Good day, and welcome everyone to CRA International's second quarter fiscal 2008 conference call. (Operator Instructions) With us today are CRA's President and Chief Executive Officer, Jim Burrows, and Executive Vice President and Chief Financial Officer, Wayne Mackey. 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, [Doug]. Statements made during this conference call concerning the future business, operating results, estimated cost savings and financial condition of the company and statements using the terms anticipates, 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 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 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 convertible debt offering and stock options, dependence on key personnel, attracting and retaining qualified consultants, dependence on outside experts, utilization rates, factors related to its recent acquisitions, including integration of personnel, clients, offices and unanticipated expenses and liabilities, risks associated with acquisitions it makes in the future, risks inherent in international operations, performance of NeuCo, changes in accounting standards, rules and regulations, changes in the law that affect the practice areas, management of new offices, potential loss of clients, dependence on the 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 practices, 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 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 call. Jim?

Thanks, Wayne, and thank you, everyone, for joining us today. I apologize if I don't come across clearly. I have laryngitis, and I will try to get through the call as best I can and [because I think] I can. But first I would encourage everyone to refer to today's news release for a full reconciliation of GAAP net income and earnings per share to non-GAAP net income and earnings per share. As outlined in today's news release, [inaudible] revenue for the second quarter of 2008 was $93.8 million, an increase of 6% over the second quarter of 2007. As previously announced, we exited or divested a number of lines of business during the first half of fiscal 2008, including the majority of our Asia Pacific operation and certain specialized Forensic-related practices in London. The 2008 second quarter results include less than a full quarter of revenues from these lines of business as compared to the second quarter of 2007. That did have a full quarter of revenue. Our overall revenue growth during the quarter was fueled by our Litigation and Applied Economics platform, which offset declines in our Finance and Business Facility platforms. In particular, within Litigation and Applied Economics we saw notable increases in our Competition and Intellectual Property practices as part of the divestiture of our competition business in Australia and New Zealand as well as continued growth in our Labor and Employment practice. Within our Finance platform we saw increased activity in Subprime and Credit Crisis Investigation and Litigation work, however this positive trend was offset by a slowdown in work coming from our Forensics practice, which was affected by the timing of projects and the divesture of certain non-core pieces of the business in the U.K. and Australia. Within Business Consulting, our Chemicals and Petroleum…

Thanks, Jim. Let me remind everyone that CRA's fiscal year typically operates on 13 four-week cycles producing unequal quarters in terms of length. Q1, Q2 and Q4 are typically 12 weeks in length, while Q3 is a 16week quarter. Briefly recapping the Q2 results, revenue grew 6% to $93.8 million compared to $88.3 million for the second quarter of fiscal 2007. As described in the press release, our GAAP results for the second quarter of fiscal 2008 reflected $8.7 million related to employee separation, office closure costs, and the divestiture of the majority of the company's Australia and New Zealand practices. Second quarter gross margin on a GAAP basis was 31.6%, and on a non-GAAP basis, excluding the items mentioned above, gross margin was 34.1%. This compares with a gross margin of 36.4% in the second quarter of 2007. The decrease in gross margin percentage between Q2 2008 GAAP and non-GAAP measures is the result of the restructuring costs related to employee separation and other compensation recorded in conjunction with the employee work force reduction as well as certain costs associated with the Australia and New Zealand practice divestitures completed during the year. The decrease of 2.3 percentage points in our non-GAAP measure of Q2 2008 gross margin compared to our Q2 2007 gross margin is due primarily to two items. The first item is an increase in reimbursable expenses of approximately $1.3 million or 0.6 percentage points. Reimbursable expenses generally include no margin. In addition, calculating the bonus in the second quarter, the restructuring charges were not included. Also an additional $1.3 million of incentive bonus was accrued as a retention incentive for key officers. SG&A expenses were 30.7% of revenue in Q2 on a GAAP basis. On a non-GAAP basis, excluding the restructuring items mentioned above, SG&A expenses…

Thanks, Wayne. In terms of our outlook, we believe the strategic initiatives we included in the first half of the year have created a solid foundation for profitable growth. The CRA International brand remains one of the most prominent and recognizable in our practice areas. Overall demand for our specialized services across North America and throughout Europe has been steady. Our entire management team is focused on recovering from the revenue shortfall we had in Q1, which was mostly the European, Middle Eastern portion of the Chemicals and Petroleum practice. We have already seen a significant recovery in this sector. We are encouraged by the size of the contingent improvement in that business. With that I will ask the operator to open the call for questions. Operations?

Thank you. (Operator Instructions) Your first question comes from Randy Hugen - Piper Jaffray.

What needs to happen to get utilization back in the high 70s, and how soon do you think it can happen?

Well, it's a case of just managing the business and keeping on [inaudible] the headcount to match the business. We continue to have a, what I'll call a soft hiring freeze. That is, we're looking at each potential hire as it comes in to make sure that they're needed for current business and will generate immediate revenues. And utilization can change pretty quickly in this business, so we're certainly hoping to get further recovery. I'll remind you that the measures we took in Q2 were basically in mid-quarter, so what you're seeing in the utilization for that quarter still has a mixture of old and new in it.

