Good day and welcome everyone to CRA International’s F1Q08 conference call. Today’s call is being recorded you may listen to the web cast on CRA’s website located at www.CRAI.com. In addition, today’s news release is posted on the site for those of you who did not receive it by email. With us today are CRA’s President and Chief Executive Officer, Mr. Jim Burrows, speaking from CRA’s European Middle East regional headquarters in London and Executive Vice president and Chief Financial Officer, Mr. Wayne Mackey, in CRA’s corporate headquarters in Boston. At this time, for opening remarks and introductions I would like to turn the call over to Mr. Mackey. Please go ahead sir.

Thank you Charlotte. Statements made during this conference call concerning the future business, operating results and financial condition of the company and statements using the terms anticipate, believes, expects, should, 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 is 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. Factors that could cause actual 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, shares dilutions from the company’s operating and stock options, dependence on key personnel, attracting and retaining qualified consultants, dependence on outside experts, utilization rates, practice related to its recent acquisitions including integration of personnel, clients, offices and unanticipated expenses and liabilities, risks associated with acquisitions it may make in the future, risks inherent in international operations, performance of new co, changes in accounting standards, rules and regulations, changes in the law of its practicing area, management of new offices, potential loss of clients, dependence on growth of the company’s business consulting practice, the unpredictable nature of litigation related projects, the ability of 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 factors that could affect the company’s financial results is included in the company’s filings with the SEC. The company cannot guarantee any financial results, levels of activity, performance or achievement. The company undertakes no obligation to update any of its forward looking statements after the day of this call. Jim…

Thanks Wayne and thank you everyone for joining us today. Let me start today’s call by saying we were very disappointed with our first quarter results. As we outlined in today’s news release, consolidated revenue and net income both came in well below our expectations, likely as a consequence of underperformance in certain of our over seas businesses. In Q01 international business was only 22% of our revenues, down from 26% and 27% in recent quarters. Aggregate North American net revenues for each of our 3 consulting platforms were in line with plans. There are 5 take away points that I would like to highlight today. First, Q01 results were impacted adversely by our international performance restructuring costs and our higher affected tax rate. Second, Q01 margins were distorted by higher reimbursable. Third, strong actions have been taken to reduce costs and generate annual savings of approximately $9.4 million. Fourth, investigating less strategic and unprofitable operations in Australia and New Zealand. Fifth, demand for services in the North American and our European litigation operations remain strong and the prospects of recovery for the international chemicals and petroleum practice are very good. By far the most significant factor in the disappointing results in Q01 was a substantial decline in the revenues of our chemical and petroleum practice, particularly in the Middle East. Revenues of several large, long running Middle East projects declined more rapidly than expected, as phase down contracts were not received during the quarter. Revenues from the CNP practice in the Middle East and Europe were about $4 million below planned and declined about $3 million from F4Q07 to F1Q08. We’ve been building a staff in the middle east during the the second half of 2007 and into the first quarter of this year, so the impact of profitability…

Thanks Jim. Let me remind everyone that CRA’s fiscal year operates on 13 full week cycles producing unequal quarters in terms of length. Q1, Q2, ad Q4 are typically 12 weeks in length, while Q3 is a 16 week quarter. Briefly recapping our Q1 results, revenue grew 3% to $86.1 million compared with $83.3 million in F3Q07. First quarter gross margin was 34.6% compared to 38% in F1Q07. The decrease in gross margin from a year ago is primarily the result of approximately a 40% or $3.6 million increase in revenue from reimbursable expenses that continued little or no margin. In F1Q08 reimbursable expenses were approximately $12.5 million or 14.5% of net revenue compared to $8.8 million or 10.6% of net revenue in F1Q07. Our overall reimbursable rate in Q1 was above our historical average with reimbursable outside North America representing approximately 22% of international revenue for the quarter. Gross margin was also impacted by approximately $600,000 in separation costs related to some of the actions Jim mentioned earlier in our Forensic Investigations and Computing and Australia Transfer Pricing practices. SG&A expenses for the F1Q08 were 27.8% of revenue compared to 24% of revenue in F1Q07. The high percentage was partly a result of lower than anticipated revenues; in addition we experienced a 36% increase in rent expense, or a 1.4% point increase as a percentage of revenue and certain higher general operating costs. In regards to the additional expense, as Jim touched on, we’re taking action by exiting office space in Palo Alto and in London. The London office had been in the process of shifting a new location and we have been carrying double rents while that build up was happening. These two office closings will result in an estimated $4.1 million charge in Q2 with expected annualized…

