15. Transition Period Financial Information

        On December 17, 2010, the Company's Board of Directors approved a change in the Company's fiscal year end from the last Saturday in November to the Saturday closest to December 31 of each year. Accordingly, the Company is presenting financial statements for the five-week transition period ended January 1, 2011. The following table provides certain comparative financial information of the same period of the prior year. The five-week periods ended January 1, 2011 and January 2, 2010, both included 35 days (in thousands, except per share data):

16. Compensation Arrangements

        In connection with a previous acquisition, CRA has agreed to pay an award to certain employees of the acquired business if they achieve specific performance targets through fiscal 2012. Retention of amounts paid to the individual employees is contingent on their continued employment with CRA through 2016. As of April 2, 2011, based upon performance to date and expected performance in the future, the amount of the award is estimated to be approximately $12 million and is being expensed over the seven and a half year service period. The amount of the award could fluctuate depending on future performance. Any payments under this award would be made in fiscal 2013.

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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 this quarterly report and 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 ethics applicable to our principal executive officer, principal financial officer, and principal accounting officer.

Recent Events

        On December 17, 2010, our Board of Directors approved a change in our fiscal year end from the last Saturday in November to the Saturday nearest December 31 of each year. The fiscal year change was effective beginning with our 2011 fiscal year, which began January 2, 2011 and will end December 31, 2011. As a result of the change, we had a five-week period which began November 28, 2010 and ended January 1, 2011 ("transition period"). The audited results of the five-week transition period ended January 1, 2011 were presented in our Annual Report on Form 10-K as filed on February 10, 2011. For comparative analysis purposes, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" presented herein compares the results for the five-week transition period ended January 1, 2011, which were derived from the audited financial statements included in the Annual Report, to the results for the five-week comparative period ended January 2, 2010.

        The fiscal year change was not effective until after the completion of our 2010 fiscal year. Therefore, the prior year comparative financial and other information reported in the financial statements herein continue to be presented based on our prior fiscal year end calendar. We have not prepared financial information for the thirteen weeks ended April 3, 2010 in this Form 10-Q because the information is not practical or cost beneficial to prepare. Our results for the first quarter of fiscal 2011, which was the thirteen-week period ended April 2, 2011, are compared to our results for the first quarter of fiscal 2010, which was the twelve-week period ended February 19, 2010. The comparisons are affected by the inclusion of thirteen weeks in the first quarter of fiscal 2011 versus twelve weeks in the first quarter of fiscal 2010, as well as seasonality differences that result from the year-end holiday period being part of the first quarter of fiscal 2010 but not part of the first quarter of fiscal 2011.

Critical Accounting Policies and Significant Estimates

        The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. ("U.S. GAAP"). The preparation of these financial

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statements requires us to make significant estimates and judgments that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates in these condensed consolidated financial statements include, but are not limited to, accounts receivable allowances, revenue recognition on fixed price contracts, depreciation of property and equipment, share-based compensation, valuation of acquired intangible assets, impairment of long lived assets, goodwill, accrued and deferred income taxes, valuation allowances on deferred tax assets, accrued compensation, accrued exit costs, and other accrued expenses. These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if our assumptions based on past experience or our other assumptions do not turn out to be substantially accurate.

        A summary of the accounting policies that we believe are most critical to understanding and evaluating our financial results is set forth below. This summary should be read in conjunction with our condensed consolidated financial statements and the related notes included in Item 1 of this quarterly report, as well as in our most recently filed annual report on Form 10-K.

        Revenue Recognition and Accounts Receivable Allowances.    We derive substantially all of our revenues from the performance of professional services. The contracts that we enter into and operate under specify whether the engagement will be billed on a time-and-materials or fixed-price basis. These engagements generally last three to six months, although some of our engagements can be much longer in duration. Each contract must be approved by one of our vice presidents.

        We recognize substantially all of our revenues under written service contracts with our clients where the fee is fixed or determinable, as the services are provided, and only in those situations where collection from the client is reasonably assured and sufficient contractual documentation has been obtained. In certain cases we provide services to our clients without sufficient contractual documentation, or fees are tied to performance-based criteria, which require us to defer revenue in accordance with U.S. GAAP. In these cases, where we invoice clients, these amounts are fully reserved until all criteria for recognizing revenue are met.

        Most of our revenue is derived from time-and-materials service contracts. Revenues from time-and-materials service contracts are recognized as the services are provided based upon hours worked and contractually agreed-upon hourly rates, as well as indirect fees based upon hours worked.