How are you thinking about guidance for the rest of the year? Could you just walk us through while you still don't feel comfortable providing guidance and what would have to happen to, I guess, allow you to provide guidance for '08?

Well, we have had practice at that, providing quarterly guidance, and now we're in the middle of the year and if we gave guidance now for the year, effectively that becomes quarterly guidance. I think we'll just simply reevaluate where we are at the end of the year.

And then the Chemicals and Petroleum practice, how were things there at the end of the quarter? What's your visibility? Is it back up to speed or are you going to continue to experience, I guess, a bit of a dragging into Q3 and Q4?

That practice has some visibility because a lot of their work is contract and that is, you know, the kind of work we do in Litigation. They are projecting some continued improvement going into the third quarter. And there's a good pipeline of work, so we are optimistic.

SG&A dropped nicely in the quarter. On a weekly run rate, is this a new baseline or could we expect continued cost saving going forward?

Well, we are continuing to implement cost reduction measures, so we are trying to continue the work to reduce that number over time. And what we saw - actually much of what we did in Q2 hasn't really shown up in the numbers. There was a big drop in recruiting costs. But we do anticipate we'll have further savings.

Your next question comes from Timothy McHugh - William Blair & Company. Timothy McHugh - William Blair & Company: As you look at, you know, the second half of the quarter and the impact of the restructuring initiatives, are you pleased that those are sufficient to get your International operations to the profitability you hope for or are you still evaluating other options?

No, we're happy with what we have internationally. I think we're good. Solid practices. We actually, in spite of the first quarter problems, I think we're very happy to be in the Middle East. There's a lot of work there. We're on the ground. We have a good reputation. There's a lot of marketing going on and a good pipeline of possible work out there, so we think we basically have the right combination of resources and practices going forward [inaudible] right now. Timothy McHugh - William Blair & Company: Along those lines, then - I know it's tough to draw conclusions from a relatively short period - but, as you look kind of post the implementation of these restructuring charges, are the International operations profitable again or is it going to take time for some of this to come back and for the C&P practice to improve?

Well, on a non-GAAP basis, I think the second quarter still showed a loss but it was down about half from what it was in the first quarter. But also the Q2 only had partial effects of any measures, so we're optimistic that we'll be able to move back [on regular block]. Obviously, there are a lot of moving parts there, but that's what we're driving towards. Timothy McHugh - William Blair & Company: And as we think about the impact of the restructuring charges, you said most of them were pretty much midquarter. Can we assume about that amount of the cost savings or kind of half of it was maybe recognized in the quarter, or how shall we think of ongoing cost savings relative to your Q2 run rate?

We took a look at what the impact on the quarter of these were, and if you think of the $8.7 million, actually, because of the nature of what occurred, some of the people rolled out that were [inaudible] left the company during the quarter or later in the quarter. We didn't really announce it until about halfway through the quarter, so it was muted to some degree. The lease issues, those also didn't happen until the last part of March, and so the impact of this was much smaller, if you will, than you might have anticipated. It wasn't a full 25%, if you will, of the annualized effect. So it's down well under 25% of what the annualized effect would be. Timothy McHugh - William Blair & Company: And then, lastly, share repurchases that you were - continue to be aggressive there. What's you appetite going forward as well as the share repurchases in the quarter, Wayne, can you tell us relative to the quarter end share count, are most of those reflected in the diluted average that you show for the second quarter?

They would be. With our quiet period, we did not buy shares after some time in the early to mid part of April, so those would be all reflected in the quarter-end balances. In terms of the appetite, I think that's something we'll continue to evaluate depending on the price and what our Board's wisdom is on that.

Your next question comes from Andrew Fones - UBS.

You mentioned that the cost cutting occurred roughly mid-quarter. Did the divestiture also occur mid-quarter?

Yes.

And then, as I look at the utilization and how that kind of trended through the quarter, obviously it would have picked up post the cost cutting. Where did utilization - where was that running at the end of the quarter? Can you give us that?

It was running fairly close to what the average for the quarter was, but I would caution that there's leading up in delivery of week to week variations in that number. So it definitely obviously trended up during the quarter. It started out around 70%.

And then in terms of headcount, can you tell me where headcount was at the end of the quarter and how many college hires you expect to bring on during Q3 and Q4?

Headcount was at 682 at the end of Q2. There is a fairly large volume of new analysts coming in. I don't know the exact number, but there's also expected - a large volume of analysts expected to go back to school. On expected value, we do see some growth in headcount in Q3 and Q4, but there are a lot of uncertainties in that number, so I think the actual will be anywhere from a small increase to some number in the 2%, 3% range.

And then how many weeks are in the third quarter this year?

There'll be 16 weeks in the third quarter.

And what was reimbursable expense in the quarter?

Reimbursable - let's see - $12.3 million.

And do you have cash from operations and Capex as well?

I thought I gave it, but hold on for a second, Andrew.

Wayne, perhaps while you're looking for that, I had one more for Jim. In terms of the large Middle East project that fell off in the first quarter and, you know, may pick back up again later this year, what's your current thought in terms of the timing there?

