Charles River Associates (CRA) Announces Fourth-Quarter and Full-Year Fiscal 2012 Financial Results

Charles River Associates (CRA) Announces Fourth-Quarter and Full-Year Fiscal 2012 Financial Results

Company Delivers Solid Fourth-Quarter Performance;

On Track For Previously Announced Savings


BOSTON--(BUSINESS WIRE)-- Charles River Associates (NAS: CRAI) , a worldwide leader in providing management, economic and financial consulting services, today announced financial results for the fiscal fourth quarter and year ended December 29, 2012.

Revenue for the fourth quarter of fiscal 2012 was $67.5 million, compared with $75.0 million for the fourth quarter of fiscal 2011, ended December 31, 2011. Non-GAAP revenue for the fourth quarter of fiscal 2012 was $66.0 million, compared with $73.1 million for the fourth quarter of fiscal 2011.

The net loss for the fourth quarter of fiscal 2012 was $53.5 million, or $5.33 per share, which includes a net of tax, non-cash goodwill impairment charge of $57.8 million. This compares with net income for the fourth quarter of fiscal 2011 of $4.4 million, or $0.42 per diluted share. Non-GAAP net income for the fourth quarter of fiscal 2012 was $4.3 million, or $0.43 per diluted share, compared with $4.3 million, or $0.40 per diluted share, for the fourth quarter of fiscal 2011.

A complete reconciliation between revenue, net income or loss (as applicable) and net income or loss per diluted share (as applicable), on a GAAP and non-GAAP basis, for the fourth quarters of fiscal 2012 and fiscal 2011, and for fiscal years 2012 and 2011, are provided in the financial tables at the end of this release.

Comments on the Fourth Quarter

"CRA's fourth quarter performance was on track as we delivered sequential revenue growth and experienced steady demand for our services," said Paul Maleh, CRA's President and Chief Executive Officer. "We achieved our established target for the fourth quarter of double-digit non-GAAP operating margin, which reached 10%. At the same time, we increased our sequential non-GAAP profitability in the fourth quarter. We remain on target to realize the previously announced annualized cost of service and SG&A savings from our 2012 restructuring actions."

"Our results in the fourth quarter were led by solid contributions across our portfolio," said Maleh. "Within Litigation, our Antitrust & Competition Economics practice delivered another excellent quarter and benefitted from growth in North America and Europe. In addition, our Intellectual Property and Labor & Employment practices performed strongly. In Management Consulting, we experienced improved performance from the slow start to the year."

"Another important highlight of the quarter was our expense management," Maleh said. "As part of our third-quarter restructuring, we implemented comprehensive actions to lower SG&A and our fourth-quarter results demonstrated their effectiveness on our overall performance. In the fourth quarter, our non-GAAP SG&A was significantly reduced as a percentage of revenue to 21.9% from 24.1% in the third quarter and 23.7% in the fourth quarter of 2011."

"During the fourth quarter, we reported a pre-tax goodwill impairment charge of $71.6 million," Maleh said. "The impairment charge does not affect CRA's liquidity position, cash flow, or our bank line of credit, nor does it have any effect on the operations of the Company."

Outlook

"After a challenging start to fiscal 2012, we took decisive action to eliminate underperforming assets, refocus our service portfolio, and concentrate resources on core areas," Maleh said. "As a result, we concluded the year in a stronger position - competitively, operationally, and financially. We have created a solid foundation from which we can profitability grow the business, and we are optimistic about fiscal 2013."