        Revenues from the majority of our fixed-price engagements are recognized on a proportional performance method based on the ratio of costs incurred, substantially all of which are labor-related, to the total estimated project costs. Project costs are based on the direct salary of the consultants on the engagement plus all direct expenses incurred to complete the engagement that are not reimbursed by the client. The proportional performance method is used since reasonably dependable estimates of the revenues and costs applicable to various stages of a contract can be made, based on historical experience and terms set forth in the contract, and are indicative of the level of benefit provided to our clients. Our fixed-price contracts generally include a termination provision that converts the agreement to a time-and-materials contract in the event of termination of the contract. Our management maintains contact with project managers to discuss the status of the projects and, for fixed-price engagements, management is updated on the budgeted costs and resources required to complete the project. These budgets are then used to calculate revenue recognition and to estimate the anticipated income or loss on the project. In the past, we have occasionally been required to commit unanticipated additional resources to complete projects, which have resulted in lower than anticipated income or losses on those contracts. We may experience similar situations in the future. Provisions for estimated

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losses on contracts are made during the period in which such losses become probable and can be reasonably estimated. To date, such losses have not been significant.

        Revenues also include reimbursable expenses, which include travel and other out-of-pocket expenses, outside consultants, and other reimbursable expenses. Reimbursable expenses are as follows (in thousands):

        Our normal payment terms are 30 days from the invoice date. At the end of the first quarter of fiscal 2011, the first quarter of fiscal 2010, and the five-week transition period ended January 1, 2011, our average days sales outstanding, or DSOs, were 95 days, 103 days, and 93 days, respectively. We calculate DSOs by dividing the sum of our accounts receivable and unbilled services balance, net of deferred revenue, at the end of the period by average daily revenues. Average daily revenues are calculated by dividing period revenues by the number of days in the period. Our project managers and finance personnel monitor payments from our clients and assess any collection issues. We maintain accounts receivable allowances for estimated losses resulting from clients' failure to make required payments. We base our estimates on our historical collection experience, current trends, and credit policy. In determining these estimates, we examine historical write-offs of our receivables and review client accounts to identify any specific customer collection issues. If the financial condition of our customers were to deteriorate, or if disputes were to arise regarding the services provided, resulting in an impairment of their ability or intent to make payment, additional allowances may be required. A failure to estimate accurately the accounts receivable allowances and ensure that payments are received on a timely basis could have a material adverse effect on our business, financial condition, and results of operations. As of April 2, 2011, January 1, 2011, and November 27, 2010, $7.1 million, $7.0 million, and $6.9 million were provided for accounts receivable allowances, respectively.

        Share-Based Compensation Expense.    Share-based compensation cost is estimated at the grant date based on the fair value of the award and is recognized as expense over the requisite service period of the award. We use the Black-Scholes option-pricing model to estimate the fair value of share-based awards. Option valuation models require the input of assumptions, including the expected life of the share-based awards, the expected stock price volatility, the risk-free interest rate, and the expected dividend yield. The expected volatility and expected life are based on our historical experience. The risk-free interest rate is based on U.S. Treasury interest rates whose term is consistent with the expected life of the share-based award. Expected dividend yield was not considered in the option pricing formula since we do not pay dividends and have no current plans to do so in the future. We will update these assumptions if changes are warranted. The forfeiture rate is based upon historical experience. We adjust the estimated forfeiture rate based upon our actual experience. In addition, we have performance based awards that are valued at the fair value of shares as of the grant date and expense is recognized based on the number of shares expected to vest under the terms of the award under which they are granted. The fair value determination requires significant assumptions, including estimating future revenues and profits.

        Valuation of Goodwill and Other Intangible Assets.    We account for our acquisitions under the purchase method of accounting. Goodwill represents the purchase price of acquired businesses in excess of the fair market value of net assets acquired. Intangible assets consist principally of non-competition agreements, which are amortized on a straight-line basis over the related estimated lives of the agreements (eight to ten years), as well as customer relationships, customer lists, developed

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technology, and trademarks, which are generally amortized on a straight-line basis over their remaining useful lives (four to ten years).

        In accordance with Accounting Standards Codification ("ASC") Topic 350, "Intangibles-Goodwill and Other," goodwill and intangible assets with indefinite lives are not subject to amortization, but are monitored annually for impairment, or more frequently, as necessary. For our goodwill impairment analysis, we operate under one reporting unit. Under ASC Topic 350, in performing the first step of the goodwill impairment testing and measurement process, we compare our entity-wide estimated fair value to net book value to identify potential impairment. We estimate the entity-wide fair value of our single reporting unit utilizing our market capitalization, plus an appropriate control premium. Market capitalization is determined by multiplying the shares outstanding on the assessment date by the average market price of our common stock over a reasonable period of time based upon management's judgment. We have utilized a control premium which considers appropriate industry, market and other pertinent factors, including indications of such premiums from data on recent acquisition transactions. If the fair value of the reporting unit is less than the book value, the second step is performed to determine if goodwill is impaired. If we determine through the impairment evaluation process that goodwill has been impaired, we would record the impairment charge in our consolidated statement of operations.

