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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                        to       
Commission file number: 000-24049
________________________________________________________________________________________
CRA International, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts04-2372210
(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)
(617425-3000
(Registrant’s telephone number, including area code)
________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, no par valueCRAINasdaq Global Select Market
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 x 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 x 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.
Large accelerated filerAccelerated filerxNon-accelerated filerSmaller reporting companyEmerging growth company
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  No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at October 29, 2021
Common Stock, no par value per share7,427,079 shares




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CRA International, Inc.
INDEX
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
Fiscal Quarter EndedFiscal Year-to-Date
Period Ended
October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Revenues$136,412 $121,762 $431,167 $370,951 
Costs of services (exclusive of depreciation and amortization)95,980 88,304 306,396 269,462 
Selling, general and administrative expenses24,490 22,194 71,740 67,742 
Depreciation and amortization3,141 3,244 9,657 9,293 
Income from operations12,801 8,020 43,374 24,454 
Interest expense, net(183)(277)(791)(1,011)
Foreign currency gains (losses), net235 (217)(253)1,103 
Income before provision for income taxes12,853 7,526 42,330 24,546 
Provision for income taxes1,908 2,123 9,318 6,744 
Net income$10,945 $5,403 $33,012 $17,802 
Net income per share:
Basic$1.48 $0.69 $4.42 $2.28 
Diluted$1.44 $0.68 $4.31 $2.23 
Weighted average number of shares outstanding:
Basic7,375 7,771 7,440 7,780 
Diluted7,560 7,934 7,643 7,964 
See accompanying notes to the condensed consolidated financial statements.
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CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
(in thousands)
Fiscal Quarter EndedFiscal Year-to-Date
Period Ended
October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Net income$10,945 $5,403 $33,012 $17,802 
Other comprehensive income (loss)
Foreign currency translation adjustments, net of tax(1,028)1,589 (1,275)(302)
Comprehensive income$9,917 $6,992 $31,737 $17,500 
See accompanying notes to the condensed consolidated financial statements.
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CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share data)
October 2,
2021
January 2,
2021
ASSETS
Current assets:
Cash and cash equivalents$19,665 $45,677 
Accounts receivable, net of allowances of $3,915 at October 2, 2021 and $3,595 at January 2, 2021
108,035 111,595 
Unbilled services, net of allowances of $1,204 at October 2, 2021 and $1,000 at January 2, 2021
65,799 40,881 
Prepaid expenses and other current assets10,740 7,068 
Forgivable loans9,662 14,749 
Total current assets213,901 219,970 
Property and equipment, net55,577 62,878 
Goodwill88,966 89,187 
Intangible assets, net4,400 5,108 
Right-of-use assets113,759 122,144 
Deferred income taxes11,125 9,667 
Forgivable loans, net of current portion40,387 46,864 
Other assets1,792 2,692 
Total assets$529,907 $558,510 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable$22,916 $19,430 
Accrued expenses128,701 136,376 
Deferred revenue and other liabilities5,826 9,866 
Current portion of lease liabilities14,188 13,557 
Current portion of deferred compensation4,439 20,902 
Revolving line of credit6,000  
Total current liabilities182,070 200,131 
Non-current liabilities:
Deferred compensation and other non-current liabilities14,074 9,188 
Non-current portion of lease liabilities128,565 139,447 
Deferred income taxes913 725 
Total non-current liabilities143,552 149,360 
Commitments and contingencies (Note 10)
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; 7,396,296 and 7,693,497 shares issued and outstanding at October 2, 2021 and January 2, 2021, respectively
676 503 
Retained earnings213,367 216,999 
Accumulated other comprehensive loss(9,758)(8,483)
Total shareholders’ equity204,285 209,019 
Total liabilities and shareholders’ equity$529,907 $558,510 
See accompanying notes to the condensed consolidated financial statements.
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CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
Fiscal Year-to-Date
Period Ended
October 2,
2021
September 26,
2020
OPERATING ACTIVITIES:
Net income$33,012 $17,802 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization9,657 9,293 
Right-of-use asset amortization9,711 8,900 
Deferred income taxes(1,357)496 
Share-based compensation expense2,830 2,357 
Accounts receivable allowances327 (894)
Unrealized foreign currency remeasurement (gains) losses, net(220)129 
Changes in operating assets and liabilities:
Accounts receivable2,889 1,952 
Unbilled services, net(25,213)(14,994)
Prepaid expenses and other current assets, and other assets(2,850)(979)
Forgivable loans9,304 (18,963)
Incentive cash awards5,030 4,862 
Accounts payable, accrued expenses, and other liabilities(17,668)(15,087)
Lease liabilities(11,549)(5,526)
Net cash provided by (used in) operating activities13,903 (10,652)
INVESTING ACTIVITIES:
Purchases of property and equipment(1,730)(15,742)
Net cash used in investing activities(1,730)(15,742)
FINANCING ACTIVITIES:
Issuance of common stock, principally stock option exercises5,005 1,667 
Borrowings under revolving line of credit72,000 77,000 
Repayments under revolving line of credit(66,000)(39,000)
Tax withholding payments reimbursed by shares(588)(390)
Cash paid for contingent consideration(2,357) 
Cash dividends paid(5,903)(5,412)
Repurchase of common stock(39,977)(8,807)
Net cash provided by (used in) financing activities(37,820)25,058 
Effect of foreign exchange rates on cash and cash equivalents(365)(195)
Net decrease in cash and cash equivalents(26,012)(1,531)
Cash and cash equivalents at beginning of period45,677 25,639 
Cash and cash equivalents at end of period$19,665 $24,108 
Noncash investing and financing activities:
Purchases of property and equipment not yet paid for$7 $3,923 
Asset retirement obligations$ $155 
Right-of-use assets obtained in exchange for lease obligations$1,751 $2,601 
Restricted common stock issued for contingent consideration$2,250 $ 
Supplemental cash flow information:
Cash paid for taxes$12,484 $5,933 
Cash paid for interest$528 $932 
Cash paid for amounts included in operating lease liabilities$15,556 $13,736 
See accompanying notes to the condensed consolidated financial statements.
