreciation of property and equipment, measurement of operating lease right-of-use ("ROU") assets and liabilities, share-based compensation, valuation of contingent consideration liabilities, valuation of acquired intangible assets, impairment of long lived assets and goodwill, accrued and deferred income taxes, valuation allowances on deferred tax assets, accrued incentive compensation, and certain other accrued expenses. These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if our assumptions based on past experience or our other assumptions do not turn out to be substantially accurate.

We have described our significant accounting policies in Note 1 to our consolidated financial statements included in the 2018 Form 10-K. We have reviewed our accounting policies, identifying those that we believe to be critical to the preparation and understanding of our consolidated financial statements in the list set forth below. See the disclosure under the heading "Critical Accounting Policies" in Item 7 of Part II of the 2018 Form 10-K for a detailed description of these policies and their potential effects on our results of operations and financial condition.

Except for the adoption of ASC 842 as described below, we did not adopt any changes in the fiscal ~~quarter~~year-to-date period ended ~~March 30,~~September 28, 2019 that had a material effect on these critical accounting policies, nor did we make any changes to our accounting policies in the fiscal ~~quarter~~year-to-date period ended ~~March 30,~~September 28, 2019 that changed these critical accounting policies.

We adopted ASU No. 2016-02,Leases (Topic 842) (ASC 842) on December 30, 2018, using the additional modified retrospective transition method provided by ASC 842. The reported results for 2019 reflect the application of ASC 842 guidance while the reported results for 2018 were prepared under the guidance of ASC 840,Leases (ASC 840). As a result of adopting the new standard, we recognized ROU assets of $82.3 million and lease liabilities of $106.8 million, of which ~~$9.6~~$10.6 million is classified as a current liability, as of December 30, 2018. The difference between the amount of ROU assets and lease liabilities recognized was an adjustment to deferred rent. Prior periods will not be retrospectively adjusted. See Note 10 to our consolidated condensed financial statements included in this quarterly report on Form 10-Q for a complete description of our accounting policy.

See Note 1 to our condensed consolidated financial statements included in this quarterly report on Form 10-Q for a discussion of recent accounting standards that we have not yet adopted under the heading "Recent Accounting Standards Not Yet ~~Adopted".~~Adopted."

Results of Operations—For the Fiscal Quarter and Fiscal Year-to-Date Period Ended ~~March 30,~~September 28, 2019, Compared to the Fiscal Quarter and Fiscal Year-to-Date Period Ended ~~March 31,~~September 29, 2018

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

	Fiscal Quarter Ended						Fiscal Quarter Ended						Fiscal Year-to-Date Period Ended

	March 30, 2019			March 31, 2018			September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Costs of services (exclusive of depreciation and amortization)		69.6			69.8			72.4			71.0			70.3			68.9
Selling, general and administrative expenses		21.5			21.8			19.4			21.5			20.8			21.9
Depreciation and amortization		2.5			2.2			2.2			2.5			2.3			2.4

Income from operations		6.5			6.2			6.0			5.0			6.6			6.8
Other expense, net		(0.7	)		(0.3	)
Interest expense, net								(0.4	)		(0.2	)		(0.3	)		(0.2	)
Other income (expense), net								0.2			(0.1	)		(0.1	)		0.0

Income before provision for income taxes		5.8			6.0			5.8			4.8			6.2			6.7
Provision for income taxes		1.4			1.0			0.8			1.0			1.4			1.6

Net income		4.4	%		4.9	%		5.0	%		3.8	%		4.8	%		5.1	%

Fiscal Quarter Ended ~~March 30,~~September 28, 2019 Compared to the Fiscal Quarter Ended ~~March 31,~~September 29, 2018

Revenues. Revenues increased by ~~$6.3~~$11.8 million, or ~~6.3%~~11.4%, to ~~$105.8~~$115.7 million for the ~~first~~third quarter of fiscal 2019 from ~~$99.5~~$103.9 million for the ~~first~~third quarter of fiscal 2018. The increase in net revenue was a