Thank you Wayne. Let me just conclude my comments by repeating what we outlined in today’s press release as it relates to guidance. Fiscal 2008 our focus will be on better aligning our cost structure both the North American and overseas in order to raise our utilization rates and improve margins. Visibility into our business will be limited until the impact of these iniatives. Although our North American business is performing at acceptable levels, and there are positive trends in our international practice areas. The decline of visibility, especially in our international business areas limits our ability to provide guidance at this time. To summarize my comments this morning we are taking comprehensive steps to address the margin pressures we experienced in the quarter while at the same time strengthening our prospects for long term growth. Our target markets are active with potential projects and CRA remains one of the most recognized and respected names in our field. Demand for services particularly in our invested businesses remains fundamentally strong. With that I will ask the operator to open the call to questions. Charlotte.

The question and answer session will be conducted electronically. To ask a question please press the star key followed by the digit 1 on your touchtone telephone. If you are using a speaker phone please make sure your mute button is turned off to allow your signal to reach our equipment. We’ll go first to Tim McQue, William Blair and Company.

Yes, I wanted to ask first about the chemicals and petroleum practice. What type of projects were those that fell off quicker than you had thought, could you give us a little more detail on that situation?

We had some large engagements in the Middle East related to economic initiatives, our largest single project was in Saudi Arabia, where we’ve been engaged in a number of initiatives to help industrial that economy. The work did not end, but it phased out much more rapidly than we thought it would. First of all, our business didn’t come in the same schedule as we thought it would.

As you look forward here, are you still looking for new work there, you mentioned you’re optimistic about the potential improvement of that business, does that reflect any change since the quarter then, or is this just hope that you see down the pipe for the rest of the year?

When we see prospects both in Europe and the Middle East, those are sort of managed as 1 unit, we’ve taken a comprehensive look at the work that we have and the work coming in, and we do expect to see an improvement.

2 quick ones if I could. I know you’re not giving any guidance can you give us any sense perhaps where utilization has trended thus far this quarter, so we can get a sense how that compared to the 70% which is impacted with some seasonality?

It’s a little early in the quarter, but we definitely are seeing an uptake and we expect it’s quite possible the quarter will end up with a much better utilization than we saw in last quarter.

Do you have operating cash flow and cap backs for the quarter?

Yes, Tim. I think I mentioned and let me pull out. Cap backs for the quarter were $1.5 million. I don’t think he have published the operating cash flow yet. (Do we have it here?) Operating cash flow was $1.3 million. We had the payout of the bonuses that was a major piece of Q1 that would impact that.

We’ll go next to Randy Hugan.

Just for clarification, were those consultants who were working on those Middle Eastern oil engagements still on the bench now?

We’re not fully utilized in that area but there is work. We’re continuing to work on projects he had, we’ve had work coming in, we’re starting to move assignments around; we have good projects in Europe. As I mentioned, we have a number of leads in the Middle East that we expect to vary over time.

Looking out to maybe, 6 months or a year from now, you expect that demand in that area to be similar to where it had been in trending for the prior few quarters than Q1?

Well we certainly see very good prospects. That’s a little far in the future to make a projection. They’re definitely good prospects and we’re still very confident in our investment in that region and we think that we’ll see the benefits over time.

What areas didn’t see the typical mid quarter rebound you were expecting?

I think we mentioned IP was down a bit for the quarter, transfer pricing. Those are a couple of the areas, but other areas of the company did quite well so there were offsetting effects.

You mentioned increased recruiting costs, why were they higher, and what specific areas were you recruiting for?