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CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED OCTOBER 2, 2021 (unaudited)
(in thousands, except share data)
Common StockRetained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
Shares
Issued
Amount
BALANCE AT JANUARY 2, 20217,693,497 $503 $216,999 $(8,483)$209,019 
Net income— — 10,501 — 10,501 
Foreign currency translation adjustment— — — (111)(111)
Issuance of restricted common stock for contingent consideration40,039 2,250 — — 2,250 
Exercise of stock options41,008 1,113 — — 1,113 
Share-based compensation expense— 842 — — 842 
Restricted shares vestings29,494 — — — — 
Redemption of vested employee restricted shares for tax withholding(9,895)(588)— — (588)
Shares repurchased(166,552)(4,120)(5,522)— (9,642)
Accrued dividends on unvested shares— — 5 — 5 
Cash dividends paid ($0.26 per share)
— — (2,061)— (2,061)
BALANCE AT APRIL 3, 20217,627,591 $ $219,922 $(8,594)$211,328 
Net income— — 11,566 — 11,566 
Foreign currency translation adjustment— — — (136)(136)
Exercise of stock options48,562 1,387 — — 1,387 
Share-based compensation expense— 980 — — 980 
Restricted shares vestings1,006 — — — — 
Shares repurchased(337,837)(382)(24,953)— (25,335)
Accrued dividends on unvested shares— — (50)— (50)
Cash dividends paid ($0.26 per share)
— — (1,909)— (1,909)
BALANCE AT JULY 3, 20217,339,322 $1,985 $204,576 $(8,730)$197,831 
Net income— — 10,945 — 10,945 
Foreign currency translation adjustment— — — (1,028)(1,028)
Exercise of stock options98,310 2,505 — — 2,505 
Share-based compensation expense— 1,008 — — 1,008 
Restricted shares vestings11,676 — — — — 
Shares repurchased(53,012)(4,822)(178)— (5,000)
Accrued dividends on unvested shares— — (43)— (43)
Cash dividends paid ($0.26 per share)
— — (1,933)— (1,933)
BALANCE AT OCTOBER 2, 20217,396,296 $676 $213,367 $(9,758)$204,285 
See accompanying notes to the condensed consolidated financial statements.
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CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED SEPTEMBER 26, 2020 (unaudited)
(in thousands, except share data)
Common StockRetained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
Shares
Issued
Amount
BALANCE AT DECEMBER 28, 20197,814,797 $9,265 $200,249 $(11,763)$197,751 
Balance at December 29, 2019, as previously reported7,814,797 $9,265 $200,249 $(11,763)$197,751 
Cumulative effect of a change in accounting principle related to ASC 326— — (203)— (203)
Balance at December 29, 2019, as adjusted7,814,797 $9,265 $200,046 $(11,763)$197,548 
Net income— — 6,468 — 6,468 
Foreign currency translation adjustment— — — (2,427)(2,427)
Exercise of stock options8,200 151 — — 151 
Share-based compensation expense— 655 — — 655 
Restricted shares vestings23,884 — — — — 
Redemption of vested employee restricted shares for tax withholding(7,843)(390)— — (390)
Shares repurchased(82,613)(3,810)— — (3,810)
Accrued dividends on unvested shares— — 1 — 1 
Cash dividends paid ($0.23 per share)
— — (1,836)— (1,836)
BALANCE AT MARCH 28, 20207,756,425 $5,871 $204,679 $(14,190)$196,360 
Net income— — 5,931 — 5,931 
Foreign currency translation adjustment— — — 536 536 
Exercise of stock options22,611 418 — — 418 
Share-based compensation expense— 796 — — 796 
Restricted shares vestings513 — — — — 
Accrued dividends on unvested shares— — (38)— (38)
Cash dividends paid ($0.23 per share)
— — (1,788)— (1,788)
BALANCE AT JUNE 27, 20207,779,549 $7,085 $208,784 $(13,654)$202,215 
Net income— — 5,403 — 5,403 
Foreign currency translation adjustment— — — 1,589 1,589 
Exercise of stock options57,219 1,098 — — 1,098 
Share-based compensation expense— 906 — — 906 
Restricted shares vestings12,936 — — — — 
Shares repurchased(110,154)(4,997)— — (4,997)
Accrued dividends on unvested shares— — (31)— (31)
Cash dividends paid ($0.23 per share)
— — (1,788)— (1,788)
BALANCE AT SEPTEMBER 26, 20207,739,550 $4,092 $212,368 $(12,065)$204,395 
See accompanying notes to the condensed consolidated financial statements.
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Table of Contents
CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. Summary of Significant Accounting Policies
Description of Business
CRA International, Inc. (“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.
Basis of Presentation
The unaudited condensed consolidated financial statements include the accounts of CRA International, Inc. and its wholly-owned subsidiaries (collectively the “Company”), which require consolidation after the elimination of intercompany accounts and transactions. 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 presentation 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 January 2, 2021 included in CRA’s Annual Report on Form 10-K filed with the SEC on March 4, 2021 (the “2020 Form 10-K”). Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported results of operations, financial position, or cash flows.
Estimates
The preparation of financial statements in conformity with GAAP requires management to make significant estimates and judgments that affect the reported amounts of assets and liabilities, as well as the related disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of consolidated revenues and expenses during the reporting period. Estimates in these condensed consolidated financial statements include, but are not limited to, allowances for accounts receivable and unbilled services, revenue recognition on fixed-price contracts, 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, 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 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.
Common Stock and Equity
Equity transactions consist primarily of the repurchase by CRA of its common stock under its share repurchase program and the recognition of compensation expense and issuance of common stock under CRA’s 2006 Equity Incentive Plan. The Company repurchases its common stock under its share repurchase program in open market purchases (including through any Rule 10b5-1 plan adopted by CRA) or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations. During the second fiscal quarter, CRA repurchased shares of its common stock through a modified "Dutch auction" self-tender offer, as further described in Note 11.
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CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

The purchase price of common stock repurchases is first charged against available paid-in capital (“PIC”) until PIC is exhausted, after which repurchases will be charged to retained earnings. CRA’s common stock has no par value. All shares repurchased have been retired.