result of an increase in gross revenues of ~~$7.9~~$10.9 million as compared to the ~~first~~third quarter of fiscal 2018, ~~while~~and a decrease in write-offs and reserves ~~increased by $1.6~~of $0.9 million compared to the ~~first~~third quarter of fiscal 2018. Utilization ~~increased to 75%~~remained flat at 76% for the ~~first~~third quarter of fiscal 2019 ~~from 73% for~~relative to the ~~first~~third quarter of fiscal 2018, while consultant headcount grew ~~6.2%~~8.2% from ~~647~~685 at the end of the ~~first~~third quarter of fiscal 2018 to ~~687~~741 at the end of the ~~first~~third quarter of fiscal 2019. ~~Client service hours increased by 11.0% for the first quarter 2019 when compared to the first quarter 2018.~~ Included in revenues are the effect of changes in currency exchange rates resulting in a decrease to revenue of ~~$1.5~~$1.1 million for the fiscal quarter ended ~~March 30,~~September 28, 2019, and ~~an increase~~a decrease of ~~$2.2~~$0.2 million for the fiscal quarter ended ~~March 31,~~September 29, 2018.

Overall, revenues outside of the U.S. represented approximately ~~21%~~20% and 22% of total revenues for the ~~first~~third quarters of fiscal 2019 and fiscal 2018, respectively. Revenues derived from fixed-price engagements increased to 26% of total revenues for the third quarter of fiscal 2019 compared with ~~approximately 23%~~24% of total revenues for the ~~first quarter of fiscal 2018. Revenues derived from fixed-price engagements decreased to 20% of total revenues for the first quarter of fiscal 2019 compared with 21% of total revenues for the first~~third quarter of fiscal 2018. These percentages of revenue derived from fixed-price engagements depend largely on the proportion of our revenues derived from our management consulting business, which typically has a higher concentration of fixed-price service contracts.

Costs of Services (exclusive of depreciation and amortization). Costs of services (exclusive of depreciation and amortization) increased by ~~$4.2~~$10.1 million, or ~~6.1%~~13.7%, to ~~$73.6~~$83.8 million for the ~~first~~third quarter of fiscal 2019 from ~~$69.4~~$73.7 million for the ~~first~~third quarter of fiscal 2018. The increase in costs of services was due primarily to an increase of ~~$1.8~~$2.3 million in employee compensation and fringe benefit costs attributable to ~~salaries and benefits associated with~~ our increased ~~consulting~~consultant headcount, an increase in incentive and retention compensation costs of $4.6 million, an increase in forgivable loan and incentive awards amortization of ~~$1.4 million, offset by a decrease in stock compensation of $0.4~~$0.3 million, and ~~a decrease~~an increase in expense related to the net change in contingent consideration valuation of ~~$0.2~~$0.7 million. These increased expenses were partially offset by a decrease in stock compensation of $0.4 million. Additionally, client reimbursable expenses increased by ~~$1.6~~$2.6 million in the ~~first~~third quarter of fiscal 2019 compared to the ~~first~~third quarter of fiscal 2018. As a percentage of revenues, costs of services (exclusive of depreciation and amortization) ~~decreased~~increased to ~~69.6%~~72.4% for the ~~first~~third quarter of fiscal 2019 from ~~69.8%~~70.9% for the ~~first~~third quarter of fiscal 2018.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by ~~$1.0~~$0.1 million, or ~~4.6%~~0.4%, to ~~$22.7~~$22.4 million for the ~~first~~third quarter of fiscal 2019 from ~~$21.7~~$22.3 million for the ~~first~~third quarter of fiscal 2018. ~~A contributor to~~Within this ~~increase~~category of expenses, there was a ~~$0.4~~$0.3 million increase in employee and incentive compensation, a ~~$0.9~~$1.1 million increase in ~~other operating expenses,~~rent expense primarily due to additional space in our Boston office, and a ~~$0.3~~$0.2 million increase in commissions to our nonemployee experts for the ~~first~~third quarter of fiscal 2019 as compared to the ~~first~~third quarter of fiscal ~~2018, as~~2018. Partially offsetting these increased expenses was a ~~higher percentage of our revenue for the quarter was sourced by our nonemployee experts, offset by a $0.7~~$0.4 million decrease in ~~rent expense~~other operating expenses primarily due ~~primarily~~ to a ~~$0.6~~decrease in legal and other professional fees and a $1.0 million ~~lease recapture charge~~decrease in ~~the first quarter of fiscal 2018.~~bad debt expense.

As a percentage of revenues, selling, general and administrative expenses decreased ~~slightly~~ to ~~21.5%~~19.4% for the ~~first~~third quarter of fiscal 2019 from ~~21.8%~~21.5% for the ~~first~~third quarter of fiscal 2018. Commissions to our nonemployee experts ~~increased slightly~~decreased to ~~3.2%~~2.6% of revenues for the ~~first~~third quarter of fiscal 2019 compared to ~~3.0%~~2.7% of revenues for the ~~first~~third quarter of fiscal 2018.

