Good day, everyone, and welcome to the CRA Internationalfourth quarter and full year fiscal 2007 conference call. Today’s call is beingrecorded. You may listen to the webcast on CRA's website located atwww.crai.com. In addition, today’s news release is posted on the site for thoseof you who did not receive it by e-mail. With us today are CRA's President and Chief ExecutiveOfficer, Mr. Jim Burrows; and Executive Vice President and Chief FinancialOfficer, Mr. Wayne Mackie. At this time, for opening remarks and introductions,I’d like to turn the call over to Mr. Mackie. Please go ahead, sir.

Thank you, Felicia. Statements made during this conferencecall concerning the future business, operating results, and financial conditionof the company and statements using the terms anticipates, believes, expects,should, or similar expressions are forward-looking statements as defined in thePrivate Securities Litigation Reform Act of 1995. These statements are basedupon management’s current expectations and are subject to a number of factorsand uncertainties. Information contained in these forward-looking statements isinherently uncertain and actual performance and results may differ materiallydue to many important factors. Such factors that could cause actual results to differmaterially from any forward-looking statements made by the company include,among others: changes in the company’s effective tax rate, share dilution fromthe company’s convertible debt offering and stock options, dependence on keypersonnel, attracting and retaining qualified consultants, dependence onoutside experts, utilization rates, factors related to its recent acquisitions,including integration of personnel, clients, offices, and unanticipatedexpenses and liabilities, risks associated with acquisitions it may make in thefuture, risks inherent in its international operations, the performance ofNeuCo, changes in accounting standards, rules and regulations, changes in thelaw that affect its practice areas, management of new offices, the potentialloss of clients, dependence on growth of the company’s business consultingpractice, the unpredictable nature of litigation-related projects, the abilityof the company to integrate successfully new consultants into its practice,intense competition, risks inherent in litigation, and professional liability. Further information on these and other potential factorsthat could affect the company’s financial results is included in the company’sfilings with the Securities and Exchange Commission. Jim.

Thanks, Wayne and thanks, everyone for joining us today.Revenue in the fourth quarter of fiscal 2007 increased 14% over the prior yearto $98.7 million, continuing the steady growth we’ve achieved over the pastseveral quarters. As a reminder, we have not completed any major acquisitionssince our acquisition of the Ballentine Barbera Group in May 2006, so therevenue generated in the fourth quarter was entirely through internal growthled by a number of our service offerings. In particular, we experienced strongcontributions from our competition, energy and environment, chemicals andpetroleum, and transfer pricing practices. Net income in the fourth quarter of 2007 was $10.3 millionor $0.89 per diluted share. This compares with net income of $6.3 million or$0.51 per diluted share in the comparable period of 2006. Net income in thefourth quarter of 2007 includes a one-time benefit of approximately $2.1million or $0.18 per diluted share related to the licensing of intellectualproperty rights by NeuCo. As you may recall, CRA has a 36.4% interest in NeuCoand accounts for its interest under the equity method of accounting. Looking at how the core business performed by excluding theone-time benefit from NeuCo, net income for the quarter would have beenapproximately $8.2 million or $0.71 per diluted share, which was below ourexpectations. Our Q4 operating income performance was primarily the resultof higher-than-anticipated SG&A costs which Wayne will discuss in more detaillater in the call, and lower-than-expected employee consultant utilization. Utilization in the fourth quarter 2007 was 74%. On ayear-over-year comparison, utilization was down from the 78% we achieved inQ406 and below our target range of 76% to 78% for the full year. To bring our utilization rate back into the 76% to 78% rangein fiscal 2008, we are reallocating consultants to the most active practicesand only hiring new consultants who can quickly bring in business who areimmediately needed…