Recent Accounting Standards Adopted
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
CRA adopted Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”) on the first day of fiscal 2021. ASU 2019-12 simplifies or clarifies accounting for income taxes by changing prior guidance related to accounting for year-to-date losses in interim periods, accounting for tax law changes in interim periods, determining when a deferred tax liability is recognized for foreign subsidiaries that transition to or from being accounted for as equity method investments, application of income tax guidance to franchise taxes that are partially based on income, and making an intra-period allocation in situations where there is a loss in continuing operations and income or gain from other items. ASU 2019-12 also introduces new guidance to evaluate whether a step up in the tax basis of goodwill relates to a business combination or a separate transaction and provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax. The adoption of the new standard did not have a material impact on CRA's financial position, results of operations, cash flows, or disclosures on the date of transition.
2. Revenue Recognition
The contracts CRA enters into and operates under specify whether the projects are billed on a time-and-materials or a fixed-price basis. Time-and-materials contracts are typically used for litigation, regulatory, and financial consulting projects while fixed-price contracts are principally used for management consulting projects. In general, project costs are classified in costs of services and are based on the direct salary of CRA’s employee consultants on the engagement, plus all direct expenses incurred to complete the project, including any amounts billed to CRA by its non-employee experts.
Disaggregation of Revenue
The following tables disaggregate CRA’s revenue by type of contract and geographic location (in thousands):
Fiscal Quarter EndedFiscal Year-to-Date
Period Ended
Type of ContractOctober 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Consulting services revenues:
Fixed-price$31,741 $26,197 $101,419 $85,968 
Time-and-materials104,671 95,565 329,748 284,983 
Total$136,412 $121,762 $431,167 $370,951 
Fiscal Quarter EndedFiscal Year-to-Date
Period Ended
Geographic BreakdownOctober 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Consulting services revenues:
United States$109,387 $96,117 $347,444 $296,273 
United Kingdom20,177 20,358 63,203 57,355 
Other6,848 5,287 20,520 17,323 
Total$136,412 $121,762 $431,167 $370,951 
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CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Reserves for Variable Consideration and Credit Risk
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 specific price concessions and those expected to be extended to CRA customers estimated by CRA's historical realization rates. Reserves for variable consideration are recorded as a component of the allowances for accounts receivable and unbilled services on the condensed consolidated balance sheets. Adjustments to the reserves for variable consideration are included in revenues on the condensed consolidated statements of operations.
CRA also maintains allowances for accounts receivable and unbilled services for estimated losses resulting from clients’ failure to make required payments. CRA adopted ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASC 326") on the first day of fiscal 2020, which changed the method CRA utilizes to estimate reserves related to credit risk. As a result of the adoption, CRA recognized a $0.2 million cumulative-effect increase to allowances for accounts receivable and unbilled services and a reduction to the fiscal 2020 opening balance of retained earnings.
The following table presents CRA's bad debt expense, net of recoveries of previously written off allowances (in thousands):
Fiscal Quarter EndedFiscal Year-to-Date
Period Ended
October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Bad debt expense (recovery), net$55 $271 $44 $228 
Reimbursable Expenses
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 EndedFiscal Year-to-Date
Period Ended
October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Reimbursable expenses$15,727 $13,150 $49,382 $44,395 
Contract Balances from Contracts with Customers
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. The contract assets balance was immaterial as of October 2, 2021 and January 2, 2021.
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 performance obligations have been satisfied and all revenue recognition criteria have been met. The following table presents the closing balances of CRA's contract liabilities (in thousands):
October 2,
2021
January 2,
2021
Contract liabilities$2,189 $5,527 
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CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

CRA recognized the following revenue that was included in the contract liabilities balance as of the opening of the respective period or for performance obligations satisfied in previous periods (in thousands):
Fiscal Quarter EndedFiscal Year-to-Date
Period Ended
October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Amounts included in contract liabilities at the beginning of the period$1,603 $1,766 $5,051 $3,262 
Performance obligations satisfied in previous periods$3,925 $3,987 $2,805 $4,363 
3. Forgivable Loans
In order to attract and retain highly skilled professionals, CRA may issue forgivable loans to employees and non-employee experts, certain of which may be denominated in local currencies. A portion of these loans is collateralized. The principal amount of forgivable loans and accrued interest is forgiven by CRA over the term of the loans, so long as the employee or non-employee expert continues employment or affiliation with CRA 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.
The following table presents forgivable loan activity for the respective periods (in thousands):
Fiscal Year-to-Date
Period Ended
Fiscal Year Ended
October 2,
2021
January 2,
2021
Beginning balance$61,613 $55,141 
Advances9,635 42,418 
Reclassifications from accrued expenses or to other assets (1)(2,229)(9,713)
Amortization(18,909)(26,628)
Effects of foreign currency translation(61)395 
Ending balance$50,049 $61,613 
Current portion of forgivable loans$9,662 $14,749 
Non-current portion of forgivable loans$40,387 $46,864 
_______________________________
(1)Relates to the reclassification of performance awards previously recorded as accrued expenses or forgivable loans that have been reclassified to other receivables.
4. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the fiscal year-to-date period ended October 2, 2021 are summarized as follows (in thousands):
Goodwill$161,080 
Accumulated goodwill impairment(71,893)
Goodwill, net at January 2, 202189,187 
Foreign currency translation adjustment(221)
Goodwill, net at October 2, 2021 (1)$88,966 
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CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

_______________________________
(1)Goodwill, net at October 2, 2021, is comprised of goodwill of $160.9 million and accumulated impairment of $71.9 million.
Intangible assets that are separable from goodwill and have determinable useful lives are valued separately and amortized using the straight-line method over their expected useful lives. The components of acquired identifiable intangible assets are as follows (in thousands):
October 2, 2021January 2, 2021
Useful Life (in years)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Non-competition agreements5$280 $(262)$18 $280 $(219)$61 
Customer relationships
8 to 10
8,220 (3,838)4,382 12,120 (7,073)5,047 
Total$8,500 $(4,100)$4,400 $12,400 $(7,292)$5,108 
Amortization expense related to intangible assets was $0.2 million and $0.7 million for the fiscal quarter and fiscal year-to-date period ended October 2, 2021, respectively, and $0.3 million and $1.0 million for the fiscal quarter and fiscal year-to-date period ended September 26, 2020, respectively. There were no impairment losses related to intangible assets during the fiscal year-to-date period ended October 2, 2021 or during the fiscal year ended January 2, 2021.