I think what happened was early in the quarter there were some recruiting fees. These are individuals that have been recruited earlier or during last year when they came onboard, we were subject to recruiting fees.

You mentioned the sub prime crunch as a possible driver for the finance practices. Are there other practices that might benefit from that as well?

We have different aspects, plans, practices: the securities litigation, the forensic accounting, we also have risk management group that’s been quite active in that area, and we also have a group that gets involved with litigation’s delayed effects. A number of different practice areas in the company harnessing favorable trends from that.

Realizing that a case of litigation is extremely hard to predict, when could you see a more significant level of work from credit crisis related engagements.

We’re already seeing it. We think it will increase over time.

Great, Thanks.

We’ll go next to Jim Janesky, Stifel Nicolaus.

A couple of questions, Jim. You mentioned in your prepared marks, a number of areas where projects wound down or didn’t start up, or didn’t rebound as quickly as expected. Is the something unique about the market right now, that this has a occurred, to where historically you’ve been able to backfill projects where utilization was in the mid 70’s, is there something unique about the market right now that you’re not able to back fill in the projects?

No, I don’t think so. I think these are unrelated events. They happened around the holiday season, made it a little more difficult to immediately adjust. For example, in finance we had one project solo that had been a long running project literally for a number of years, and it was subtly expected to continue on for another year. Less than capacity event that happened right before holiday season. Even though we had other projects in the pipeline, it takes a while to reallocate the staff. In the Middle East again the timing was just simply unique with that set of projects. I don’t think there’s any generic indication; we’ve seen nothing to suggest any change in the market environment.

Sequentially, based upon, excluding the New Zealand practice, how much will come out of the May quarter because of the, you said it’s $12 million on an annualized basis, what do you think will come out of the May quarter for revenues?

Well, I don’t have an estimate but $12 million was a run rate so I think you could you get a reasonable imprints from that.

Rough order and magnitude might be $3-$4 million no higher than that would I expect. And that’s the combined Australia, New Zealand vestibules for the quarter.

Based upon utilization trends that you mentioned, would you expect to be up sequentially in revenues on Australia, New Zealand revenues?

I’m not sure, do you mean do we expect to recover the $3-$4 million in expenses or just take that out of there?

Right, if you take that out would you expect revenues to be up sequentially?

Well that’s certainly our plan and we certainly see favorable trends in our business areas.

2 questions, first of all, the tax rate Wayne, what do you expect it to be for the rest of the year?

Our challenge of course is changing the mix of the income a bit and getting some of the foreign operations that created the higher tax rate into at least break even. Our goal is to get back to a more normalized rate in the low to mid 40’s area. It does not appear that will happen for the balance of the year. But this 50% rate that we capped in this quarter is particularly problem some. A few of the non recurring items we talked about the lease terminations, a portion is in London in the UK, some of the Australia, New Zealand, some of those items will aggregate the ability to get the whole year in there for the tax rate outside North America back to where we’d like it to be. Those are some of the challenges we’re working. Hard to say exactly where it’s going to come out but its not going to be to the full year as to where we started at 42% rate.

You started the year, where, you just started the year at 51%, so is that going to continue for the rest of the year?

No, I think it will be down somewhat, but we’re not sure exactly where it’s going to be, it will not be back at the 42% rate for the rest of the year though.

What was stock based compensation in the quarter and how much was the loss internationally?

We haven’t published the loss amount outside the US, but it clearly is what drove the results for the quarter. Again, we haven’t published the specific amount number. Let’s see if we have the stock compensation number up here now…

If, when you get it, could you just let me know?

It’s $1.5 million.

Thanks.

We’ll go next to Andrew Fones, UBS Securities.

Hi, I was wondering if you could tell me what the utilization trend was through the first of this quarter and how that compares to other first quarters, what the normal trend would be? Thanks.

We had a dip, as we always do coming into the holiday season, and then coming out. The difference was normal pattern is usually for a good January and this year it stayed around the 70% mark. Middle of the quarter is always quite bad so the first and third periods are the ones that have to make up for that.