Provision for Income Taxes. The income tax provision was ~~$1.4~~$1.0 million and the effective tax rate was ~~23.5%~~14.2% for the ~~first~~third quarter of fiscal 2019 compared to $1.0 million and ~~17.5%~~20.9% for the ~~first~~third quarter of fiscal 2018. The effective tax rate for the ~~first~~third quarter of fiscal 2019 was ~~higher~~lower than the prior year primarily due to the release of tax reserves as a ~~reduced~~result of expiration of statutes of limitation, partially

offset by a decrease in the tax benefit related to ~~the accounting for stock-based~~share-based compensation. The effective tax rate in the ~~first~~third quarter of fiscal 2019 was lower than the combined federal and state statutory tax rate primarily due to the release of tax reserves as a result of expiration of statutes of limitation, the tax benefit ~~related to~~on share-based compensation, and the ~~accounting for stock-based compensation,~~remeasurement of U.S deferred tax assets and liabilities based on expected fiscal 2019 applicable state apportionment and statutory rates, partially offset by non-deductible items resulting from limitations on the deductibility of compensation paid to executive officers and the deductibility of meals and entertainment. The effective tax rate in the ~~first~~third quarter of fiscal 2018 was lower than the combined federal and state statutory tax

rate primarily due to the tax benefit ~~related to~~on share-based compensation and the ~~accounting for stock-based compensation, partially offset by non-deductible items referenced above.~~remeasurement of U.S deferred tax assets and liabilities based on expected fiscal 2018 applicable state apportionment and statutory rates.

Net Income. Net income ~~decreased~~increased by ~~$0.2~~$1.8 million to ~~$4.7~~$5.7 million for the ~~first~~third quarter of fiscal 2019 from ~~$4.9~~$3.9 million for the ~~first~~third quarter of fiscal 2018. The net income per diluted share was ~~$0.56~~$0.71 per share for the ~~first~~third quarter of fiscal 2019, compared to ~~$0.57~~$0.46 of net income per diluted share for the ~~first~~third quarter of fiscal 2018. Weighted average diluted shares outstanding decreased by approximately ~~234,000~~498,000 shares to approximately ~~8,346,000~~8,050,000 shares for the ~~first~~third quarter of fiscal 2019 from approximately ~~8,580,000~~8,548,000 shares for the ~~first~~third quarter of fiscal 2018. The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since the ~~first~~ fiscal ~~quarter of fiscal~~year-to-date period ended September 29, 2018, offset in part by the issuance or vesting of shares of restricted stock and time-vesting restricted stock units, and the exercise of stock options, since the ~~first~~third quarter of fiscal 2018.

Fiscal Year-to-Date Period Ended September 28, 2019 Compared to the Fiscal Year-to-Date Period Ended September 29, 2018

Revenues. Revenues increased by $23.2 million, or 7.5%, to $332.1 million for the fiscal year-to-date period ended September 28, 2019 from $308.9 million for the fiscal year-to-date period ended September 29, 2018. The increase in net revenue was a result of an increase in gross revenues of $23.8 million as compared to the fiscal year-to-date period ended September 29, 2018, offset by an increase in write-offs and reserves of $0.6 million as compared to the fiscal year-to-date period ended September 29, 2018. Utilization remained flat at 76% for the fiscal year-to-date period ended September 28, 2019 relative to the fiscal year-to-date period ended September 29, 2018, while consultant headcount increased during the period. Included in revenues are the effect of changes in currency exchange rates resulting in a decrease in revenue of $3.8 million for the fiscal year-to-date period ended September 28, 2019 and an increase in revenue of $3.3 million for the fiscal year-to-date period ended September 29, 2018, respectively.

Overall, revenues outside of the U.S. represented approximately 21% of total revenues for each of the fiscal year-to-date periods ended September 28, 2019 and September 29, 2018. Revenues derived from fixed-price engagements were 23% and 22% of total revenues for the fiscal year-to-date periods ended September 28, 2019 and September 29, 2018, respectively. These percentages of revenue derived from fixed-price engagements depend largely on the proportion of our revenues derived from our management consulting business, which typically has a higher concentration of fixed-price service contracts.