        The goodwill amount for acquisitions is initially recorded based upon a preliminary estimated purchase price allocation and is subject to change. Any preliminary purchase price allocation is based upon our estimate of fair value, and is finalized as we receive other information relevant to the acquisition.

        We assess the impairment of amortizable intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important that could trigger an impairment review include the following:

•

a significant underperformance relative to expected historical or projected future operating results;



•

a significant change in the manner of our use of the acquired asset or the strategy for our overall business;



•

a significant negative industry or economic trend; and



•

our entity-wide fair value relative to net book value.

        If we were to determine that an impairment evaluation is required, we would review the expected future undiscounted cash flows to be generated by the assets. If we determine that the carrying value of intangible assets may not be recoverable, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model.

        During the five weeks ended January 1, 2011, in connection with the sale of our Asia-Pacific based Energy practice, we recorded a charge of approximately $39,000 related to the write-off of goodwill. There were no impairment losses related to goodwill or intangible assets during the first quarter of fiscal 2011. We will continue to monitor our market capitalization and in the event that our average stock price subsequently declines and our market capitalization plus an estimated control premium declines below the carrying value for a period we consider to be other-than-temporary, we may be required to record an impairment of goodwill either as a result of our annual assessment that we will conduct in the fourth quarter of fiscal year 2011, or in a future quarter, if an indication of potential impairment is evident. A non-cash goodwill impairment charge would have the affect of decreasing our earnings in such period. If we are required to take a substantial impairment charge, our operating results would be materially adversely affected in such period.

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        Accounting for Income Taxes.    We record income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

        Our financial statements contain certain deferred tax assets and liabilities that result from temporary differences between book and tax accounting, as well as net operating loss carryforwards. ASC Topic 740, "Income Taxes," requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance recorded against our net deferred tax assets. We evaluate the weight of all available evidence to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The decision to record a valuation allowance requires varying degrees of judgment based upon the nature of the item giving rise to the deferred tax asset. As a result of operating losses incurred in certain of our foreign subsidiaries, and uncertainty as to the extent and timing of profitability in future periods, we recorded valuation allowances in certain of these foreign subsidiaries in the five-week transition period ended January 1, 2011 and in fiscal 2010 based on the facts and circumstances affecting each subsidiary. Had we not recorded these allowances of approximately $0.1 million and $2.2 million in the five-week transition period ended January 1, 2011 and fiscal 2010, respectively, we would have reported a lower effective tax rate than that recognized in our statements of operations in the transition period and fiscal 2010. The Company has also recorded a valuation allowance against certain foreign tax credit carryforwards since the future utilization of these credits is considered uncertain. As a result of improved operations, we did not record any valuation allowances in the first quarter of fiscal 2011. If the realization of deferred tax assets in the future is considered more likely than not, an adjustment to the deferred tax assets would increase net income in the period such determination was made. The amount of the deferred tax asset considered realizable is based on significant estimates, and it is possible that changes in these estimates in the near term could materially affect our financial condition and results of operations.

        Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to the valuation allowance, changes to federal, state, or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs, uncertain tax positions, and expenses by jurisdiction, and as a result of acquisitions or dispositions.

        The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in several different tax jurisdictions. We are periodically reviewed by domestic and foreign tax authorities regarding the amount of taxes due. These reviews include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposure associated with various filing positions, we record estimated reserves for probable exposures. Based on our evaluation of current tax positions, we believe we have appropriately accrued for probable exposures. The number of years with open tax audits varies depending on the tax jurisdiction. Our major taxing jurisdiction is the United States. We are no longer subject to U.S. federal examinations by the Internal Revenue Service for years before fiscal 2007. In fiscal 2010, the Internal Revenue Service examined our fiscal 2007 U.S. federal tax return. This examination was concluded with no change in taxable income. During fiscal 2010, the HM Revenue and Customs reviewed our UK subsidiary's fiscal 2006 and fiscal 2007 corporate tax returns. The

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examination has not been formally concluded, however, we do not anticipate that proposed adjustments will have a material impact on our financial position or results of operations.

Adoption of New Accounting Standards

Goodwill

        In December 2010, the Financial Accounting Standards Board (the "FASB") issued an Accounting Standards Update 2010-28, Intangibles-Goodwill and Other (Topic 350) ("ASU 2010-28"). ASU 2010-28 clarifies the requirement to test for impairment of goodwill. ASC Topic 350 requires that goodwill be tested for impairment if the carrying amount of a reporting unit exceeds its fair value. Under ASU 2010-28, when the carrying amount of a reporting unit is zero or negative, an entity must assume that it is more likely than not that a goodwill impairment exists, perform an additional test to determine whether goodwill has been impaired and calculate the amount of that impairment. The modifications to ASC Topic 350 resulting from the issuance of ASU 2010-28 are effective for fiscal years beginning after December 15, 2010 and interim periods within those years. The adoption of the provisions of ASU 2010-28 had no effect on our financial position, results of operations, or cash flows.