The February period, did you see any improvement there?

I think I mentioned earlier that we’ve seen some uptake; it’s too early to make a judgment as we only have partial data. We believe we’ll perform closer to normal levels in Q2.

In terms of the headcount reductions can you tell how us roughly overall how many people you’re looking to cut and what practices they may come out of? Thanks.

One thing I should say is this action is essentially happened and actually doubt, I don’t have the total number, I don’t know if he have with us the total debt reduction but it’s a reasonably material number. (Do we have that Wayne? I’m sitting in London.)

Andrew, the reductions have been communicated to all the individuals involved. It’s across the board, it includes people from the consulting practices and it includes support people from inside the company as well. So as you can see from the magnitude of the annual roughly what the impact would be on a full year, once it rolls in.

Can you tell us which practices were most impacted through the company?

It was more or less spread throughout the company.

Just to clarify the prior question on the tax rate, is there anything that would make you think that we couldn’t get back to that 42% or 43% by the end of Q4, you know once you’re done with the charges and so forth.

The challenge is because we have some of the nonrecurring items in particular, I mentioned the real estate write off, that we’ll have in the UK, that’s going to make it a challenge, with what we’re doing on the Australia, new Zealand activities that part of our affective tax rate is going to have a small influence on the balance of a year. It’s really going to be how well earnings of the EME sector of the company comes back in terms getting the rate down. But that’s clearly our goal, is to get the rate back to where it normally would be by getting a better balanced degree of earnings, performance from the company.

On the convertible, that is in the water now, any thoughts in terms of the convertible might be calling a fark and also with the cash balance you have and the way the stock price is, and thoughts in terms of share buybacks?

Well certainly, as I mentioned on the call we have just under 600,000 shares remaining in the authorization we have from our board, and as you pint out depending on the stock price and other considerations that’s certainly something that we’ll be looking at. We would be able to purchase shares as early as beginning this coming Monday under our policy. As to whether we would purchase bonds on the open market or stock, we haven’t made our decision on that, certainly the possibility is to be able to purchase using some of the cash we have for prices on securities where they are.

In terms of hiring plans for the year, can you give us any sense, obviously the head count reductions, but potentially still some hiring, particularly with in the finance practices, you mentioned you’re still looking to build a toolkit, where head count may come into the end of the year?

We continue to have a hiring window open for anyone that we can bring in on at a senior level. Obviously there’s certain areas like finance which we think will continue to grow. Where we won’t be doing a lot of additional hiring is in the middle and junior ranks. We feel we have the right amount of staff to date for the business we have. Now if our business picks up then we’ll be back in the hiring business. As of now, we think we have just about the right balance of staff. There are always shortages, we all need to fill in some situation when we have a specific need, and we are always recruiting at the very senior levels. The other thing I wanted to point out, is we do have the hiring has already been done ate the junior levels for the third and fourth quarter so we’ll have some growth from that factoring into our analysis. I would guess on a net basis that we’ll see a lot of growth in headcount for the rest of the year.

Thanks

We’ll go next to Matt Magherty, Sentinel Management.

I was hoping you could shed a little more light if possible on what happened in the Middle East, Middle Eastern infrastructure projects are a pretty good place to be. Just sort of curious what you think happened there and why you think uptake of those consultants didn’t happen as quickly there. What gives you confidence that you’ll be ok over there, in your terms?

You’re correct, that’s a very good place to be, we’ve had many opportunities. The issues we’re getting into is a classic one in consulting, where you’re getting into so much business you can’t pursue all your marketing opportunities, and that happened last year. I was in that office in October and people were flat out complaining they couldn’t properly market where we had opportunities. Now the market we had was one that we were getting follow up revenue, there was a reorganization on the Saudi side and that was not anticipated. That happened during the quarter and we do have proposals for very substantial pieces of work that are related to what we were doing. Given the way things work in that region of the world those new very substantial projects as they come in, we’re very optimistic, but it probably won’t hit us until much later this year. In the mean time we’re backfilling with the other projects we have, it will just take a while to feel the effects of that. Meanwhile we have seen significant uptake in our European business, we still have projects that are coming in the middle East area. So we think we can remain reasonable fillable until we see the up skirt later in the year.