5. Accrued Expenses
Accrued expenses consist of the following (in thousands):
October 2,
2021
January 2,
2021
Compensation and related expenses$119,394 $123,540 
Income taxes payable655 1,927 
Performance awards571 2,176 
Other professional fees1,677 1,541 
Direct project accruals3,012 3,988 
Accrued leasehold improvements39 52 
Other3,353 3,152 
Total accrued expenses$128,701 $136,376 
As of October 2, 2021 and January 2, 2021, approximately $93.5 million and $102.6 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”
6. Income Taxes
For the fiscal quarters ended October 2, 2021 and September 26, 2020, CRA’s effective income tax rate (“ETR”) was 14.8% and 28.2%, respectively. The ETR for the third quarter of fiscal 2021 was lower than the third quarter of fiscal 2020 primarily due to an increase in the tax benefit related to the accounting for stock-based compensation.
For the fiscal year-to-date periods ended October 2, 2021 and September 26, 2020, CRA's ETR was 22.0% and 27.5%, respectively. The ETR for the current fiscal year-to-date period was lower than the prior year-to-date period primarily due to an increase in the tax benefit related to the accounting for stock-based compensation, partially offset by the enactment of the U.K. statutory tax rate increase during the second fiscal quarter whereby the U.K.'s long-term deferred tax liabilities were remeasured.
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CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

During the fourth quarter of fiscal 2020, CRA considered the operating needs of the United Kingdom ("U.K.") subsidiary, as well as the tax implications of no longer asserting indefinite reinvestment with respect to the U.K. operations. As a result of both a qualitative and quantitative analysis, previously taxed and untaxed post fiscal 2018 U.K. earnings were no longer considered permanently reinvested. Deferred taxes that are a consequence of foreign exchange translation resulting from earnings that are no longer considered permanently reinvested are recorded as a component of foreign currency translation adjustments on the condensed consolidated statements of comprehensive income. For the fiscal year-to-date period ended October 2, 2021, CRA’s U.K. subsidiary distributed approximately £12.0 million of both previously taxed and untaxed earnings to CRA’s U.S. parent entity, the foreign currency translation impact of which was immaterial. Deferred income taxes or foreign withholding taxes, estimated to be $0.3 million, have not been recorded for other jurisdictions as those earnings are considered to be permanently reinvested.
7. Net Income Per Share
CRA calculates basic earnings per share using the two-class method. CRA calculates diluted earnings per share using the more dilutive of either the two-class method or treasury stock method. The two-class method was more dilutive for the fiscal quarters and fiscal year-to-date periods ended October 2, 2021 and September 26, 2020.
Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all the net earnings for the period had been distributed. CRA's participating securities consist of unvested share-based payment awards that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders. Net earnings allocable to these participating securities were not material for the fiscal quarters and fiscal year-to-date periods ended October 2, 2021 and September 26, 2020.
The following table presents a reconciliation from net income to the net income available to common shareholders (in thousands):
Fiscal Quarter EndedFiscal Year-to-Date
Period Ended
October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Net income, as reported$10,945 $5,403 $33,012 $17,802 
Less: net income attributable to participating shares43 22 128 53 
Net income available to common shareholders$10,902 $5,381 $32,884 $17,749 
The following table presents a reconciliation of basic to diluted weighted average shares of common stock outstanding (in thousands):
Fiscal Quarter EndedFiscal Year-to-Date
Period Ended
October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Basic weighted average shares outstanding7,375 7,771 7,440 7,780 
Dilutive stock options and restricted stock units185 163 203 184 
Diluted weighted average shares outstanding7,560 7,934 7,643 7,964 
The following table presents 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. For the fiscal quarter and fiscal year-to-date period ended September 26, 2020, the share-based awards each period were anti-dilutive because their exercise price exceeded the average market price over the respective period. There were no anti-dilutive shares for the fiscal quarter and fiscal year-to-date period ended October 2, 2021.
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CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Fiscal Quarter EndedFiscal Year-to-Date
Period Ended
October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Anti-dilutive share-based awards excluded 76,399  62,808 
8. Fair Value of Financial Instruments
As of October 2, 2021, CRA did not have any financial instruments measured at fair value on a recurring basis. The following table presents CRA’s financial instruments recorded in the condensed consolidated financial statements at January 2, 2021, which are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
January 2, 2021
Level 1Level 2Level 3
Assets:
Money market mutual funds$150 $ $ 
Total Assets$150 $ $ 
Liabilities:
Contingent consideration liability$ $ $14,620 
Total Liabilities$ $ $14,620 
As of January 2, 2021, the fair value of CRA’s money market mutual fund share holdings was $1.00 per share.
The contingent consideration liability pertained to estimated future contingent consideration payments related to the acquisition of C1 Consulting, LLC, an independent consulting firm, and its wholly-owned subsidiary C1 Associates (collectively, “C1”). The following table summarizes the changes in the contingent consideration liabilities (in thousands):
Fiscal Year-to-Date Period EndedFiscal Year Ended
October 2,
2021
January 2,
2021
Beginning balance$14,620 $11,579 
Remeasurement of acquisition-related contingent consideration 1,156 
Accretion380 1,885 
Payment of contingent consideration(15,000) 
Ending balance$ $14,620 
9. Credit Agreement
CRA is party to an amended and restated credit agreement that provides the Company with a $175.0 million revolving credit facility, which reflects an increase to the capacity by $50.0 million per an amendment to the credit agreement on January 12, 2021, and includes 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 any borrowings must be repaid no later than October 24, 2022. There was $6.0 million in borrowings outstanding under this revolving credit facility as of October 2, 2021. There were no borrowings outstanding under this facility as of January 2, 2021.
As of October 2, 2021, the amount available under this revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $4.2 million. Under the credit agreement, CRA must comply with various financial and non-
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CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

financial covenants. Compliance with these financial covenants is tested on a fiscal quarterly basis. As of October 2, 2021, CRA was in compliance with the covenants of its credit agreement.
10. Commitments and Contingencies
As described in the previous note, CRA is party to standby letters of credit with its bank in support of minimum future lease payments under certain operating leases for office space.
CRA is subject to legal actions arising in the ordinary course of business. In management’s opinion, based on current knowledge, CRA believes it has adequate legal defenses or insurance coverage, or both, with respect to the eventuality of such actions. CRA does not believe any settlement or judgment relating to any pending legal action would materially affect its financial position or results of operations. However, the outcome of such legal actions is inherently unpredictable and subject to inherent uncertainties.