Business Combinations

        In December 2010, the FASB issued Accounting Standards Update 2010-29, Business Combinations (Topic 805)—Disclosure of Supplementary Pro Forma Information for Business Combinations ("ASU 2010-29"), which requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The amendments in ASU 2010-29 are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of the provisions of this topic had no effect on our financial position, results of operations, or cash flows.

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Results of Operations

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

Quarter Ended April 2, 2011 Compared to the Quarter Ended February 19, 2010

        On December 17, 2010, our Board of Directors approved a change in our fiscal year end from the last Saturday in November to the Saturday nearest December 31 of each year. The fiscal year change was effective beginning with our 2011 fiscal year, which began January 2, 2011 and will end December 31, 2011. The fiscal year change was not effective until after the completion of our 2010 fiscal year. Therefore, the prior year comparative financial and other information reported in the financial statements herein continue to be presented based on our prior fiscal year end calendar. We have not submitted financial information for the thirteen weeks ended April 3, 2010 in this Form 10-Q because the information is not practical or cost beneficial to prepare. Our results for the first quarter of fiscal 2011, which was the thirteen-week period ended April 2, 2011, are compared to our results for the first quarter of fiscal 2010, which was the twelve-week period ended February 19, 2010. The comparisons are affected by the inclusion of thirteen weeks in the first quarter of fiscal 2011 versus twelve weeks in the first quarter of fiscal 2010 as well as seasonality differences that result from the year-end holiday period being part of the first quarter of fiscal 2010 but not part of the first quarter of fiscal 2011.

        Revenues.    Revenues increased $19.8 million, or 33.6%, to $78.6 million for the first quarter of fiscal 2011 from $58.8 million for the first quarter of fiscal 2010. Our revenue improvement was due primarily to increased demand for our services, specifically in the litigation, regulatory, and financial consulting and management consulting areas, even though clients have continued to carefully manage their spending. Our litigation, regulatory, and financial consulting areas have also benefited from our recent investments in business development. Employee consultant headcount was 518 at the end of the

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first quarter of fiscal 2011, a decrease from 588 at the end of the first quarter of fiscal 2010. Our utilization rate increased to 75% for the first quarter of fiscal 2011 from 60% for the first quarter of fiscal 2010. The increase in utilization is primarily related to increased demand for our services and the restructuring of our portfolio of services. In addition, due to the change in our fiscal year end, the first quarter of fiscal 2011 did not include the year-end holiday season that was included in the first quarter of fiscal 2010. As a result, revenues were positively impacted in the current quarter compared to the first quarter of fiscal 2010. Increased billing rates for employee consultants, which went into effect in the first quarter of fiscal 2011, have also favorably impacted revenue.

        Overall, revenues outside of the U.S. represented approximately 28% of total revenues for the first quarter of fiscal 2011, compared with 26% of total revenues for the first quarter of fiscal 2010, which is due primarily to our international business having a strong quarter, specifically in Europe and the Middle East. Revenues derived from fixed-price engagements increased to 24.8% of total revenues for the first quarter of fiscal 2011 compared with 15.1% for the first quarter of fiscal 2010. The increase in revenues from fixed-price engagements is due primarily to a change in the proportion of time-and-materials service contracts and fixed-price service contracts in our management consulting area.

        Costs of Services.    Costs of services increased $11.1 million, or 27.5%, to $51.6 million for the first quarter of fiscal 2011 from $40.5 million for the first quarter of fiscal 2010. The increase in costs of services is due to an increase in compensation for our employee consultants and an increase in client reimbursable expenses, partially offset by a decrease in headcount. Compensation for our employee consultants increased by $9.0 million, or 27.9%, and is primarily due to an increase in incentive bonuses for our employee consultants that was accrued for in the first quarter of fiscal 2011 due to the increase in revenue and profitability and the inclusion of thirteen weeks of results in the first quarter of fiscal 2011 as compared with twelve weeks of results in the first quarter of fiscal 2010 due to the change in fiscal year end. Client reimbursable expenses increased $2.1 million, or 25.5%, to $10.4 million for the first quarter of fiscal 2011 from $8.3 million for the first quarter of fiscal 2010 primarily related to the increase in the number of projects. As a percentage of revenues, costs of services decreased to 65.6% for the first quarter of fiscal 2011 from 68.7% for the first quarter of fiscal 2010. The decrease in costs of services as a percentage of revenue is due primarily to the increase in revenue during the first quarter of fiscal 2011 as compared with the first quarter of fiscal 2010 and lower compensation expense as a percentage of revenue.

