Charles River Associates (CRA) Announces Third-Quarter 2012 Financial Results

  Charles River Associates (CRA) Announces Third-Quarter 2012 Financial
  Results

 Company Completes Majority of Planned Restructuring Activities and Delivers
Solid Performance During Third Quarter; Company On Track to Achieve Continuing
            Performance Improvement in the Fourth Quarter and 2013

Business Wire

BOSTON -- October 25, 2012

Charles River Associates (NASDAQ: CRAI), a worldwide leader in providing
management, economic and financial consulting services, today announced third
quarter financial results for the quarter ended September 29, 2012.

Revenue for the third quarter of fiscal 2012 was $65.9 million, compared with
$71.0 million for the third quarter of fiscal 2011. Non-GAAP revenue for the
third quarter of fiscal 2012 was $64.7 million, compared with $69.4 million
for the third quarter of fiscal 2011.

Net loss for the third quarter of fiscal 2012 was $0.7 million, or $0.07 per
share. This compares with net income for the third quarter of fiscal 2011 of
$3.7 million, or $0.34 per diluted share. Results for the third quarter of
fiscal 2012 include a pre-tax restructuring charge of $4.4 million. Non-GAAP
net income for the third quarter of fiscal 2012 was $2.8 million, or $0.27 per
diluted share, compared with $3.3 million, or $0.31 per diluted share, for the
third quarter of fiscal 2011.

A complete reconciliation between revenue, net income/loss and net income/loss
per diluted share, on a GAAP and non-GAAP basis, for the third quarters and
nine month year-to-date periods of fiscal 2012 and fiscal 2011 are provided in
the financial tables at the end of this release.

Management Comments

“As previously announced, during the third quarter we eliminated two
underperforming businesses and restructured select practices,” said Paul
Maleh, CRA’s President and Chief Executive Officer. “These comprehensive
actions should intensify the focus of our portfolio, increase the cohesiveness
of our services, significantly enhance our margins, lessen the drag on our
overall tax rate, and improve profitability. Our third-quarter results reflect
some of the benefits associated with the restructuring actions and a solid
performance by a number of our practices.”

“During the quarter, our Litigation business delivered good results despite
some general industry headwinds,” said Maleh. “The Litigation business was led
by strong contributions from our Intellectual Property, Competition, and Labor
& Employment practices, among others. At the same time, demand for our
Management Consulting services continued to improve from its slow start at the
beginning of the year led by our Marakon practice, which achieved
year-over-year growth in the third quarter.”

“Our utilization for the third quarter was 67%; excluding the consultants
involved in our workforce reduction, our utilization rate for the third
quarter would be 71%,” Maleh said. "We continue to expect the reduction in
consulting positions to reduce net revenue on an annual basis by approximately
$8 to $10 million while generating an annualized cost of service savings of
approximately $17 million.”

“Also during the quarter and as previously announced, we took significant
actions to lower our SG&A expenses,” said Maleh. “In the third quarter, we
reduced our administrative staff, lowered administrative spending on outside
contractors and eliminated excess office space. We continue to expect that the
majority of these SG&A actions will be completed by the end of fiscal 2012 and
will generate an annualized cost savings of approximately $8 million.”

“Our restructuring activities completed during the third quarter helped to
increase our non-GAAP operating margin to 8.1% in the quarter from 5.9% in the
second quarter,” Maleh said.

Outlook

“We continue to focus on growing organically, supplemented by new senior
hires,” Maleh said. “During the third quarter, we increased our operating
margin organically and we made a number of key hires whom we expect will
contribute to our growth and profitability going forward. Looking ahead, we
remain on track to achieve our established target of double-digit non-GAAP
operating margin in the fourth quarter. We also continue to anticipate that
once fully completed, the consulting staff reductions, the repositioning of
select underperforming practices and the lowering of SG&A costs will, in
total, improve our operating profitability by approximately $15 to $17 million
on an annualized basis. We believe the steps we have taken better position the
Company for long-term profitable growth and enhanced margin performance,”
Maleh concluded.

Conference Call Information and Prepared CFO Remarks

CRA will host a conference call this morning at 9:00 a.m. ET to discuss its
third-quarter fiscal 2012 financial results. To listen to a live webcast of
the call, please visit the Company’s website at http://www.crai.com prior to
the event’s broadcast.To listen to the call via telephone, dial (201)
689-8881 or (877) 709-8155.Interested parties unable to participate in the
live call may access an archived version of the webcast on CRA’s website.

In combination with this press release, CRA is providing prepared remarks by
its CFO Wayne Mackie under “Conference Call Materials” in the investor
relations section on the Company’s website at http://www.crai.com. These
remarks are offered to provide the investment community with additional
background on CRA’s financial results prior to the start of the conference
call.