11. Self-Tender Offer
On March 8, 2021, CRA commenced a modified "Dutch auction" self-tender offer to purchase up to $25.0 million in value of shares of its common stock at a price of not less than $66.25 per share nor greater than $76.00 per share. The self-tender offer expired on April 5, 2021. On April 8, 2021, CRA paid $25.3 million, including transaction costs, to repurchase 337,837 shares at a purchase price of $74.00 per share. The purchase price and transaction costs were funded from the revolving credit facility and cash on hand. The repurchased shares were retired.
12. Subsequent Events
On November 4, 2021, CRA announced that its Board of Directors declared a quarterly cash dividend of $0.31 per common share, payable on December 10, 2021 to shareholders of record as of November 30, 2021.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
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.
Critical Accounting Policies and Estimates
Our critical accounting policies involving the more significant estimates and judgments used in the preparation of our financial statements as of October 2, 2021 remain unchanged from January 2, 2021. Please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 2, 2021, filed with the Securities and Exchange Commission on March 4, 2021 (the "2020 Form 10-K") for details on these critical accounting policies.
Recent Accounting Standards
Please refer to the sections captioned “Recent Accounting Standards Adopted” included in Note 1, “Summary of Significant Accounting Policies” in Part I, Item I, “Financial Statements” of this report.
Results of Operations—For the Fiscal Quarter and Fiscal Year-to-Date Period Ended October 2, 2021, Compared to the Fiscal Quarter and Fiscal Year-to-Date Period Ended September 26, 2020
The following table provides operating information as a percentage of revenues for the periods indicated:
Fiscal Quarter
Ended
Fiscal Year-to-Date
Period Ended
October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Revenues100.0 %100.0 %100.0 %100.0 %
Costs of services (exclusive of depreciation and amortization)70.4 72.5 71.1 72.6 
Selling, general and administrative expenses18.0 18.2 16.6 18.3 
Depreciation and amortization2.3 2.7 2.2 2.5 
Income from operations9.4 6.6 10.1 6.6 
Interest expense, net(0.1)(0.2)(0.2)(0.3)
Foreign currency gains (losses), net0.2 (0.2)(0.1)0.3 
Income before provision for income taxes9.4 6.2 9.8 6.6 
Provision for income taxes1.4 1.7 2.2 1.8 
Net income8.0 %4.4 %7.7 %4.8 %

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Fiscal Quarter Ended October 2, 2021, Compared to the Fiscal Quarter Ended September 26, 2020
Revenues. Revenues increased by $14.6 million, or 12.0%, to $136.4 million for the third quarter of fiscal 2021 from $121.8 million for the third quarter of fiscal 2020. The increase in net revenue was a result of an increase in gross revenues of $13.7 million as compared to the third quarter of fiscal 2020, as well as a decrease in write-offs and reserves of $0.9 million compared to the third quarter of fiscal 2020. Utilization increased to 73% for the third quarter of fiscal 2021 from 69% for the third quarter of fiscal 2020, while consultant headcount grew 6.8% from 826 at the end of the third quarter of fiscal 2020 to 882 at the end of the third quarter of fiscal 2021.
Overall, revenues outside of the U.S. represented approximately 20% and 21% of net revenues for the third quarters of fiscal 2021 and fiscal 2020, respectively. Revenues derived from fixed-price projects increased to 23% of net revenues for the third quarter of fiscal 2021 compared with 22% of net revenue for the third quarter of fiscal 2020. The percentage of revenue derived from fixed-price projects depends largely on the proportion of our revenues derived from our management consulting business, which typically has a higher concentration of fixed-price service contracts.
Costs of Services (exclusive of depreciation and amortization). Costs of services (exclusive of depreciation and amortization) increased by $7.7 million, or 8.7%, to $96.0 million for the third quarter of fiscal 2021 from $88.3 million for the third quarter of fiscal 2020. The increase in costs of services was due primarily to an increase of $3.0 million in employee compensation and fringe benefit costs attributable to our increased consultant headcount, an increase in incentive and retention compensation costs of $2.3 million, and an increase in forgivable loan amortization of $0.7 million, partially offset by a decrease in the valuation expense of the contingent consideration of $0.9 million. Additionally, client reimbursable expenses increased by $2.6 million in the third quarter of fiscal 2021 compared to the third quarter of fiscal 2020. As a percentage of revenues, costs of services (exclusive of depreciation and amortization) decreased to 70.4% for the third quarter of fiscal 2021 from 72.5% for the third quarter of fiscal 2020.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $2.3 million, or 10.3%, to $24.5 million for the third quarter of fiscal 2021 from $22.2 million for the third quarter of fiscal 2020. Within this category of expenses, there was a $0.8 million increase in commissions to our non-employee experts, a $0.4 million increase in employee and incentive compensation, a $0.7 million increase in travel and entertainment, and a $0.6 million increase in miscellaneous and other costs. Partially offsetting the increase in these expenses was a $0.2 million decrease in bad debt expense for the third quarter of fiscal 2021 as compared to the third quarter of fiscal 2020.
As a percentage of revenues, selling, general and administrative expenses decreased to 18.0% for the third quarter of fiscal 2021 from 18.2% for the third quarter of fiscal 2020. Commissions to our non-employee experts increased to 3.2% of revenues for the third quarter of fiscal 2021 compared to 3.0% of revenues for the third quarter of fiscal 2020.
Provision for Income Taxes. The income tax provision was $1.9 million and the effective tax rate ("ETR") was 14.8% for the third quarter of fiscal 2021 compared to $2.1 million and 28.2% for the third quarter of fiscal 2020. The ETR for the third quarter of fiscal 2021 was lower than the third quarter of fiscal 2020 primarily due to an increase in the tax benefit related to the accounting for stock-based compensation. The ETR for the third quarter of fiscal 2021 was lower than the combined federal and state statutory tax rate due to the tax benefit related to the accounting for stock-based compensation, partially offset by non-deductible items resulting primarily from limitations of compensation paid to executive officers. The ETR for the third quarter of fiscal 2020 was higher than the combined federal and state statutory tax rate due to non-deductible items resulting primarily from limitations of compensation paid to executive officers as well as the remeasurement of U.S. deferred tax assets and liabilities, partially offset by the tax benefit related to the accounting for stock-based compensation.