        Selling, General and Administrative Expenses.    Selling, general and administrative expenses increased by $2.0 million, or 12.9%, to $17.8 million for the first quarter of fiscal 2011 from $15.8 million for the first quarter of fiscal 2010. The increase in selling, general and administrative expenses is due primarily to an increase in incentive bonuses for our employees that were accrued for in the first quarter of fiscal 2011 due to the increase in revenue and profitability, the year-end holiday season reflected in our results for the first quarter of fiscal 2010 but not affecting the first quarter of fiscal 2011, the inclusion of thirteen weeks of results in the first quarter of fiscal 2011 as compared with twelve weeks of results in the first quarter of 2010 due to the change in fiscal year end, and investments in business development. As a percentage of revenues, selling, general and administrative expenses decreased to 22.7% for the first quarter of fiscal 2011 from 26.8% for the first quarter of fiscal 2010, which was primarily the result of the increase in revenue during the first quarter of fiscal 2011 as compared with the first quarter of fiscal 2010.

        Depreciation and Amortization.    Depreciation and amortization remained relatively constant at $1.3 million for the first quarter of fiscal 2011 and the first quarter of fiscal 2010.

        Interest Expense.    Interest expense decreased by $478,000 to $392,000 for the first quarter of fiscal 2011 from $870,000 for the first quarter of fiscal 2010. Interest expense primarily represents interest incurred on our 2.875% convertible debt, the amortization of debt issuance costs, and the amortization

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of the discount recorded in connection with our adoption of ASC Topic 470-20. The decrease was primarily due to the lower principal balance outstanding on our convertible debt in the first quarter of fiscal 2011 compared with the first quarter of fiscal 2010.

        Other Income (Expense).    Other income (expense) increased by $132,000 to expense of $146,000 for the first quarter of fiscal 2011 from expense of $14,000 for the first quarter of fiscal 2010. Other income (expense) consists primarily of foreign currency exchange transaction gains and losses. We continue to manage our foreign currency exchange exposure through frequent settling of intercompany account balances and by self-hedging movements in exchange rates between the value of the dollar and foreign currencies including the Euro and the British Pound.

        (Provision) Benefit for Income Taxes.    The provision for income taxes was $3.0 million for the first quarter of fiscal 2011 and $436,000 for the first quarter of fiscal 2010. Our effective income tax rate decreased to 40.2% for the first quarter of fiscal 2011 compared to an effective tax rate of 81.5% for the first quarter of fiscal 2010. The effective tax rate in the first quarter of fiscal 2011 was consistent with the expected statutory rate. The effective tax rate in the first quarter of fiscal 2010 was higher than the expected statutory rate primarily due to losses in foreign locations that provided no tax benefit.

        Net (Income) Loss Attributable to Noncontrolling Interest, Net of Tax.    Our ownership interest in NeuCo constitutes control under U.S GAAP. As a result, NeuCo's financial results are consolidated with ours and allocations of the noncontrolling interest's share of NeuCo's net income result in deductions to our net income, while allocations of the noncontrolling interest's share of NeuCo's net loss result in additions to our net income. Our ownership interest in NeuCo is 55.89%. The result of operations of NeuCo allocable to its other owners was a net income of $26,000 for the first quarter of fiscal 2011 and a net loss of $167,000 for the first quarter of fiscal 2010.

        Net Income (Loss) Attributable to CRA International, Inc.    Net income (loss) attributable to CRA International, Inc. increased by $4.2 million to net income of $4.4 million for the first quarter of fiscal 2011 from net income of $266,000 for the first quarter of fiscal 2010. Diluted net income per share was $0.41 per share for the first quarter of fiscal 2011, compared to $0.02 of net income per diluted share for the first quarter of fiscal 2010. Diluted weighted average shares outstanding decreased by approximately 37,000 shares to approximately 10,798,000 shares for the first quarter of fiscal 2011 from approximately 10,835,000 shares for the first quarter of fiscal 2010. The decrease in weighted average shares outstanding is primarily due to repurchases of common stock during fiscal 2010, offset in part by an increase in restricted shares that have vested and stock options that have been exercised since the first quarter of fiscal 2010.

Five Weeks Ended January 1, 2011 Compared to Five Weeks Ended January 2, 2010

        On December 17, 2010, our Board of Directors approved a change in our fiscal year end from the last Saturday in November to the Saturday nearest December 31 of each year. The fiscal year change was effective beginning with our 2011 fiscal year that began January 2, 2011 and will end December 31, 2011. As a result of this change, we had a five week transition period which began November 28, 2010 and ended January 1, 2011. The discussion below compares the results for the five-week transition period ended January 1, 2011 to the results for the five-week comparative period ended January 2, 2010. These two comparative periods each included two weeks with major holidays and resultant employee consultant vacation time. Accordingly, revenue for the five-week periods is not representative of five average weeks from a full fiscal cycle. Moreover, expenses such as compensation, occupancy costs and many other costs continue on a level basis, which impacted performance in both periods.

