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Articles 

CRA International Inc. Reports Operating Results (10-Q)

October 12, 2010 | About:

CRA International Inc. (NASDAQ:CRAI) filed Quarterly Report for the period ended 2010-09-03.

Cra International Inc. has a market cap of $218.1 million; its shares were traded at around $19.83 with a P/E ratio of 22.5 and P/S ratio of 0.7. Cra International Inc. had an annual average earning growth of 8.4% over the past 10 years.CRAI is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

adjustment for prior years of $6.4 million, which represented a non-cash decrease in retained earnings as of November 28, 2009. Also, the carrying amount of the convertible debentures was retroactively adjusted to reflect a discount of approximately $12.6 million and a reduction of deferred financing costs by approximately $0.5 million, with offsetting increases in common stock of approximately $6.9 million and deferred tax liability of $5.2 million as of the date of issuance. Under ASC Topic 470-20, in fiscal 2010, we expect to record incremental non-cash interest expense of approximately $1.2 million. The effect of adopting ASC Topic 470-20 is included in the condensed consolidated financial statements.

Revenues. Revenues decreased $4.6 million, or 5.2%, to $84.6 million for the third quarter of fiscal 2010 from $89.3 million for the third quarter of fiscal 2009. Included in revenues are $2.2 million and $2.9 million in revenues in the third quarter of fiscal 2010 and the third quarter of fiscal 2009, respectively, due to the consolidation of NeuCo. Our revenue decline was due primarily to general economic conditions and the restructuring of our portfolio of services, resulting in a reduction of employee consultant headcount. Utilization decreased to 68% for the third quarter of fiscal 2010 from 69% for the third quarter of fiscal 2009. Another factor contributing to our revenue decline was the decrease in client reimbursable expenses. Client reimbursable expenses are pass-through expenses that carry little to no margin.

Costs of Services. Costs of services decreased $4.2 million, or 7.1%, to $54.9 million for the third quarter of fiscal 2010 from $59.0 million for the third quarter of fiscal 2009. Included in costs of services are $0.5 million and $1.1 million in costs of services in the third quarter of fiscal 2010 and the third quarter of fiscal 2009, respectively, due to the consolidation of NeuCo. The decrease in costs of services is mainly due to a decrease in client reimbursable expenses and a decrease in compensation expenses. Client reimbursable expenses decreased by $2.6 million, or 19.5%, to $10.8 million for the third quarter of fiscal 2010 from $13.5 million for the third quarter of fiscal 2009. The decrease in compensation expense is due primarily to a decrease in the average number of employee consultants, offset partially by an increase associated with the employee consultants we hired as a result of acquiring substantially all of the assets of Marakon Associates in June 2009. As a percentage of revenues, costs of services decreased to 64.8% for the third quarter of fiscal 2010 from 66.1% for the third quarter of fiscal 2009. The decrease in costs of services as a percentage of revenue is due primarily to a decrease in client reimbursable expenses.

Net Income Attributable to CRA International, Inc. Net income attributable to CRA International, Inc. decreased by $0.6 million from net income of $2.6 million for the third quarter of fiscal 2009 to net income of $2.1 million for the third quarter of fiscal 2010. Diluted net income per share was $0.19 per share for the third quarter of fiscal 2010, compared to $0.24 of net income per diluted share for the third quarter of fiscal 2009. Diluted weighted average shares outstanding decreased by approximately 17,000 shares to approximately 10,734,000 shares for the third quarter of fiscal 2010 from approximately 10,751,000 shares for the third quarter of fiscal 2009. The decrease in weighted average shares outstanding is primarily due to repurchases of common stock since September 4, 2009, offset in part by restricted shares that have vested and stock options that have been exercised since September 4, 2009.

Revenues. Revenues decreased $15.5 million, or 6.8%, to $211.6 million for the forty weeks ended September 3, 2010 from $227.1 million for the forty weeks ended September 4, 2009. Included in revenues are $5.1 million and $7.1 million in revenues in the forty weeks ended September 3, 2010 and the forty weeks ended September 4, 2009, respectively, due to the consolidation of NeuCo. Our revenue decline was due primarily to general economic conditions and the restructuring of our portfolio of services, resulting in a reduction of employee consultant headcount. Utilization decreased to 65% for the forty weeks ended September 3, 2010 from 70% for the forty weeks ended September 4, 2009. Another factor contributing to our revenue decline, to a lesser extent, was the decrease in client reimbursable expenses. Client reimbursable expenses are pass-through expenses that carry little to no margin. These decreases in revenue were partially offset by an increase in revenue due to revenue generated by our acquisition of substantially all of the assets of Marakon Associates and increased billing rates for our employee consultants, which went into effect during the first quarter of fiscal 2010.

Costs of Services. Costs of services decreased $4.5 million, or 3.0%, to $145.4 million for the forty weeks ended September 3, 2010, from $149.9 million for the forty weeks ended September 4, 2009. Included in costs of services are $1.4 million and $3.5 million in costs of services in the forty weeks ended September 3, 2010 and the forty weeks ended September 4, 2009, respectively, due to the consolidation of NeuCo. The decrease in costs of services is mainly due to a decrease in reimbursable expenses of $4.2 million, or 13.1%. Partially offsetting these decreases are increases in costs of services due to an increase in compensation expense for our employee consultants of $2.0 million or 1.8%, which includes increases due to the employee consultants we hired as a result of acquiring substantially all of the assets of Marakon Associates and an increase in restructuring charges, partially offset by a decrease in compensation expense primarily due to a decrease in the average number of employee consultants, excluding the Marakon Associates emp

Read the The complete Report

About the author:

10qk
Charlie Tian, Ph.D., is the founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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