Net Income. Net income increased by $5.5 million to $10.9 million for the third quarter of fiscal 2021 from $5.4 million for the third quarter of fiscal 2020. The net income per diluted share was $1.44 per share for the third quarter of fiscal 2021, compared to $0.68 of net income per diluted share for the third quarter of fiscal 2020. Weighted average diluted shares outstanding decreased by approximately 374,000 shares to approximately 7,560,000 shares for the third quarter of fiscal 2021 from approximately 7,934,000 shares for the third quarter of fiscal 2020. The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since September 26, 2020, offset in part by the vesting of shares of restricted stock and time-vesting restricted stock units, the issuance of common stock for contingent consideration, and the exercise of stock options since September 26, 2020.
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Fiscal Year-to-Date Period Ended October 2, 2021, Compared to the Fiscal Year-to-Date Period Ended September 26, 2020
Revenues. Revenues increased by $60.2 million, or 16.2%, to $431.2 million for the fiscal year-to-date period ended October 2, 2021 from $371.0 million for the fiscal year-to-date period ended September 26, 2020. The increase in net revenue was a result of an increase in gross revenues of $61.3 million as compared to the fiscal year-to-date period ended September 26, 2020, partially offset by an increase in write-offs and reserves of $1.1 million as compared to the fiscal year-to-date period ended September 26, 2020. Utilization increased to 75% for the fiscal year-to-date period ended October 2, 2021 from 69% for the fiscal year-to-date period ended September 26, 2020, while consultant headcount grew 6.8% from 826 at the end of the third quarter of fiscal 2020 to 882 at the end of the third quarter of fiscal 2021.
Overall, revenues outside of the U.S. represented approximately 19% and 20% of net revenues for the fiscal year-to-date periods ended October 2, 2021 and September 26, 2020, respectively. Revenues derived from fixed-price projects increased to 24% of net revenues for the fiscal year-to-date period ended October 2, 2021 compared with 23% of net revenue for the year-to-date period ended September 26, 2020. The percentage of revenue derived from fixed-price projects depends largely on the proportion of our revenues derived from our management consulting business, which typically has a higher concentration of fixed-price service contracts.
Costs of Services (exclusive of depreciation and amortization). Costs of services (exclusive of depreciation and amortization) increased by $36.9 million, or 13.7%, to $306.4 million for the fiscal year-to-date period ended October 2, 2021 from $269.5 million for the fiscal year-to-date period ended September 26, 2020. The increase in costs of services was due primarily to an increase of $11.0 million in employee compensation and fringe benefit costs associated with our increased consulting headcount, an increase in incentive and retention compensation costs of $20.8 million, and an increase in forgivable loan amortization of $1.9 million, partially offset by a decrease in expense related to other compensation of $0.3 million and a decrease in the valuation expense of the contingent consideration of $1.5 million. Additionally, client reimbursable expenses increased by $5.0 million in the fiscal year-to-date period ended October 2, 2021 compared to the fiscal year-to-date period ended September 26, 2020. As a percentage of revenues, costs of services (exclusive of depreciation and amortization) decreased to 71.1% for the fiscal year-to-date period ended October 2, 2021 from 72.6% for the fiscal year-to-date period ended September 26, 2020.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $4.0 million, or 5.9%, to $71.7 million for the fiscal year-to-date period ended October 2, 2021 from $67.7 million for the fiscal year-to-date period ended September 26, 2020. Within this category of expenses, there was a $3.5 million increase in commissions to our non-employee experts, a $1.8 million increase in employee and incentive compensation, and a $1.3 million increase in miscellaneous and other costs. Partially offsetting the increase in these expenses was a $0.5 million decrease in travel and entertainment, a $0.5 million decrease in legal and other professional services fees, a $1.4 million decrease in rent expense, and a $0.2 million decrease in bad debt expense for the fiscal year-to-date period ended October 2, 2021 as compared to the fiscal year-to-date period ended September 26, 2020.
As a percentage of revenues, selling, general and administrative expenses decreased to 16.6% for the fiscal year-to-date period ended October 2, 2021 from 18.3% for the fiscal year-to-date period ended September 26, 2020. Commissions to our non-employee experts increased to 3.0% of revenues for the fiscal year-to-date period ended October 2, 2021 compared to 2.5% of revenues for the fiscal year-to-date period ended September 26, 2020.
Provision for Income Taxes. For the fiscal year-to-date period ended October 2, 2021, our income tax provision was $9.3 million, and the ETR was 22.0%, compared to $6.7 million and 27.5% for the fiscal year-to-date period ended September 26, 2020. The ETR for the current fiscal year-to-date period was lower than the prior year-to-date period primarily due to an increase in the tax benefit related to the accounting for stock-based compensation, partially offset by the enactment of the U.K. statutory tax rate increase during the second fiscal quarter whereby the U.K.'s long-term deferred tax liabilities were remeasured. The ETR in the fiscal year-to-date period ended October 2, 2021 was lower than the combined federal and state statutory tax rate due to the tax benefit related to accounting for stock-based compensation, partially offset by non-deductible items resulting primarily from limitations on the deductibility of compensation paid to executive officers and the impact of the U.K. statutory tax rate change. The ETR for the fiscal year-to-date period ended September 26, 2020 was the same as the combined federal and state statutory tax rate but included increases in the rate for non-deductible compensation paid to executive officers and the remeasurement of U.S. deferred tax assets and liabilities, offset by decreases in the rate related to the accounting for stock-based compensation.
Net Income. Net income increased by $15.2 million to $33.0 million for the fiscal year-to-date period ended October 2, 2021 from $17.8 million for the fiscal year-to-date period ended September 26, 2020. The diluted net income per share was
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$4.31 for the fiscal year-to-date period ended October 2, 2021, compared to diluted net income per share of $2.23 for the fiscal year-to-date period ended September 26, 2020. Weighted average diluted shares outstanding decreased by approximately 321,000 to approximately 7,643,000 shares for the fiscal year-to-date period ended October 2, 2021 from approximately 7,964,000 shares for the fiscal year-to-date period ended September 26, 2020. The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since September 26, 2020, offset in part by the vesting of restricted stock and time-vesting restricted stock units, the issuance of common stock for contingent consideration, and the exercise of stock options since September 26, 2020.