Costs of Services (exclusive of depreciation and amortization). Costs of services (exclusive of depreciation and amortization) increased by $20.6 million, or 9.7%, to $233.4 million for the fiscal year-to-date period ended September 28, 2019 from $212.8 million for the fiscal year-to-date period ended September 29, 2018. The increase in costs of services was due primarily to an increase of $5.2 million in employee compensation and fringe benefit costs associated with our increased consulting headcount, an increase in incentive and retention compensation costs of $7.7 million, an increase in forgivable loan and incentive awards amortization of $1.7 million, and an increase in the valuation of the contingent consideration of $3.4 million, partially offset by a decrease in stock compensation

expense of $1.1 million. Additionally, client reimbursable expenses increased by $4.3 million in the fiscal year-to-date period ended September 28, 2019 compared to the fiscal year-to-date period ended September 29, 2018. As a percentage of revenues, costs of services (exclusive of depreciation and amortization) increased to 70.3% for the fiscal year-to-date period ended September 28, 2019 from 68.9% for the fiscal year-to-date period ended September 29, 2018.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $1.2 million, or 1.8%, to $68.9 million for the fiscal year-to-date period ended September 28, 2019 from $67.7 million for the fiscal year-to-date period ended September 29, 2018. The primary contributor to this increase was an increase in employee and incentive compensation of $1.3 million, a $0.7 million increase in travel and entertainment, a $0.5 million increase in training and marketing, a $0.6 million increase in subscriptions and licenses, a $1.0 million increase in rent, and a $0.2 million increase in commissions to our nonemployee experts for the fiscal year-to-date period ended September 30, 2019 as compared to the fiscal year-to-date period ended September 29, 2018, offset by a $2.0 million decrease in legal and other professional fees, a $1.0 million decrease in bad debt expense, and a $0.2 million decrease in other operating expenses.

As a percentage of revenues, selling, general and administrative expenses decreased to 20.8% for the fiscal year-to-date period ended September 28, 2019 from 21.9% for the fiscal year-to-date period ended September 29, 2018 due primarily to the increase in revenues. Commissions to our nonemployee experts decreased to 2.9% of revenues for the fiscal year-to-date period ended September 28, 2019 compared to 3.0% of revenues for the fiscal year-to-date period ended September 29, 2018 as less revenue was sourced by nonemployee experts in the fiscal year-to-date period ended September 28, 2019 compared to the fiscal year-to-date period ended September 29, 2018.

Provision for Income Taxes. For fiscal year-to-date period ended September 28, 2019, our income tax provision was $4.8 million, and the effective tax rate was 22.9%, compared to a provision of $5.0 million and an effective tax rate of 24.1% for the fiscal year-to-date period ended September 29, 2018. The effective tax rate for the fiscal year-to-date period ended September 28, 2019 was lower than the prior year primarily due to the release of tax reserves as a result of expiration of statutes of limitation, partially offset by a decrease in the tax benefit related to share-based compensation. The effective tax rate in the fiscal year-to-date period ended September 28, 2019 was lower than the combined federal and state statutory tax rate primarily due to the release of tax reserves as a result of expiration of statutes of limitation, the tax benefit on share-based compensation, and the remeasurement of U.S deferred tax assets and liabilities based on the expected fiscal 2019 applicable state apportionment and statutory rates, partially offset by non-deductible items resulting from limitations on the deductibility of compensation paid to executive officers and the deductibility of meals and entertainment. The effective tax rate for the fiscal year-to-date period ended September 29, 2018 was lower than the combined federal and state statutory tax rate primarily due to the tax benefit on share-based compensation, partially offset by non-deductible items referenced above.

Net Income. Net income increased by $0.4 million to $16.0 million for the fiscal year-to-date period ended September 28, 2019 from $15.6 million for the fiscal year-to-date period ended September 29, 2018. The diluted net income per share was $1.94 for the fiscal year-to-date period ended September 28, 2019, compared to diluted net income per share of $1.81 for the fiscal year-to-date period ended September 29, 2018. Diluted weighted average shares outstanding decreased by approximately 410,000 to approximately 8,205,000 shares for the fiscal year-to-date period ended September 28, 2019 from approximately 8,615,000 shares for the fiscal year-to-date period ended September 29, 2018. The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since the fiscal year-to-date period ended September 29, 2018, offset in part by the issuance or vesting of shares of restricted stock and time-vesting restricted stock units, and the exercise of stock options, since the third quarter of fiscal 2018.