        Revenues.    Revenues for the five weeks ended January 1, 2011, increased by $1.9 million, or 9.3%, to $22.3 million, from $20.4 million for the five weeks ended January 2, 2010. Included in revenues are $0.4 million and $0.6 million for the five weeks ended January 1, 2011 and January 2, 2010,

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respectively, due to the consolidation of NeuCo. The increase in revenue was a result of continuing improvements in activity within our litigation, regulatory and financial consulting and management consulting areas, evidenced by an increase in our utilization from 61% for the five weeks ended January 2, 2010 to 67% in the five-week transition period ended January 1, 2011. Despite this utilization increase, these comparative periods represent weak operating periods for us due to the holiday season and disproportionate levels of vacation. Therefore, utilization in these periods tends to be lower than utilization typically experienced during other periods.

        Cost of Services.    Cost of services increased by $1.4 million, or 9.3%, to $16.4 million for the five weeks ended January 1, 2011, from $15.0 million for the five weeks ended January 2, 2010. Included in costs of services are $0.1 million and $0.2 million in the five weeks ended January 1, 2011, and January 2, 2010, respectively, due to the consolidation of NeuCo. The increase in cost of services was due to increased compensation-related costs and an increase in client reimbursable expenses in the comparable periods.

        Selling, General and Administrative Expenses.    Selling, general and administrative expenses decreased by $0.2 million, or 3.8%, to $6.1 million for the five weeks ended January 1, 2011, from $6.4 million for the five weeks ended January 2, 2010. Included in selling, general and administrative expenses are $0.4 million and $0.6 million in the five weeks ended January 1, 2011, and January 2, 2010, respectively, due to the consolidation of NeuCo. The decrease in selling, general, and administrative expenses was due primarily to our cost cutting efforts during fiscal 2010.

        Interest and other income (expense).    Interest and other expense decreased $0.2 million, or 52.3%, to $0.1 million for the five weeks ended January 1, 2011, from $0.3 million for the five weeks ended January 2, 2010, primarily due to the lower principal balance outstanding on our convertible debt in the five weeks ended January 1, 2011 as compared to the five weeks ended January 2, 2010. Included in the five weeks ended January 1, 2011 are $0.1 million in costs related to the sale of our Asia-Pacific based Energy practice.

        Provision for Income Taxes.    For the five weeks ended January 1, 2011, our effective tax rate was a benefit of 30.4% and lower than statutory rates due to foreign losses for which we provided no benefit, offset by a partial tax benefit from the divestiture of our Asia-Pacific based Energy practice. Our effective tax rate for fiscal 2010 was a provision of 68.6%. The effective tax rate for fiscal 2010 was higher than the expected statutory rate primarily due to losses in certain tax jurisdictions that were not benefited. The annual effective rate of 68.6% was applied to the five-week transition period ended January 2, 2010 and resulted in a benefit for that period.

        Net Loss Attributable to CRA International, Inc.    We reported a net loss of $0.6 million, or net loss of $0.06 per share, for the five weeks ended January 1, 2011, compared to a net loss of $0.4 million, or a net loss of $0.03 per share, for the five weeks ended January 2, 2010. Included in the net loss are $39,000 and $0.1 million in net losses in the five weeks ended January 1, 2011 and January 2, 2010, respectively, due to the consolidation of NeuCo. Weighted average shares outstanding decreased by approximately 72,000 shares to approximately 10,567,000 for the five weeks ended January 1, 2011, from approximately 10,639,000 for the five weeks ended January 2, 2010. The decrease in weighted average shares outstanding was due to repurchases of common stock during fiscal 2010, partially offset by restricted shares that vested and stock options that were exercised during fiscal 2010.

Liquidity and Capital Resources

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

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Quarter Ended April 2, 2011

        General.    In the first quarter of fiscal 2011, cash and cash equivalents decreased by $37.2 million. We completed the quarter with cash and cash equivalents of $50.3 million, short term investments of $31.6 million, and working capital (defined as current assets less current liabilities) of $104.6 million.