Liquidity and Capital Resources
Fiscal Year-to-Date Period Ended October 2, 2021
We believe that our current cash, cash equivalents, cash generated from operations, and amounts available under our revolving credit facility will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months.
General. During the fiscal year-to-date period ended October 2, 2021, cash and cash equivalents decreased by $26.0 million. We completed the period with cash and cash equivalents of $19.7 million. The principal drivers of the reduction of cash were payment of a significant portion of our fiscal 2020 performance bonuses in the first and second fiscal quarters of fiscal 2021, the payment of the contingent consideration liability, the repurchase of shares, and the payment of dividends, offset by net borrowings of $6.0 million.
During the fiscal year-to-date period ended October 2, 2021, working capital (defined as current assets less current liabilities) increased by $12.0 million to $31.8 million. The increase in working capital was principally due to an increase in accounts receivable and unbilled services of $21.4 million, a decrease in the current portion of deferred compensation of $16.5 million, and a decrease in accrued expenses of $7.7 million. Partially offsetting these increases to working capital was a decrease in cash and cash equivalents of $26.0 million, a decrease in the current portion of our forgivable loans of $5.1 million, and an increase in borrowings of $6.0 million.
At October 2, 2021, $1.8 million of our cash and cash equivalents was held within the U.S. We have sufficient sources of liquidity in the U.S., including cash flow from operations and availability on our revolving credit facility to fund U.S. operations for the next 12 months without the need to repatriate funds from our foreign subsidiaries.
Sources and Uses of Cash. During the fiscal year-to-date period ended October 2, 2021, net cash provided by operating activities was $13.9 million. Net income was $33.0 million for the fiscal year-to-date period ended October 2, 2021. Uses of cash for operating activities included a $11.5 million decrease in lease liabilities, a net increase of $22.0 million in accounts receivable and unbilled receivables due primarily to the increase in revenues and the timing of billings, and a $2.9 million increase in prepaid expenses and other current assets primarily related to the timing of renewing annual subscriptions. Other uses of cash included a decrease in accounts payable, accrued expenses, and other liabilities of $17.7 million, primarily due to the payment of a significant portion of our fiscal 2020 performance bonuses and performance awards and the payment of the contingent consideration liability, and a decrease in forgivable loans for the period of $9.3 million, which was primarily driven by $9.6 million of forgivable loan issuances offset by $18.9 million of forgivable loan amortization.
Cash provided by operations included incentive cash award expense of $5.0 million, non-cash depreciation and amortization expense of $9.7 million, right-of-use amortization of $9.7 million, share-based compensation expenses of $2.8 million, and other non-cash deductions of $1.5 million.
During the fiscal year-to-date period ended October 2, 2021, net cash used in investing activities was $1.7 million for capital expenditures primarily related to purchases of office equipment.
During the fiscal year-to-date period ended October 2, 2021, net cash used in financing activities was $37.8 million, primarily as a result of $40.0 million of repurchases of common stock, payment of $5.9 million of cash dividends and dividend equivalents, tax withholding payments reimbursed by restricted shares of $0.6 million, and a portion of the payment of the contingent consideration classified as a financing activity in the amount of $2.4 million. Offsetting these decreases in cash used in financing activities were borrowings, net of repayments, under the revolving credit facility of $6.0 million and $5.0 million received upon the issuance of shares of common stock related to the exercise of stock options.
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Lease Commitments
We are a lessee under certain operating leases for office space and equipment. Certain of our operating leases have terms that impose asset retirement obligations due to office modifications or the periodic redecoration of the premises, which are included in facility-related liabilities on our consolidated balance sheets and are recorded at a value based on their estimated discounted cash flows. We expect to satisfy these lease and related obligations, as they become due, from cash generated from operations.
Indebtedness
We are party to an amended and restated credit agreement that provides us with a $175.0 million revolving credit facility, which reflects an increase to the capacity by $50.0 million per an amendment to the credit agreement on January 12, 2021, and includes 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 we must repay all borrowings no later than October 24, 2022. There was $6.0 million in borrowings outstanding under the revolving credit facility as of October 2, 2021.
The amount available under the revolving credit facility is reduced by certain letters of credit outstanding, which amounted to $4.2 million as of October 2, 2021. Borrowings under the revolving credit facility bear interest at a rate per annum, at our election, of either (i) the 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 $32.3 million in net assets as of October 2, 2021.
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, as defined in the credit agreement, 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. At October 2, 2021 and currently, we are in compliance with the covenants of our credit agreement.
Forgivable Loans
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 two and seven 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.
Compensation Arrangements
We have entered into compensation arrangements for the payment of performance awards to certain of our employees and non-employee experts that are payable if specific performance targets are met. The financial targets may include a measure of revenue generation, profitability, or both. The amounts of the awards to be paid under these compensation arrangements could fluctuate depending on future performance during the applicable 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 performance awards. We expect to fund any cash payments from existing cash resources, cash generated from operations, or borrowings on our revolving credit facility.
Our Amended and Restated 2006 Equity Incentive Plan, as amended (the "2006 Equity Plan"), authorizes the grant of a variety of incentive and performance equity awards to our directors, employees and non-employee experts, including stock options, shares of restricted stock, restricted stock units, and other equity awards.
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In 2009, the compensation committee of our Board of Directors adopted our long-term incentive program, or "LTIP," as a framework for equity grants made under our 2006 equity incentive plan to our senior corporate leaders, practice leaders, and key revenue generators. The equity awards granted under the LTIP include stock options, time-vesting restricted stock units, and performance-vesting restricted stock units.
In December 2016, our compensation committee modified the long-term incentive program, or "LTIP," to allow grants of service- and performance-based cash awards in lieu of, or in addition to, equity awards to our senior corporate leaders, practice leaders, and key revenue generators. The compensation committee of our Board of Directors is responsible for approving all cash and equity awards under the LTIP. We expect to fund any cash payments from existing cash resources, cash generated from operations, or borrowings on our revolving credit facility.
Business and Talent Acquisitions
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, including our ability to refinance our credit agreement, will depend on several factors, including our future profitability, the levels of our debt and equity, restrictions under our existing revolving credit facility, and the overall credit and equity market environments.