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

General. During the fiscal ~~quarter~~year-to-date period ended ~~March 30,~~September 28, 2019, cash and cash equivalents decreased by ~~$23.1~~$18.2 million. We completed the period with cash and cash equivalents of ~~$15.0~~$19.8 million and working capital (defined as current assets less current liabilities) of ~~$17.3~~$8.3 million. The principal drivers of the reduction of cash were payment of a significant portion of our fiscal 2018 performance bonuses in the ~~first~~second quarter of 2019, the funding of forgivable loans, the repurchase of shares, and capital expenditures related to the ~~funding~~buildout of ~~forgivable loans.~~the expanded Boston office space, offset by net borrowings of $36.0 million.

Of the total cash and cash equivalents held at ~~March 30,~~September 28, 2019, ~~$4.6~~$7.8 million was held within the U.S. We have sufficient sources of liquidity in the U.S., including cash from operations and availability on our revolving line of credit, to fund U.S. activities. At ~~March 30,~~September 28, 2019, we had outstanding borrowings on the revolving line of credit of ~~$39.0 million, which is expected to be paid within the next twelve months.~~$36.0 million.

Sources and Uses of Cash. During the fiscal ~~quarter~~year-to-date period ended ~~March 30,~~September 28, 2019, net cash used in operating activities was ~~$56.6~~$19.9 million. Net income was ~~$4.7~~$16.0 million for the fiscal ~~quarter~~year-to-date period ended ~~March 30,~~September 28, 2019. The primary factor in cash used in operations was the decrease in the "accounts payable, accrued expenses, and other liabilities" line item of our consolidated statement of cash flows of ~~$42.5 million due to the payment of a significant portion of our fiscal 2018 performance bonuses during the first quarter of fiscal 2019.~~$16.3 million. Other uses of cash included an increase of ~~$8.7~~$14.6 million in unbilled receivables, ~~and~~ a ~~$2.2~~$5.7 million increase in prepaid expenses and other current ~~assets.~~assets and a $5.8 million decrease in lease liabilities. The change in forgivable loans for the period of ~~$17.0~~$18.9 million was primarily driven by ~~$21.3~~$32.3 million of forgivable loan issuances, net of repayments, offset by ~~$4.3~~$13.3 million of forgivable loan amortization. Offsetting these uses of cash was a ~~$5.7~~$3.5 million decrease in accounts receivable, net. Cash provided by operations included non-cash ~~items including~~ depreciation and amortization expense of ~~$2.6~~$7.7 million, ~~and~~ share-based compensation expenses of ~~$0.9 million.~~$2.6 million, and $7.8 million in ROU amortization.

During the fiscal ~~quarter~~year-to-date period ended ~~March 30,~~September 28, 2019, net cash used in investing activities was ~~$0.8~~$12.5 million for capital ~~expenditures.~~expenditures primarily related to the buildout of the Boston and Cambridge, UK office space.

~~Net~~During the fiscal year-to-date period ended September 28, 2019, net cash provided by financing activities ~~during the first quarter of fiscal 2019~~ was ~~$34.1~~$14.8 million, primarily as a result of borrowings under the line of credit of ~~$39.0~~$36.0 million, net of repayments, and ~~$1.5~~$2.0 million received upon the issuance of shares of common stock related to the exercise of stock options. Offsetting these increases in cash were the tax withholding payments reimbursed by restricted shares of $0.4 million, payment of ~~$1.6~~$4.7 million of cash dividends to shareholders, and ~~$4.3~~$18.1 million of repurchases of common stock.

We are party to a credit agreement that provides us with a $125.0 million revolving credit facility and a $15.0 million sublimit for the issuance of letters of credit. We may use the proceeds of the revolving credit facility to provide working capital and for other general corporate purposes. Generally, we may repay any borrowings under the revolving credit facility at any time, but must repay all borrowings no later than October 24, 2022. There was ~~$39.0~~$36.0 million in outstanding borrowings under this revolving line of credit as of ~~March 30,~~September 28, 2019.