About Charles River Associates (CRA)

Charles River Associates® is a global consulting firm specializing in
litigation, regulatory, and financial consulting, and management consulting.
CRA advises clients on economic and financial matters pertaining to litigation
and regulatory proceedings, and guides corporations through critical business
strategy and performance-related issues. Since 1965, clients have engaged CRA
forits unique combination of functional expertise and industry knowledge, and
for its objective solutions to complex problems. Detailed information about
Charles River Associates, a registered trade name of CRA International, Inc.,
is available at http://www.crai.com.

NON-GAAP FINANCIAL MEASURES

In addition to reporting its financial results in accordance with U.S.
generally accepted accounting principles, or GAAP, the Company has also
provided in this release non-GAAP financial information. The Company believes
the use of non-GAAP measures in addition to GAAP measures is an additional
useful method of evaluating its results of operations. The Company believes
that presenting its financial results excluding certain restructuring costs
and the results of the Company’s NeuCo subsidiary is important to investors
and management because it is more indicative of the Company’s ongoing
operating results and financial condition. These non-GAAP financial measures
should be considered in conjunction with, but not as a substitute for, the
financial information presented in accordance with GAAP, and the expected
results calculated in accordance with GAAP and reconciliations to those
expected results should be carefully evaluated. The non-GAAP financial
measures used by the Company may be calculated differently from, and therefore
may not be comparable to, similarly titled measures used by other companies.
Specifically, for each of the periods presented other than the third quarter
of fiscal 2011, the Company has excluded certain restructuring costs, and for
each of the periods presented, the Company has excluded NeuCo’s results.

Statements in this press release concerning the future business, operating
results, anticipated, expected or intended impact of restructuring actions and
key hires, estimated cost savings, and financial condition of the Company and
statements using the terms “anticipates,” “believes,” “expects,” “should,”
“prospects,” “target,” “on track” or similar expressions are “forward-looking”
statements as defined in the Private Securities Litigation Reform Act of 1995.
These statements are based upon management's current expectations and are
subject to a number of factors and uncertainties. Information contained in
these forward-looking statements is inherently uncertain, and actual
performance and results may differ materially due to many important factors.
Such factors that could cause actual performance or results to differ
materially from any forward-looking statements made by the Company include,
among others, the Company’s restructuring costs and attributable annual cost
savings, changes in the Company’s effective tax rate, share dilution from the
Company’s stock-based compensation, dependence on key personnel, attracting,
recruiting and retaining qualified consultants, dependence on outside experts,
utilization rates, completing acquisitions and factors related to its
completed acquisitions, including integration of personnel, clients and
offices, and unanticipated expenses and liabilities, the risk of impairment
write downs to the Company’s intangible assets, including goodwill, if the
Company’s enterprise value declines below certain levels, risks associated
with acquisitions it may make in the future, risks inherent in international
operations, the performance of NeuCo, changes in accounting standards, rules
and regulations, changes in the law that affect the Company’s practice areas,
management of new offices, the potential loss of clients, the ability of
customers to terminate the Company’s engagements on short notice, dependence
on the growth of the Company’s management consulting practice, the
unpredictable nature of litigation-related projects, the ability of the
Company to integrate successfully new consultants into its practice, general
economic conditions, intense competition, risks inherent in litigation, and
professional liability. Further information on these and other potential
factors that could affect the Company’s financial results is included in the
Company’s periodic filings with the Securities and Exchange Commission. The
Company cannot guarantee any future results, levels of activity, performance
or achievement. The Company undertakes no obligation to update any of its
forward-looking statements after the date of this press release.

                                                                                                                                                   
                                                                                                                                                                
CRA INTERNATIONAL, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS INCLUDING A RECONCILIATION TO NON-GAAP RESULTS
FOR THE QUARTER ENDED SEPTEMBER 29, 2012 COMPARED TO THE QUARTER ENDED OCTOBER 1, 2011
(In thousands, except per share data)
                                                                                                                                                                
                 Quarter Ended September 29, 2012                                                          Quarter Ended October 1, 2011
                                              Adjustments to    Adjustments                                                          Adjustments
                 GAAP              GAAP       GAAP Results      to            Non-GAAP          Non-GAAP   GAAP         GAAP         to            Non-GAAP     Non-GAAP
                 Results           % of       (Restructuring)   GAAP          Results           % of       Results      % of         GAAP          Results      % of
                                   Revenues   (1)               Results                         Revenues                Revenues     Results                    Revenues
                                                                (NeuCo) (2)                                                          (NeuCo) (2)
                                                                                                                                                                