"Looking ahead, we are encouraged about our prospects for profitable growth, both organically and through strategic hires. The recently announced returns of Senior Consultants to CRA, Fiona Scott Morton and Carl Shapiro, along with the notable recent addition of a 40-person litigation consulting team including Senior Consultants to CRA, Kevin Murphy, Mark Zmijewski, and Robert Topel, and Vice President, Nicholas Weir, reflect our continued success in attracting influential senior-level consultants and remaining a top destination for leading talent," 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 fourth-quarter fiscal and year-end 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 for its 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, a goodwill impairment charge, 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. For the fourth quarter of fiscal 2012 and full-year fiscal 2012 results, the Company has excluded certain restructuring costs, a goodwill impairment charge, and NeuCo's results. For the full-year fiscal 2011, the Company has excluded certain restructuring costs and NeuCo's results. For the fourth quarter of fiscal 2011, 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, effects of the goodwill impairment charge, 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 DECEMBER 29, 2012 COMPARED TO THE QUARTER ENDED DECEMBER 31, 2011
(In thousands, except per share data)
                       
Quarter Ended December 29, 2012 Quarter Ended December 31, 2011
GAAP Adjustments to Adjustments to Adjustments to Non-GAAP GAAP Adjustments to Non-GAAP
GAAP % of GAAP Results GAAP Results GAAP Results Non-GAAP % of GAAP % of GAAP Results Non-GAAP % of
Results Revenues (Restructuring) (1) (Goodwill Impairment) (2) (NeuCo) (3) Results Revenues Results Revenues (NeuCo) (3) Results Revenues
 
 
Revenues $ 67,533 100.0 % $ - $ - $ 1,546 $ 65,987 100.0 % $ 74,973 100.0 % $ 1,847 $ 73,126 100.0 %
Costs of services   44,271   65.6 %   390     -     321     43,560   66.0 %   47,521   63.4 %   308     47,213   64.6 %
Gross profit (loss) 23,262 34.4 % (390 ) - 1,225 22,427 34.0 % 27,452 36.6 % 1,539 25,913 35.4 %
 
Selling, general and administrative expenses 15,217 22.5 % (209 ) 225 775 14,426 21.9 % 18,223 24.3 % 916 17,307 23.7 %
Depreciation and amortization 1,610 2.4 % 207 - 1 1,402 2.1 % 1,269 1.7 % 10 1,259 1.7 %
Goodwill impairment   71,394   105.7 %   -     71,394     -     -   0.0 %   0.0 %     -   0.0 %
Income (loss) from operations (64,959 ) -96.2 % (388 ) (71,619 ) 449 6,599 10.0 % 7,960 10.6 % 613 7,347 10.0 %
 
Interest and other income (expense), net   (28 ) 0.0 %   -     -     (28 )   -   0.0 %   (63 ) -0.1 %   (38 )   (25 ) 0.0 %

Income (loss) before (provision) benefit for income taxes and noncontrolling interest

(64,987 ) -96.2 % (388 ) (71,619 ) 421 6,599 10.0 % 7,897 10.5 % 575 7,322 10.0 %
(Provision) benefit for income taxes   11,641   17.2 %   99     13,852     (50 )   (2,260 ) -3.4 %   (3,347 ) -4.5 %   (288 )   (3,059 ) -4.2 %
Net income (loss) (53,346 ) -79.0 % (289 ) (57,767 ) 371 4,339 6.6 % 4,550 6.1 % 287 4,263 5.8 %
Net (income) loss attributable to noncontrolling interest, net of tax   (138 ) -0.2 %   -     -     (138 )   -   0.0 %   (101 ) -0.1 %   (101 )   -   0.0 %
Net income (loss) attributable to CRA International, Inc. $ (53,484 ) -79.2 % $ (289 ) $ (57,767 ) $ 233   $ 4,339   6.6 % $ 4,449   5.9 % $ 186   $ 4,263   5.8 %
 
Net income (loss) per share attributable to CRA International, Inc.:
Basic $ (5.33 ) $ 0.43   $ 0.43   $ 0.41  
Diluted $ (5.33 ) $ 0.43   $ 0.42   $ 0.40  
 
Weighted average number of shares outstanding:
Basic   10,027     10,027     10,399     10,399  
Diluted   10,027   (4)   10,127   (4)   10,636     10,636  
 

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