The amount available under this revolving line of credit is reduced by certain letters of credit outstanding, which amounted to ~~$3.9~~$4.4 million as of ~~March 30,~~September 28, 2019. Borrowings under the revolving credit facility bear interest at a rate per annum, at our election, of either (i) the adjusted base rate, as defined in the credit agreement, plus an applicable margin, which varies between 0.25% and 1.25% depending on our total leverage ratio as determined under the credit agreement, or (ii) the adjusted eurocurrency rate, as defined in the credit agreement, plus an applicable margin, which varies between 1.25% and 2.25% depending on our total leverage ratio. We are required to pay a fee on the unused portion of the revolving credit facility at a rate per annum that varies between 0.20% and 0.35% depending on our total leverage ratio. Borrowings under the revolving credit facility are secured by 100% of the stock of certain of our U.S. subsidiaries and 65% of the stock of certain of our foreign subsidiaries, which represent approximately ~~$29.7~~$30.7 million in net assets as of ~~March 30,~~September 28, 2019.

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

In order to attract and retain highly skilled professionals, we may issue forgivable loans or term loans to employees and non-employee experts. A portion of these loans is collateralized by key person life insurance. The forgivable loans have terms that are generally between three and eight years. The principal amount of forgivable loans and accrued interest is forgiven by us over the term of the loans, so long as the employee or non-employee expert continues employment or affiliation with us and complies with certain contractual requirements. The expense associated with the forgiveness of the principal amount of the loans is recorded as compensation expense over the service period, which is consistent with the term of the loans.

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

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

including our future profitability, the levels of our debt and equity, restrictions under our existing revolving line of credit with our bank, and the overall credit and equity market environments.

In February ~~2018 and February~~ 2019, our Board of Directors authorized ~~expansions~~an expansion to our existing share repurchase program, ~~each~~ authorizing the purchase of an additional $20.0 million of our common stock. We may repurchase shares under this program in open market purchases (including through any Rule 10b5-1 plan adopted by us) or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations. During the fiscal quarter and fiscal year-to-date period ended ~~March 30,~~September 28, 2019, we repurchased and retired ~~86,609~~157,402 shares and 421,112 shares, respectively, under our share repurchase program at an average price per share of ~~$50.25.~~$41.69 and $42.94, respectively. During the fiscal quarter and fiscal year-to-date period ended ~~March 31,~~September 29, 2018, we repurchased and retired ~~162,892~~215,585 shares and 378,477 shares, respectively, under our share repurchase program at an average price per share of ~~$51.13.~~$55.99 and $53.90, respectively. As of ~~March 30,~~September 28, 2019, we had approximately ~~$17.2~~$3.5 million available for future repurchases under our share repurchase program. We plan to finance future repurchases with available cash, cash from future operations and funds from our existing revolving credit facility. We expect to continue to repurchase shares under our share repurchase program.

We anticipate paying regular quarterly dividends each year. These dividends are anticipated to be funded through cash flow from operations, available cash on hand, and/or borrowings under our revolving credit facility. Although we anticipate paying regular quarterly dividends on our common stock for the foreseeable future, the declaration of any future dividends is subject to the discretion of our Board of Directors. During the fiscal ~~quarters~~quarter and fiscal year-to-date period ended ~~March 30,~~September 28, 2019, we paid dividends of $1.5 million and ~~March 31,~~$4.8 million, respectively. During the fiscal quarter and fiscal year-to-date period ended September 29, 2018, we paid dividends of ~~$1.7~~$1.4 million and ~~$1.5~~$4.3 million respectively, to our shareholders.

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

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


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ~~March 30,~~September 28, 2019
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


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

Title of Each Class		Trading Symbol		Name of Each Exchange on Which Registered

Common Stock, no par value		CRAI		Nasdaq Global Select Market


	Large accelerated filero		Accelerated filer ý		Non-accelerated filer o		Smaller reporting company o Emerging growth company o

~~Title of Each Class~~		~~Trading Symbol~~		~~Name of Each Exchange on Which Registered~~