Share Repurchases
In February 2021, our Board of Directors authorized an expansion of our existing share repurchase program, authorizing the purchase of an additional $40.0 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. Refer to the section titled "Self-Tender Offer" below for discussion of shares repurchased during the second quarter of fiscal 2021 under our modified "Dutch auction" self-tender offer.
During the fiscal quarter and fiscal year-to-date period ended October 2, 2021, we repurchased and retired 53,012 shares and 219,564 shares, respectively, under our share repurchase program at an average price per share of $94.32 and $66.72, respectively. During the fiscal quarter and fiscal year-to-date period ended September 26, 2020, we repurchased and retired 110,154 shares and 192,767 shares, respectively, under our share repurchase program at an average price per share of $45.39 and $45.72, respectively. As of October 2, 2021, we had approximately $35.5 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 revolving credit facility. We expect to continue to repurchase shares under our share repurchase program.
Self-Tender Offer
On March 8, 2021, we commenced a modified "Dutch auction" self-tender offer to purchase up to $25.0 million in value of shares of our common stock at a price of not less than $66.25 per share nor greater than $76.00 per share. The self-tender offer expired on April 5, 2021. On April 8, 2021, we paid $25.3 million, including transaction costs, to repurchase 337,837 shares at a purchase price of $74.00 per share. The purchase price and transaction costs were funded from the revolving credit facility and cash on hand. The repurchased shares were retired.
Dividends to Shareholders
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, timing and amounts of any such dividends remain subject to the discretion of our Board of Directors. During the fiscal quarter and fiscal year-to-date period ended October 2, 2021, we paid dividends and dividend equivalents of $1.9 million and $5.9 million, respectively. During the fiscal quarter and fiscal year-to-date period ended September 26, 2020, we paid dividends and dividend equivalents of $1.8 million and $5.4 million, respectively.
Impact of Inflation
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.
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Future Capital and Liquidity Needs
We anticipate that our future capital and liquidity needs will principally consist of funds required for:
operating and general corporate expenses relating to the operation of our business, including the compensation of our employees under various annual bonus or long-term incentive compensation programs;
the hiring of individuals to replenish and expand our employee base;
capital expenditures, primarily for information technology equipment, office furniture and leasehold improvements;
debt service and repayments, including interest payments on borrowings under our revolving credit facility;
share repurchases, under programs that we may have in effect from time to time;
dividends to shareholders;
potential acquisitions of businesses that would allow us to diversify or expand our service offerings;
potential contingent obligations related to our acquisitions; and
other known future contractual obligations.
The hiring of individuals to replenish and expand our employee base is an essential part of our business operations and has historically been funded principally from operations. Many of the other above activities are discretionary in nature. For example, capital expenditures can be deferred, acquisitions can be forgone, and share repurchase programs and regular dividends can be suspended. As such, our operating model provides flexibility with respect to the deployment of cash flow from operations. Given this flexibility, we believe that our cash flows from operations, supplemented by cash on hand and borrowings under our revolving credit facility (as necessary), will provide adequate cash to fund our long-term cash needs from normal operations for at least the next twelve months.
Our conclusion that we will be able to fund our cash requirements by using existing capital resources and cash generated from operations does not take into account the impact of any future acquisition transactions or any unexpected significant changes in the number of employees or other expenditures that are currently not contemplated. The anticipated cash needs of our business could change significantly if we pursue and complete additional business acquisitions, if our business plans change, if economic conditions change from those currently prevailing or from those now anticipated, or if other unexpected circumstances arise that have a material effect on the cash flow or profitability of our business. Any of these events or circumstances, including any new business opportunities, could involve significant additional funding needs in excess of the identified currently available sources and could require us to raise additional debt or equity funding to meet those needs on terms that may be less favorable compared to our current sources of capital. Our ability to raise additional capital over the next twelve months, if necessary, is subject to a variety of factors that we cannot predict with certainty, including:
our future profitability;
the quality of our accounts receivable;
our relative levels of debt and equity;
the volatility and overall condition of the capital markets; and
the market prices of our securities.
Factors Affecting Future Performance
Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q, as well as a description of material risks we face, are set forth below under the heading “Risk Factors” and included in Part I, Item 1A, “Risk Factors” of our 2020 Form 10-K. If any of these risks, or any risks not presently known to us or that we currently believe are not significant, develops into an actual event, then our business, financial condition, and results of operations could be adversely affected.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
For information regarding our exposure to certain market risks see Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk,” of our 2020 Form 10-K.
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ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. This is done in order to ensure that information we are required to disclose in the reports that are filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of October 2, 2021.
Management has concluded that the condensed consolidated financial statements included in this quarterly report on Form 10-Q present fairly, in all material aspects, our financial position at the end of, and the results of operations and cash flows for, the periods presented in conformity with accounting principles generally accepted in the United States.
Evaluation of Changes in Internal Control over Financial Reporting
Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial Officer, we evaluated whether there were any changes in our internal control over financial reporting during the third quarter of fiscal 2021. There were no changes in our internal control over financial reporting identified in connection with the above evaluation that occurred during the third quarter of fiscal 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Important Considerations
The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
None.
ITEM 1A. Risk Factors
There are many risks and uncertainties that can affect our future business, financial performance or results of operations. In addition to the other information set forth in this report, please review and consider the information regarding certain factors that could materially affect our business, financial condition or future results set forth under Part I, Item 1A, “Risk Factors” in our 2020 Form 10-K. There have been no material changes to these risk factors during the quarter ended October 2, 2021.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)Not applicable.
(b)Not applicable.
(c)The following provides information about our repurchases of shares of our common stock during the fiscal quarter ended October 2, 2021. During that period, we did not act in concert with any affiliate or any other person to acquire any of our common stock and, accordingly, we do not believe that purchases by any such affiliate or other person (if any) are reportable in the following table. For purposes of this table, we have divided the fiscal quarter into three periods of four weeks, four weeks, and five weeks, respectively, to coincide with our reporting periods during the third quarter of fiscal 2021.
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Issuer Purchases of Equity Securities
Period(a)
Total Number of
Shares
Purchased
(b)
Average Price
Paid per Share
(c)
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
(d)
Maximum Number
(or Approximate
Dollar Value) of
Shares that May Yet
Be Purchased
Under the Plans
or Programs (1)
July 4, 2021 to July 31, 2021— $— — $40,484,285 
August 1, 2021 to August 28, 202153,012 $94.32 53,012 $