                                                                                                                                                                
Revenues         $ 65,912          100.0  %   $   -             $  1,242      $ 64,670          100.0  %   $ 71,007     100.0  %     $  1,619      $ 69,388     100.0  %
Costs of          46,175         70.1   %      3,435          311        42,429         65.6   %    46,571    65.6   %       288        46,283    66.7   %
services
Gross profit       19,737          29.9   %       (3,435   )       931          22,241          34.4   %     24,436     34.4   %        1,331        23,105     33.3   %
(loss)
                                                                                                                                                                
Selling,
general and        17,227          26.1   %       960              709          15,558          24.1   %     17,013     24.0   %        837          16,176     23.3   %
administrative
expenses
Depreciation
and               1,475          2.2    %      29             1          1,445          2.2    %    1,209     1.7    %       5          1,204     1.7    %
amortization
Income (loss)
from               1,035           1.6    %       (4,424   )       221          5,238           8.1    %     6,214      8.8    %        489          5,725      8.3    %
operations
                                                                                                                                                                
Interest and
other income      (19    )        0.0    %      -              (35    )    16             0.0    %    (256   )   -0.4   %       (39    )    (217   )   -0.3   %
(expense), net
Income (loss)
before
(provision)
benefit for        1,016           1.5    %       (4,424   )       186          5,254           8.1    %     5,958      8.4    %        450          5,508      7.9    %
income taxes
and
noncontrolling
interest
(Provision)
benefit for       (1,722 )        -2.6   %      825            (43    )    (2,504 )        -3.9   %    (2,060 )   -2.9   %       148        (2,208 )   -3.2   %
income taxes
Net income         (706   )        -1.1   %       (3,599   )       143          2,750           4.3    %     3,898      5.5    %        598          3,300      4.8    %
(loss)
Net (income)
loss
attributable
to                (38    )        -0.1   %      -              (38    )    -              0.0    %    (238   )   -0.3   %       (238   )    -         0.0    %
noncontrolling
interest, net
of tax
Net income
(loss)
attributable     $ (744   )        -1.1   %   $   (3,599   )    $  105       $ 2,750          4.3    %   $ 3,660     5.2    %     $  360       $ 3,300     4.8    %
to CRA
International,
Inc.
                                                                                                                                                                
Net income
(loss) per
share
attributable
to CRA
International,
Inc.:
Basic            $ (0.07  )                                                   $ 0.27                      $ 0.35                                 $ 0.31   
Diluted          $ (0.07  )                                                   $ 0.27                      $ 0.34                                 $ 0.31   
                                                                                                                                                                
Weighted
average number
of shares
outstanding:
Basic             10,084                                                     10,084                     10,557                                10,557 
Diluted           10,084    (3 )                                             10,214    (3 )             10,701                                10,701 


(1) During the fiscal quarter ended September 29, 2012, the Company incurred
pre-tax expenses of $4.4 million and related income tax effect of $0.8 million
principally associated with restructuring actions announced in the third
quarter of fiscal 2012. These actions included the elimination and
restructuring of selected practice areas, and reducing selling, general and
administrative costs. In connection with the restructuring plan, the Company
eliminated its Chemicals practice and closed its Middle East operations.

(2) These adjustments include activity related to NeuCo in the Company's GAAP
results.

(3) Approximately 130,000 common stock equivalents are excluded from the GAAP
results because they are antidilutive in the third quarter of fiscal 2012 due
to the net loss, but they are included in the non-GAAP results because they
are dilutive based upon the net income.

                                                                                                                                                             
                                                                                                                                                                          
CRA INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS INCLUDING A RECONCILIATION TO NON-GAAP RESULTS
FOR THE YEAR TO DATE PERIOD ENDED SEPTEMBER 29, 2012 COMPARED TO THE YEAR TO DATE PERIOD ENDED OCTOBER 1, 2011
(In thousands, except per share data)
                                                                                                                                                                          
                 Year To Date Period Ended September 29, 2012                                      Year To Date Period Ended October 1, 2011
                                          Adjustments to    Adjustments                                                     Adjustments to    Adjustments
                 GAAP          GAAP       GAAP Results      to            Non-GAAP      Non-GAAP   GAAP          GAAP       GAAP Results      to            Non-GAAP      Non-GAAP
                 Results       % of       (Restructuring)   GAAP          Results       % of       Results       % of       (Restructuring)   GAAP          Results       % of
                               Revenues   (1)               Results                     Revenues                 Revenues   (3)               Results                     Revenues
                                                            (NeuCo) (2)                                                                       (NeuCo) (2)
                                                                                                                                                                          
                                                                                                                                                                          
Revenues         $ 202,857     100.0  %   $   -             $  3,914      $ 198,943     100.0  %   $ 230,255     100.0  %   $   -             $  4,309      $ 225,946     100.0  %
Costs of          138,110    68.1   %      3,435          993        133,682    67.2   %    151,862    66.0   %      -              1,077      150,785    66.7   %
services
Gross profit       64,747      31.9   %       (3,435   )       2,921        65,261      32.8   %     78,393      34.0   %       -                3,232        75,161      33.3   %
(loss)
                                                                                                                                                                          
