>
  1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
10qk
10qk
Articles 

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

June 21, 2010 | About:

CRA International Inc. (NASDAQ:CRAI) filed Quarterly Report for the period ended 2010-05-14.

Cra International Inc. has a market cap of $247.63 million; its shares were traded at around $22.43 with a P/E ratio of 25.2 and P/S ratio of 0.82. 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:

In May 2008, the FASB issued guidance included in ASC Topic 470-20, "Debt" (formerly FASB Staff Position No. Accounting Principles Board Opinion 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)," which changes the accounting treatment for convertible debt instruments that allow for either mandatory or optional cash settlements. Under ASC Topic 470-20, we are required to recognize non-cash interest expense on our convertible senior subordinated debentures based on the market rate for similar debt instruments without the conversion feature. ASC Topic 470-20 is effective for fiscal years beginning on or after December 15, 2008 and must be applied on a retrospective basis. Upon retroactive adoption of ASC 470-20 in fiscal 2010 during the first quarter of fiscal 2010, we recorded a cumulative after tax 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 $3.9 million, or 5.4%, to $68.1 million for the second quarter of fiscal 2010 from $72.0 million for the second quarter of fiscal 2009. Included in revenues are $1.8 million and $2.6 million in revenues in the second quarter of fiscal 2010 and the second 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 65% for the second quarter of fiscal 2010 from 71% for the second quarter of fiscal 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 during the third quarter of fiscal 2009 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 increased $2.3 million, or 4.7%, to $50.1 million for the second quarter of fiscal 2010 from $47.8 million for the second quarter of fiscal 2009. Included in costs of services are $0.5 million and $1.4 million in costs of services in the second quarter of fiscal 2010 and the second quarter of fiscal 2009, respectively, due to the consolidation of NeuCo. The increase in costs of services is mainly due to an increase in compensation expense for our employee consultants of $4.2 million, or 11.4%, which includes increases due to the employee consultants we hired as a result of acquiring substantially all of the assets of Marakon Associates, an increase in restructuring charges, and an increase in fringe benefit costs, primarily due to an unanticipated increase in health claims under our self-insured plan, partially offset by a decrease in compensation expense due to a decrease in the average number of employee consultants, excluding the Marakon Associates employees, primarily as a result of the previously discussed restructuring actions. Included in the increase in compensation are $3.7 million and $1.4 million in restructuring charges recognized during the second quarter of fiscal 2010 and the second quarter of fiscal 2009, respectively. Partially offsetting these increases is a decrease in costs of services due to a decrease in client reimbursable expenses. Client reimbursable expenses decreased by $1.0 million, or 9.7%, to $8.9 million for the second quarter of fiscal 2010 from $9.8 million for the second quarter of fiscal 2009. As a percentage of revenues, costs of services increased to 73.5% for the second quarter of fiscal 2010 from 66.4% for the second quarter of fiscal 2009. The increase in costs of services as a percentage of revenue is due primarily to lower revenue and an increase in compensation expense as a percentage of revenue, attributable to an increase in restructuring charges and an increase in compensation expense for our employee consultants, partially

Net Income (Loss) Attributable to CRA International, Inc. Net income (loss) attributable to CRA International, Inc. decreased by $2.7 million from net income of $1.2 million for the second quarter of fiscal 2009 to a net loss of $1.5 million for the second quarter of fiscal 2010. The net loss per share was $0.14 per share for the second quarter of fiscal 2010, compared to $0.11 of net income per diluted share for the second quarter of fiscal 2009. Weighted average shares outstanding increased by approximately 30,000 shares to approximately 10,713,000 shares for the second quarter of fiscal 2010 from approximately 10,683,000 shares for the second quarter of fiscal 2009. The increase in weighted average shares outstanding is primarily due to restricted shares that have vested and options that have been exercised since May 15, 2009, offset in part by repurchases of common stock since May 15, 2009. Weighted average shares outstanding as of May 14, 2010 excluded 143,000 anti-dilutive common stock equivalents in the second quarter of fiscal 2010 because we had a net loss and inclusion of these common stock equivalents would be anti-dilutive.

Revenues. Revenues decreased $10.9 million, or 7.9%, to $126.9 million for the twenty-four weeks ended May 14, 2010 from $137.8 million for the twenty-four weeks ended May 15, 2009. Included in revenues are $2.9 million and $4.1 million in revenues in the twenty-four weeks ended May 14, 2010 and the twenty-four weeks ended May 15, 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 63% for the twenty-four weeks ended May 14, 2010 from 70% for the twenty-four weeks ended May 15, 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 during the third quarter of fiscal 2009 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 $0.4 million, or 0.4%, to $90.5 million for the twenty-four weeks ended May 14, 2010 from $90.9 million for the twenty-four weeks ended May 15, 2009. Included in costs of services are $0.8 million and $2.4 million in costs of services in the twenty-four weeks ended May 14, 2010 and the twenty-four weeks ended May 15, 2009, respectively, due to the consolidation of NeuCo. The decrease in costs of services is mainly due to a decrease in reimbursable expenses of $1.6 million, or 8.6%. Partially offsetting these decreases are increases in costs of services due to an increase in compensation expense for our employee consultants of $2.3 million or 3.2%, 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 increa

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.

Rating: 4.3/5 (4 votes)

Comments

Please leave your comment:



Performances of the stocks mentioned by 10qk


User Generated Screeners


pjmason14Momentum
wigbertHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)