~~Common Stock, no par value~~		~~CRAI~~		~~Nasdaq Global Select Market~~

Class		Outstanding at ~~April 26,~~October 25, 2019

Common Stock, no par value per share		~~8,040,916~~7,739,409 shares


PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements		31
	Condensed Consolidated Income Statements (unaudited)—Fiscal Quarters and Fiscal Year-to-Date Periods Ended ~~March 30,~~September 28, 2019 and ~~March 31,~~September 29, 2018		1
	Condensed Consolidated Statements of Comprehensive Income (unaudited)—Fiscal Quarters and Fiscal Year-to-Date Periods Ended September 28, 2019 and September 29, 2018		2
	Condensed Consolidated Balance Sheets (unaudited)—September 28, 2019 and December 29, 2018		3
	Condensed Consolidated Statements of ~~Comprehensive Income~~Cash Flows (unaudited)—~~Quarters~~Fiscal Year-to-Date Periods Ended ~~March 30,~~September 28, 2019 and ~~March 31, 2018~~	4
	~~Condensed Consolidated Balance Sheets (unaudited)—March 30, 2019 and December~~September 29, 2018	5
	~~Condensed Consolidated Statements of Cash Flows (unaudited)—Quarters Ended March 30, 2019 and March 31, 2018~~	64
	Condensed Consolidated Statements of Shareholders' Equity (unaudited)—~~Quarters~~Fiscal Year-to-Date Periods Ended ~~March 30,~~September 28, 2019 and ~~March 31,~~September 29, 2018		~~7-8~~5
	Notes to Condensed Consolidated Financial Statements (unaudited)		97
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		2423
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		31
ITEM 4.	Controls and Procedures		3132
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings		3233
ITEM 1A.	Risk Factors		3233
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		33
ITEM 3.	Defaults Upon Senior Securities		3334
ITEM 4.	Mine Safety Disclosures		3334
ITEM 5.	Other Information		3334
ITEM 6.	Exhibits		3435
Signatures			3536

	March 30, 2019			December 29, 2018

Beginning balance	$	6,197		$	5,137
Remeasurement of acquisition-related contingent consideration		(499	)		(244	)
Accretion		282			1,304

Ending balance	$	5,980		$	6,197



Basic weighted average shares outstanding	8,015	8,285
Stock options and restricted stock units	331	295

Diluted weighted average shares outstanding	8,346	8,580

	March 30, 2019

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	4,627
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	713

Period		(b) Average Price Paid per Share(1)			(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(2)

December 30, 2018 to January 26, 2019	—		—	—	$	1,593,768
January 27, 2019 to February 23, 2019	2,467	$	41.61	—	$	21,593,768
February 24, 2019 to March 30, 2019	92,299	$	50.24	86,609	$	17,241,813

Period		(b) Average Price Paid per Share			(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs

June 30, 2019 to July 27, 2019	—		—	—	$	10,075,100
July 28, 2019 to August 24, 2019	157,402	$	41.69	157,402	$	10,075,100
August 25, 2019 to September 28, 2019	—		—	—	$	3,512,496

Item No.			Description

	~~31.1~~10.1		Third Amendment to Lease dated September 9, 2019 by and between CRA International, Inc. and 1411 IC-SIC Property LLC.
	31.1		Rule 13a-14(a)/15d-14(a) certification of principal executive officer
	31.2		Rule 13a-14(a)/15d-14(a) certification of principal financial officer
	32.1		Section 1350 certification
	101		The following financial statements from CRA International, Inc.'s Quarterly Report on Form 10-Q for the fiscal quarter ended ~~March 30,~~September 28, 2019, formatted in XBRL (eXtensible Business Reporting Language), as follows: (i) Condensed Consolidated Income Statements (unaudited) for the fiscal quarters and the fiscal year to date periods ended ~~March 30,~~September 28, 2019 and ~~March 31,~~September 29, 2018, (ii) Condensed Consolidated Statements of Comprehensive Income (unaudited) for the fiscal quarters ended ~~March 30,~~September 28, 2019 and ~~March 31,~~September 29, 2018, (iii) Condensed Consolidated Balance Sheets (unaudited) as at ~~March 30,~~September 28, 2019 and December 30, 2018, (iv) Condensed Consolidated Statements of Cash Flows (unaudited) for the fiscal quarters ended ~~March 30,~~September 28, 2019 and ~~March 31,~~September 29, 2018, (v) Condensed Consolidated Statement of Shareholders' Equity (unaudited) for the fiscal quarters ended ~~March 30,~~September 28, 2019 and ~~March 31,~~September 29, 2018, and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).


	CRA INTERNATIONAL, INC.
Date: ~~May 2,~~October 31, 2019	By:	/s/ PAUL A. MALEH Paul A. Maleh President and Chief Executive Officer
Date: ~~May 2,~~October 31, 2019	By:	/s/ CHAD M. HOLMES Chad M. Holmes Chief Financial Officer, Executive Vice President and Treasurer
Date: ~~May 2,~~October 31, 2019	By	/s/ DOUGLAS C. MILLER Douglas C. Miller Vice President and Chief Accounting Officer