Granted, your business is inherently difficult to forecast sometimes, I wonder if some of the restructuring that you’re doing now, do you think any of that is going to help you with forecasting a little bit. You guys, seems like 5 of the last 7 quarters now that you’ve missed expectations and I just wonder if some of these changes might be structural in the sense that is might help you get a better handle on things so you can inform the street a little better.

I think what we’ve done is we’ve downsized in the areas that were a management distraction or in areas we didn’t feel that we good opportunities anyway. We’re focusing now on the core business, in a much more aggressive way. I think we will be able to have a better handle on what performance and trends are.

Thanks

We’ll go back to Jim Janesky, Stifel Nicolaus.

Couple of follow up questions, was that 772 headcount quarter end for consultants?

Yes.

So that’s after the reductions?

They would show up in the first part of this quarter.

What were the number of headcount reductions? What number should we use as a basis in the May quarter?

We haven’t said, but in the order of the consulting side, 40 people is what we’re talking about.

Jim, with respect to turnover, has turnover increased in the near term, or after you paid bonuses, what are your thoughts there?

I don’t believe its increased. It’s been holding.

When were bonuses paid out again, March?

Bonuses were paid just very end of Q1, so they were reflected in the cash balance that we have at the end of Q1, there is a remaining piece that will go out in the next week or two.

I’m looking at the numbers right now. The turnover in Q1 this year is about the same as Q1 in last year, it’s actually dropped significantly lower than it was last couple of quarters, so there has not been any real movement.

Thanks

We’ll have a follow up from Tim McQue Willimas Company.

Can you give us a little more detail on what you viewed as the problems with the Australian business as well as the head count, you said the reductions were made to the forensic accounting business, was that demand issue, was that being a non core business? Just a little more detail would be helpful.

Well first, the Australian business we have to recognize that Australia and New Zealand are not large economies compared to the United States and Europe, but those are very large land masses so we had 5 offices;4 offices, plus one individual working in a service office. Right off the bat for a small operation that is pretty high overhead costs. It’s not a high billing market so it was hard to get projects with high cross margins. We felt in the areas we were working in we didn’t see high growth prospects. There’s nothing wrong with the business, it’s a fine business, it just wasn’t generating a growth margin for us. At the end of the day you have to ask, how much management time do you want to spend on something that is 3% of our revenues and 0% of our profits, where the growth potential isn’t significant. I think the board agreed that we just better off focusing our management investments elsewhere, and we could exit gracefully. Which we did. The other question was in the forensic side. We were operating a forensic investigations practice that was very below scale, really quite small, not a core business. It’s not clear that we should have been in that business anyways as a company so we dropped that. Then we had forensic computing business that some parts were related to what we did, some parts that weren’t and again we just below scale. It wasn’t a question of market, either we had to make a significant investment and expand the scale a lot or just get out, so we decided to get out.

Clarify, did you sell the Australian business or are you just exiting it?

Actually Tim we sold it. The way it worked is we sold the assets to a group management team that’s down there, and they assumed the liabilities.

I should add, that we do have an ongoing business down there in the utility consulting area that we retained because we are making a push into the utility market area in Asia Pacific and we have the Hong Kong office, this was an essential part of that platform. We’re not totally exited from Australia, but we basically exited from the bulk of the revenues.

Lastly, how much of your international or Middle Eastern revenue is from chemicals and petroleum?

Let us get back to you on that. As a percentage, it’s less than half.

It’s significantly less than half. A lot of the Middle East business isn’t in chemicals and petroleum, it’s in general consulting. That business has been running at less than 5% of our revenue but its not entirely chemicals and petroleum consulting.

Thank you

At this time we have no further questions. I’ll turn the conference back over to Mr. Burrows for additional or closing remarks.

Well thank you everyone. We look forward to speaking with you in our F2Q08 conference call and this concludes today’s call.