        Sources and Uses of Cash.    During the first quarter of fiscal 2011, net cash used in operating activities was $2.9 million. The use of cash was expected as we paid out bonuses during the first quarter of fiscal 2011. The primary uses of cash in operating activities include increases in unbilled services of $4.0 million, decreases in accounts payable, accrued expenses, and other liabilities of $2.9 million, decreases in deferred rent of $1.9 million, increases in prepaid expenses and other assets of $1.1 million and an increase in accounts receivable of $0.8 million. The uses of cash in operations were partially offset by the following sources of cash: net income of $4.5 million, share-based compensation expense of $1.7 million, and depreciation and amortization expense of $1.3 million.

        We used $34.2 million of net cash in investing activities for first quarter of fiscal 2011, which included uses of cash of $31.4 million to purchase short-term investments to achieve higher returns on our excess cash, $2.5 million for capital expenditures, and $0.3 million of net acquisition consideration payments.

        We used $0.4 million of net cash in financing activities for the first quarter of fiscal 2011. Cash used in financing activities was primarily used to redeem $0.7 million in vested employee restricted shares for tax withholdings, offset partially by $0.3 million received upon the exercise of stock options.

Transition Period

        General.    During the five-week transition period ended January 1, 2011, we had a net increase in cash and cash equivalents of $13.3 million since November 27, 2010. We completed the transition period with cash and cash equivalents of $87.5 million and working capital (defined as current assets less current liabilities) of $100.5 million.

        Sources and Uses of Cash.    During the five-week transition period ended January 1, 2011, net cash provided by operations was $7.5 million. The primary sources of cash from operations include a decrease in unbilled services of $7.7 million and a decrease in accounts receivable of $3.6 million due to increased collections, an increase in deferred rent of $0.9 million, share-based compensation expense of $0.8 million, and depreciation and amortization expense of $0.7 million. The sources of cash in operations were offset by a net loss of $0.7 million and a decrease in accounts payable, accrued expenses, and other liabilities of $6.4 million due to a decrease in compensation related accruals.

        We generated $5.9 million of net cash from investing activities during the transition period, which included $6.3 million received from the sale of short-term investments, partially offset by uses of cash of $0.3 million for capital expenditures.

        We used $0.2 million of cash for financing activities during the transition period, essentially all of which was for payments of notes payable.

Indebtedness

        Private Placement of Convertible Debt.    In 2004, we completed a private placement of $90.0 million of 2.875% convertible senior subordinated debentures due in 2034. Cumulatively to date through April 2, 2011, we have repurchased convertible debentures in the principal amount of $68.2 million, on the open market. As of April 2, 2011, the principal amount of the convertible debentures totaled $21.9 million. The debentures are our direct, unsecured senior subordinated obligations and rank junior in right of payment to our existing bank revolving line of credit and any future secured indebtedness

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that we may designate as senior indebtedness. Contractual interest of approximately $0.3 million is payable on June 15, 2011.

        As a result of our election on December 14, 2004, we must settle the conversion of the debentures, as follows: (i) $1,000 in cash per $1,000 principal amount of debentures converted; and (ii) in cash or shares of our common stock (at our further election, except for cash in lieu of fractional shares), any conversion obligation that exceeds the principal amount of the debentures converted.

        Pursuant to the terms of the indenture governing the debentures, since the closing stock price did not equal or exceed the $50 per share contingent conversion trigger price for 20 out of the 30 consecutive trading days ended on April 2, 2011, the market price conversion trigger was not satisfied and holders of the debentures are not able to exercise their right to convert the bonds during the first quarter of fiscal 2011 and will not be able to exercise during the second quarter of fiscal 2011. This test is repeated each fiscal quarter. To date, no conversions have occurred.

        We may elect to redeem all or any portion of the debentures on or after June 20, 2011, at a repurchase price equal to 100% of the principal amount of the debentures, plus accrued and unpaid interest. As early as June 15, 2011 or upon certain specified fundamental changes, we may be required, at the option of each holder, to repurchase all or any portion of the debentures, which, in the event of a fundamental change involving a change of control of our firm, may include the payment of a make-whole premium. Due to the potential redemption as early as June 2011, we classified the remaining convertible debt balances as a current liability as of April 2, 2011, January 1, 2011 and November 27, 2010 in the accompanying consolidated balance sheets.

        Borrowings under the Revolving Line of Credit.    We are party to a senior loan agreement with our bank for a $60.0 million revolving line of credit. Subject to the terms of the agreement, we may use borrowings under this revolving line of credit for acquisition financing, working capital, general corporate purposes, letters of credit, and foreign exchanges contracts. The available revolving line of credit is reduced, as necessary, to account for certain outstanding letters of credit. The $60.0 million credit facility allows us to mitigate the potential liquidity risk, and to provide funding if required, in the event of conversion by the debenture holders. The revolving line of credit also gives us additional flexibility to meet any unforeseen financial requirements. The revolving line of credit expires on April 30, 2014. The amounts available under our bank revolving line of credit are constrained by various financial covenants and reduced by certain outstanding letters of credit. As of April 2, 2011, there were no amounts outstanding under this revolving line of credit and $2.5 million in letters of credit were outstanding.