Thanks, Jim. As always, let’s remind everyone that CRA'sfiscal year operates on 13 four-week cycles producing unequal quarters in termsof length. Q1, Q2, and Q4 are typically 12-weeks in length, while Q3 is a16-week quarter. Briefly recapping our Q4 results, revenue grew 14% to $98.7million compared to $86.3 million for the fourth quarter of fiscal 2006, and asJim mentioned, all of this growth was internally generated. As I pointed out on our past three quarterly calls, prior toQ1 2007, we classified our internal information technology group’s labor costas an element of cost of services. In recent years, the IT group graduallybecame less involved in direct client projects and more focused on internalsystems. As a result, and similar to the first three quarters of the year, wereported approximately $900,000 in SG&A for Q4 2007 and reclassified$900,000 for Q4 2006 for comparability purposes. These reclassifications increased the Q4 2007 and Q4 2006gross margin percentages by approximately 0.9 and 1.0 percentage pointsrespectively and increased the respective SG&A expenses as a percentage ofrevenue by identical amounts. This reclassification continues to have no effecton operating income. All of my comments today on our financial results reflectthis reclassification. Fourth quarter gross margin was 38.3% compared to 37.6% inthe fourth quarter of 2006. The 0.6% increase in gross margin was a year ago isa result of a 1.5 percentage point decrease in employee compensation expense,offset by the effect of a 0.9% increase in revenues from reimbursable expensesthat contain little or no margin. In Q4 of 2007, reimbursable expenses were approximately$13.2 million, or 13.4% of our net revenue, compared to $10.8 million, or 12.5%of net revenue in Q4 of 2006. The increase in reimbursable expenses was due toan increase in the uses of subcontractors and external consultants, as well asan increase in travel costs billed directly to clients.…

Thanks, Wayne. Fiscal 2007 was a year of steady growth forthe company as we continued to expand the CRA brand. CRA's reputation is amongthe best in the industry and we continue to be involved in more significanttransactions, litigation, and other events affecting the economic landscape. Weapproached $400 million in revenue by strengthening several of our practiceareas, establishing new areas of expertise, and making strategic investments inour international operations. The continued success of our growth strategy depends on ourability to further diversify our suite of service offerings and areas ofexpertise. Turning to our guidance for fiscal 2008, as announced intoday’s press release, we anticipate revenue growth in the 10% to 14% range forthe year. We expect to achieve annual net income growth in the 6% to 10% rangeand EPS growth rate in the range of 10% to 14% over fiscal 2007. Our 2008 net income and EPS guidance range percentages arebased on our 2007 GAAP reported net income and EPS of $32.6 million and $2.68per diluted share respectively. Our 2008 guidance does not include the impactof any acquisitions or share repurchases. While we do not give quarterly guidance, I would like toremind everyone that Q1 generally is a slower quarter because of seasonality,including the effects of the mid-week Christmas and New Year’s holidays. For your information, for the last three fiscal years, 2005to 2007, revenues for the first quarter for each year have averaged 20.9% ofthe full year revenue. As indicated in our news release this morning and consistentwith past practice, in order to estimate potential share dilution for ourfiscal 2008 EPS guidance, we base it on approximately 11.5 million averagediluted shares for the year and a stock price of $47.80, which was the averageclosing price for the past 10 trading days. Deviations from this stock pricewill cause our earnings per share to vary based on share dilution from ourstock options and convertible bonds. With that, I will ask the operator to open the call forquestions. Operator.

(Operator Instructions) We’ll go to Tim McHugh ofWilliam Blair & Company. Timothy McHugh -William Blair & Company : Yes, I want to start off by digging into the utilizationquickly; can you talk about whether there is anything specific, a region orpractice level that cause the fall-off in utilization?

Obviously some were higher than others. Intellectualproperty probably had a bigger [crop] on average. Other than that, it wasprobably a little bit across the board. Timothy McHugh -William Blair & Company : Given that this surprised you, was this late in the quarterand did this -- is this a trend that continued in the first few weeks of fiscal2008?

Actually, I think it was -- it probably didn’t change a lotduring the course of the quarter and it’s a little bit early for us to know howthe first quarter will come out but bear in mind, the first quarter is heavilydominated by the seasonal effects. The utilization tends to be low in the weeksclose to the holidays. Timothy McHugh -William Blair & Company : Okay, and my other question would be on the -- you mentionedthe international margins or international operations being lower margin.What’s the differential right now between international and domestic margins?

We haven’t given out that detail but there is a -- there’scertainly a difference between the international and domestic margins. It’s nottrivial. Timothy McHugh -William Blair & Company : Okay. And the last question would be you mentioned that youare going to probably not hire as aggressively going into the new year. Can youtalk about what other factors give you confidence that you will continue togenerate the revenue growth that you are forecasting without the headcountadditions?

Well, we are projecting headcount additions for the year andone thing to bear in mind is that the way our headcount growth tends to happen,it tends to be back-end loaded because all of the hiring at the entry levelsgoes up late in the third quarter and early in the fourth quarter. And in someways, there tends to be a tendency for more senior hires to be later than thefirst quarter or second quarter, so our pattern historically is for most of theheadcount growth to be Q3 and Q4 effects. We certainly have the capacity to do more work, though itreally boils down to demand. We do assess that on a fairly continuing basis,practice by practice, and the practices -- each practice has a business planthat they have been, given their knowledge of the market. It’s basically thedistillation of that that leads to our [inaudible] what’s likely to happenduring the year. Timothy McHugh -William Blair & Company : Okay. Thank you very much.