Selling,
general and        52,018      25.6   %       1,731            2,512        47,775      24.0   %     53,529      23.2   %       1,020            2,966        49,543      21.9   %
administrative
expenses
Depreciation
and               5,580      2.8    %      1,174          3          4,403      2.2    %    3,760      1.6    %      -              20         3,740      1.7    %
amortization
Income (loss)
from               7,149       3.5    %       (6,340   )       406          13,083      6.6    %     21,104      9.2    %       (1,020   )       246          21,878      9.7    %
operations
                                                                                                                                                                          
Interest and
other income      (185    )   -0.1   %      -              (117   )    (68     )   0.0    %    (918    )   -0.4   %      -              (124   )    (794    )   -0.4   %
(expense), net
Income (loss)
before
(provision)
benefit for        6,964       3.4    %       (6,340   )       289          13,015      6.5    %     20,186      8.8    %       (1,020   )       122          21,084      9.3    %
income taxes
and
noncontrolling
interest
(Provision)
benefit for       (6,461  )   -3.2   %      869            (98    )    (7,232  )   -3.6   %    (7,791  )   -3.4   %      379            34         (8,204  )   -3.6   %
income taxes
Net income         503         0.2    %       (5,471   )       191          5,783       2.9    %     12,395      5.4    %       (641     )       156          12,880      5.7    %
(loss)
Net (income)
loss
attributable
to                (9      )   0.0    %      -              (9     )    -          0.0    %    7          0.0    %      -              7          -          0.0    %
noncontrolling
interest, net
of tax
Net income
(loss)
attributable     $ 494        0.2    %   $   (5,471   )    $  182       $ 5,783      2.9    %   $ 12,402     5.4    %   $   (641     )    $  163       $ 12,880     5.7    %
to CRA
International,
Inc.
                                                                                                                                                                          
Net income per
share
attributable
to CRA
International,
Inc.:
Basic            $ 0.05                                                  $ 0.57                  $ 1.17                                                  $ 1.21    
Diluted          $ 0.05                                                  $ 0.56                  $ 1.15                                                  $ 1.20    
                                                                                                                                                                          
Weighted
average number
of shares
outstanding:
Basic             10,214                                                 10,214                 10,607                                                 10,607  
Diluted           10,364                                                 10,364                 10,773                                                 10,773  

(1) During the year to date period ended September 29, 2012, the Company
incurred pre-tax expenses of $6.3 million and related income tax effect of
$0.9 million principally associated with restructuring actions announced in
the third quarter of fiscal 2012. Of these amounts, $4.4 million of pre-tax
expenses and $0.8 million of related income tax effect were in connection with
restructuring activities announced during the third quarter of fiscal 2012.
These actions included the elimination and restructuring of selected practice
areas, and reducing selling, general and administrative costs. In connection
with the restructuring plan, the Company eliminated its Chemicals practice and
closed its Middle East operations. In the first half of fiscal 2012, the
Company also incurred pre-tax expenses of $1.9 million and related income tax
effect of $44,000 in connection with the surrender of a portion of the
Company's leased office space in London, England and adjustments related to
its leased office space in Houston, TX.

(2) These adjustments include activity related to NeuCo in the Company's GAAP
results.

(3) During the year to date period ended October 1, 2011, the Company incurred
pre-tax expenses of $1.0 million and related income tax effect of $0.4 million
principally associated with leased office space at its Houston, TX office.

                                                             
                                                                  
CRA INTERNATIONAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                                                                  
                                                September 29,     December 31,
                                                2012              2011
                                                                  
Assets
Cash and cash equivalents and short-term        $   42,297        $   76,082
investments
Accounts receivable and unbilled, net               83,665            84,720
Other current assets                               41,267           29,122
Total current assets                                167,229           189,924
                                                                  
Property and equipment, net                         18,605            21,611
Goodwill and intangible assets, net                 144,385           143,126
Other assets                                       13,734           17,446
Total assets                                    $   343,953       $   372,107
                                                                  
Liabilities and shareholders’ equity
Current liabilities                             $   62,905        $   82,273
Long-term liabilities                              15,534           21,427
Total liabilities                                   78,439            103,700
                                                                  
Total shareholders’ equity                         265,514          268,407
Total liabilities and shareholders’ equity      $   343,953       $   372,107

Contact:

Charles River Associates
Wayne D. Mackie, 617-425-3740
Executive Vice President, CFO
or
Sharon Merrill Associates, Inc.
Jim Buckley, 617-542-5300
Executive Vice President
 
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