Well, that particular line of business we're doing some work on, but the new contracts are still out there. But [inaudible] 74, realistically, we wouldn't expect to see - we'd be surprised to see any revenue before Q4 around those contracts or maybe even next year, even end of the year, because this is contracting process and Saudi Arabia is very protracted and [inaudible] to summer. Ramadan this year is in September, so we're not counting on much revenue from those contracts. The revenue we're seeing is really from new clients and other business. We do have - we are very, very optimistic that that line of business will resume, it's just a question of when.

Your next question comes from James Janesky - Stifel, Nicolaus & Co. James Janesky - Stifel, Nicolaus & Co.: Jim, what did you say that the International operations account for now as a percentage of revenues?

[22]

22 for the quarter, Jim. James Janesky - Stifel, Nicolaus & Co.: 22%? Okay. And with the - now that's down, obviously, because of the divestitures, but historically, with European summer vacations, utilization was down sequentially in the August fiscal quarter. Is that an expectation that we should have going into this August?

That's always something we're going to watch. It's a little bit difficult to forecast. Obviously, people do take their vacations. They do here. Whether this just, you know, what the ripple effects are is different every year. So we just have to watch that carefully. James Janesky - Stifel, Nicolaus & Co.: Gross margin, do you expect that, you know, the incentive bonuses that you gave to hold on to people, I would imagine, that's going to continue throughout fiscal 2008 or, you know, just give us an idea, if you can, what type of gross margins we can expect for the remainder of the year. Do you think that they'll be up versus this quarter or will there be more, you know, compensation that's going to flow through the number?

Well, the number referenced by Wayne was basically added to the bonus pool for the year, so they weren't - was not actually paid out during the quarter, simply reserved. And we do not expect that to be [inaudible]. James Janesky - Stifel, Nicolaus & Co.: Don’t expect it what, Jim? I'm sorry.

We're not expecting that to be continuing. It was a one - it was more in the way of a one-time adjustment. James Janesky - Stifel, Nicolaus & Co.: Okay, but there will be, you know, accruals in the third and fourth quarter, right?

Well, they'll be the normal accruals. James Janesky - Stifel, Nicolaus & Co.: Oh, I see. Okay. So we could expect that gross margins could improve?

We certainly hope so. James Janesky - Stifel, Nicolaus & Co.: And actually, Wayne, you gave three reasons why gross margins were down year-over-year, increase in reimbursable expenses and the incentive bonus. What was the third reason?

The third had to do, Jim, with excluding the restructuring costs from the determination of the bonus accrual. James Janesky - Stifel, Nicolaus & Co.: Jim, can you give us an idea of, you know, what type of work you're seeing in the Subprime, you know, broadly defined area - let's even more broadly define the Financial Services area, maybe - and how do you expect that to trend as we move through 2008 and into 2009?

I don't have a list of projects here, actually. I was trying to get a list before the call, and I just didn't get to it. But we have received work in connection with some of the biggest names that you see out in the press. We tend to work for the large defendants, so it's work for accounting firms and some of the major players that are already subjects of lawsuits. I actually don't have information on the billings for those projects yet. I know we're working on this. I just don't have that information at this call, but we'll have more to say about that next quarter. James Janesky - Stifel, Nicolaus & Co.: Do you expect that accelerate throughout '08 and into '09?

We do. We certainly think we'll see increasing [billages] from the cases we have as this is an area where there's regular activity. We get opportunities on a fairly regular basis now in this area, so I would expect that to be growing. James Janesky - Stifel, Nicolaus & Co.: Wayne, what was depreciation, amortization and stock-based comp in the quarter.

Let me get that for you, Jim. James Janesky - Stifel, Nicolaus & Co.: While Wayne is looking that - Jim, the growth of a little over 6% in the quarter, you know, if you exclude the divestiture of some of the overseas operations, what do you think organic growth is and what do you think that can be going forward?

I don't have a measure of what we had done on an apples to apples, but I think that would have raised it by several percentage points. I think the organic growth during the quarter was probably still less than 10%, however there were some significant activities during the quarter in connection with projects that the revenues aren't really going to show up until Q3. So basically I think we're still operating in an organic growth area and the - you know, [OTEs] are close to that. James Janesky - Stifel, Nicolaus & Co.: Wayne, do you have those numbers?

Yes. The stock comp for the quarter was $1.6 million, Jim. The depreciation and amortization, $4.8 million.

(Operator Instructions) You have a follow-up question from the line of Timothy McHugh - William Blair & Company. Timothy McHugh - William Blair & Company: Yes, most of my questions have been asked since then other than I would be interested in cash flow as well. I didn't hear you respond to Andrew's question on that one.

Yes. In fact, I was going to get back to that. For the quarter, the cash flow from operations was $5.6 million and the Capex for the quarter was $2.2 million.

You do have a follow-up question from Andrew Fones - UBS.

Thanks. Tim asked my follow up.

Gentlemen, there are no other questions in the queue at this time.

Well, if there are no other questions, I wish to give my thanks to everyone and we look forward to speaking with you on our third quarter conference call later this year. This concludes today's call.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time.