We’ll go to Randy Hugen of Piper Jaffray.

Thanks. How should we think about operating margins as wemove through 2008? Adjusting for seasonality, should we see a pick-up towardsthe end of the year?

Well, I would think -- again, we don’t give guidance onoperating income specifically but clearly the seasonality factor that Jimreferred to almost definitely means that later in the year, we should bestronger in that area. We are also, as we mentioned, looking closely at SG&Alevels and hopefully we will make some progress on that during the year, sothat may well come later in the year as well, to add to that.

Thanks. And is it reasonable to think the competitionpractice may slow down through the year because of the high level of M&A inearly 2007, or would the long-term nature of the engagements offset that?

Well, the M&A work continues to be quite strong andcompetition actually had a strong quarter based on year over year, so we --competition actually has been a pretty strong performer for us throughout theyear. That continues to be the case.

Okay. And then just quickly, comments on the acquisitionpipeline.

We are, as is generally the case, we are always active inexamining alternatives. We have several that are at least in the stage offairly active discussions but they are all a fair ways off from being somethingthat’s likely to happen, so there is a fairly full pipeline but I really can’t predict[finding a way we might do something].

All right. Thanks.

We’ll go to Andrew Fones of UBS.

First of all, could I ask where the share count is rightnow, please?

What is the share count now?

Yes.

Hold on for a second, Andrew. We’ll come up with that foryou. I think you heard what we said with respect to what we were using for thefiscal ’08 and the denominator for our guidance.

Yes, I did, and if you like, while you are looking for that,I can move on; as you look at the international business, what differences arethere in terms of the cost structure to cause the margins to be lower? So maybeyour offices, you know, have they not yet reached critical mass or are youseeing lower utilization or is it just generally higher business costs?

Well, I think there a number of factors. One is that theLondon, our London operating costs are very high. This is basically just afunction of being in London. The operating costs of the office, these are notcorporate overhead costs, as a percent of revenue are 8% to 10% higher than therest of the company. So that’s a significant factor requiring debt toutilization in high rates to offset to generate the same amount of income. Secondly, utilization has tended to be lower for the foreignoperations than the U.S. average. That gap has been closing over time but theyare not equal yet, so we have higher operating costs and somewhat lowerutilization and the combination of those two obviously leads to lower operatingmargins. The third factor of which I guess I should mention -- in theforeign operations, we have one very large office, namely London. That officerecently had a real estate consolidation. I think as a result of theconsolidation, we’ll have a more efficient use of our real estate butthroughout fiscal ’07 and into fiscal ’08, we are continuing to have --essentially to pay the cost of carrying redundant space. We are still carryingthe cost of two locations. We’ll be getting out of one of the leases duringfiscal ’08. There’s been a substantial cost overhang though than the consolidatedspace. The second issue is that outside of London, the offices arevery small, so they are basically start-up offices. So there is a range offactors. Some of those are just related to the fact that we are still in astart-up mode. As you may recall, we opened the London office essentiallyvery late in 2000, really early 2001 when we started. And the growth in thelast three years has been very substantial but it is still basically reachingequilibrium. And then outside of London, we have very small offices. So there’sa whole range of factors that will add to the operating margins being lower, [profitwill be] lower than the United States.

Okay, thanks. And as you look at SG&A and target costreductions, is it primarily real estate that you are looking at or are theresome other initiatives or areas that you think you may see savings?

It’s really a number of different areas, Andrew. That’scertainly one of them but it would include travel and other related costs andfrankly, infrastructure costs throughout the company as well.

Okay, and then obviously costs are up significantly on theSG&A line year over year. Do you think you can get back to the levels yousaw in 2006, just over 20% of revenue?

I think that’s a reasonable target. We have not -- we areearly on in looking at this and so we have intentionally not tried to setexpectations, either overly high or frankly overly low, in this area so wehaven’t even internally logged in on a specific target. But it is clearly anarea we have our sights on to look at hard.