        Borrowings under our credit facility bear interest, at LIBOR plus an applicable margin. Applicable margins range from 1.75% to 2.75%, depending on the ratio of our consolidated total debt to consolidated earnings before interest, taxes, depreciation and amortization, or EBITDA, for the preceding four fiscal quarters, subject to various adjustments stated in the senior loan agreement. These margins are adjusted both quarterly and each time we borrow under the credit facility. Interest is payable monthly. A commitment fee of 0.25% is payable on the unused portion of the credit facility. Borrowings under the credit facility are secured by 100% of the stock of certain of our U.S. subsidiaries and 65% of the stock of our foreign subsidiaries, which represents approximately $53.8 million in net assets as of April 2, 2011.

        Under our senior loan 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 senior 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. As of April 2, 2011, the financial covenants required us to maintain a minimum consolidated working capital of $25.0 million and to comply with a consolidated senior debt to EBITDA ratio of not more than 2.5 to 1.0. The non-financial covenant restrictions under

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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. As of April 2, 2011, we were in compliance with our agreement with the bank.

Compensation Arrangements

        In connection with a previous acquisition, we have agreed to pay an award to certain employees of the acquired business if they achieve specific performance targets through fiscal 2012. Retention of amounts paid to the individual employees is contingent on their continued employment with us through 2016. As of April 2, 2011, based upon performance to date and expected performance in the future, the amount of the award is estimated to be approximately $12 million. This amount could fluctuate depending on future performance. Any payments under this award would be made in fiscal 2013 and we expect to fund these payments, if any, from existing cash resources, cash generated from operations, or financing transactions.

Other Matters

        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 current senior loan agreement, will depend on several factors, including our future profitability, the levels of our debt and equity, restrictions under our existing revolving line of credit with our bank, and the overall credit and equity market environments.

        On July 6, 2010, we announced that our board of directors approved a share repurchase program of up to $5 million of our common stock. We will finance the repurchase program with available cash and cash from future operations. We may repurchase shares in open market purchases or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations. As of April 2, 2011, we have repurchased 8,733 shares under this plan for approximately $0.2 million. We expect to continue to repurchase shares under the share repurchase program.

        We have from time to time retired or repurchased additional portions of our 2.875% convertible debentures through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Any future repurchases or exchanges will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Factors Affecting Future Performance

        Part II, Item 1A of this quarterly report sets forth risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements contained in this quarterly report. 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.

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ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk

Foreign Exchange Risk

        The majority of our operations are based in the U.S., and accordingly, the majority of our transactions are denominated in U.S. dollars. However, we have foreign-based operations where transactions are denominated in foreign currencies and are subject to market risk with respect to fluctuations in the relative value of foreign currencies. Our primary foreign currency exposures relate to our short-term intercompany balances with our foreign subsidiaries and accounts receivable and cash valued in the United Kingdom in U.S. Dollars or Euros. Our primary foreign subsidiaries have functional currencies denominated in the British Pound and the Euro, and foreign denominated assets and liabilities are remeasured each reporting period with any exchange gains and losses recorded in our consolidated statements of operations. We continue to manage our foreign currency exchange exposure through frequent settling of intercompany account balances and by self-hedging movements in exchange rates between the value of the dollar and foreign currencies and the Euro and the British Pound. Holding all other variables constant, fluctuations in foreign exchange rates may impact reported revenues and expenses significantly, based on currency exposures at April 2, 2011. A hypothetical 10% movement in foreign exchange rates would have affected our income before provision for income taxes for the first quarter of fiscal 2011 by approximately $0.6 million. However, actual gains and losses in the future could differ materially from this analysis based on the timing and amount of both foreign currency exchange rate movements and our actual exposure.

        From time to time, we may use derivative instruments to manage the risk of exchange rate fluctuations. However, at April 2, 2011, we had no outstanding derivative instruments. We do not use derivative instruments for trading or speculative purposes.

Interest Rate Risk

        We maintain an investment portfolio consisting mainly of commercial paper with maturities of less than a year and funds holding Canadian government obligations. These held-to-maturity securities are subject to interest rate risk. However, a hypothetical change in the interest rate of 10% would not have a material impact to the fair values of these securities at April 2, 2011 primarily due to their short maturity.

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. Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we record, process, summarize and report the information we must disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended, within the time periods specified in the SEC's rules and forms.

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 have determined that, during the five-week transition period ended January 1, 2011 and the first quarter of fiscal 2011, there were no changes in our internal control over financial reporting that have affected, or are reasonably likely to affect, materially our internal control over financial reporting.

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Important Considerations

        The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, 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 of 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