Okay, thanks, and then if I could perhaps ask for yourinsights into two of the practices in the demand environment that we might seein 2008 -- it seems as though for the litigation practice, we are currentlyseeing a pick-up in securities litigation and are you seeing that? Do you thinkthat could have an impact this year on demand and utilization in that group? And then secondly, competition -- I think somebody had askedabout what the outlook could be. Obviously there’s some concern about afall-off in M&A but also obviously it’s an election year and there could besome impacts there, so if you could talk about that, that’d be great. Thanks.

I missed the second part of your statement on competition. Iheard the M&A part. What was the second part?

On competition, the M&A, the impact there, do you thinkthere could be a fall-off in M&A? And then also, it being an election yearand the potential change in administration and what impact you think that couldhave on the competition practice. Thanks.

First on finance, we are continuing to experience a steadyflow of new engagements. There are some areas that area active, for example, inthe sub-prime mortgage area where we’ve been retained on a number ofpotentially major litigations and we think the momentum there is pretty good. And there is a continuing amount of other large engagementsthat are starting to appear, so how rapidly they will show up in growth is hardto tell but the mood is quite bullish in that practice in terms of theirassessment of the full year going forward. In the competition area, work and demand has been quitesteady. Obviously if the economy really goes south, M&A work or M&Atransactions could decline significantly. That will affect us. That hasn’treally affected us to date. I’m not sure I’m in a better position to project that thananybody else because that’s really a function of what the macroeconomic impactsare. But that work has been strong, it is quite strong in Europe where much ofthe work is emanating from, so we are geographically diversified, at least. Andas I said, [inaudible] has continued to be nearly a steady producer for us. Now, in terms of the effects of the election, I think ourassessment is that almost regardless of the outcome of the election, whateverthe outcome is it should be good because the current administration is prettymuch of a hands-off on business. There is a tendency to let a lot of mergers gothrough without a lot of resistance and even if it’s just another Republicanadministration, I think the belief is that either there will be no change orchange for the better in terms demand for our kinds of services.

Okay. Thank you.

There’s the question you asked on shares at the front-end ofyour questions. If this helps you, the number of shares that were reflected onthe balance sheet as outstanding, which I think is what you asked, I’m not sureif this is what you wanted, is just about 11 million at the end of the fiscalyear. Of course, the $11.5 million that we are using as the estimate of theshares to be used for guidance and EPS calculation reflects the dilutive effectof the CoCo bond shares that would be convertible and options and so forth.

Okay, thanks. Yes, that’s great. And then just as afollow-up to your comments that, if you don’t mind, on competition; I know thatin the past you’ve tried to give some quantification of the impact of M&Aon the competition business, or the proportion of business that was related toM&A. Do you have any thoughts you could provide there? Thanks.

We haven’t quantified it, partly because it’s not a numberthat we can trim down very easily because there’s a lot of work that’s presentin terms of how it would be classified, but it is a substantial share of ourcompetition work.

By substantial, you would say possibly half or more thanhalf, or -- ?

I’m not sure it’s more than half but it’s certainly not 10%either.

Okay. Thank you very much.

(Operator Instructions) We’ll go to Jim Janesky of StifelNicolaus.

Good morning, guys. This is actually Adam [Kozer] for Jim.My first question is going into ’08, what’s the sustainability for growth in Iguess the chemicals, petroleum and energy practices? What does the demandpipeline look like?

The demand pipeline looks fairly good. There’s been, in thelast several months, a turnover of projects with projects turning, othersopening up. I think there has probably been a slowdown of actual growth inrevenue but the -- there seems to be plenty of opportunities. In the MiddleEast, we have one very large project that we are still working on but it’ssubstantially reduced because we are in the late stages of that. That’s beingreplaced by a number of new projects and leads, but they require conversions sowe are in one of those periods where we are turning over projects but the[parade] of new opportunities seems to be pretty good.

Okay, great and then just briefly touching in on thesub-prime mortgage area, what types of clients are you starting to see orexpecting to see the most demand from?

Generally, it would be either the lenders themselves oraccounting firms or other financial institutions that have become involved. Ourwork tends to happen when there’s litigation. We don’t tend to get involved onjust doing the forensic investigation or purely on stage work. It’s whensomething becomes a litigation and a major player is involved, large damage[inaudible].

Okay. All right. Thanks a lot.

(Operator Instructions) Gentlemen, having no furtherquestions, I’ll turn the conference back to management for any additionalremarks.

Thanks, everybody. We look forward to speaking with you onour first quarter fiscal 2008 conference call. This concludes today’s call.

Thank you for your participation.