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, nor do we check the accuracy of this website.

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.

Critical Accounting Policies

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 accounting principles generally accepted in the U.S. The preparation of these financial 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, share-based compensation, valuation of acquired intangible assets, impairment of long lived assets, including goodwill, accrued and deferred income taxes, valuation allowances on deferred tax assets, and accrued bonuses, 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. 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 a computer services fee 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 reduces 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 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 reimbursements, or expenses billed to clients, which include travel and other out-of-pocket expenses, outside consultants, and other reimbursable expenses. These reimbursable expenses are as follows (in thousands):

                                                            Twelve
                                                         Weeks Ended
                                                February 20,     February 15,
                                                    2009             2008
      Reimbursable expenses billed to clients    $      8,920    $      12,469

Our normal payment terms are 30 days from the invoice date. For the twelve weeks ended February 20, 2009, and February 15, 2008 our average days sales outstanding, or DSOs, were 100 days and 107 days. We calculate DSOs by dividing the sum of our accounts receivable and unbilled services balance, net of deferred revenue, at the end of the quarter by average daily revenues. Average daily revenues are calculated by dividing quarter revenues by the number of days in a quarter. 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, resulting in an impairment of their ability 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 February 20, 2009, and

November 29, 2008, $10.3 million and $10.7 million were provided for accounts receivable allowances, respectively.

Share-Based Compensation Expense. We adopted Statement of Financial Accounting Standards ("SFAS") No. 123R, "Share-Based Payments" ("SFAS No. 123R") in fiscal 2006 using the modified prospective application method and began accounting for our equity-based compensation using a fair value based recognition method. Under the fair value recognition requirements of SFAS No. 123R, 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 recognize share-based compensation expense using the straight-line attribution method under SFAS No. 123R. 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 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 stock options. 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 used was based upon historical experience. As required by SFAS No. 123R, we will adjust the estimated forfeiture rate based upon our actual experience.

Valuation of Goodwill and Other Intangible Assets. We account for our acquisitions under the purchase method of accounting pursuant to SFAS No. 141, "Business Combinations". 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, trademarks, and developed technology, which are amortized on a straight-line basis over their remaining useful lives (four to thirteen years).

In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"), goodwill and intangible assets with indefinite lives are not subject to amortization, but are monitored annually for impairment, or more frequently, if necessary, if there are indicators of impairment. Any impairment would be measured based upon the fair value of the related asset based on the provisions of SFAS No. 142. Under SFAS No. 142, 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 utilizing our market capitalization, plus an appropriate control premium. 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. We utilize the entity-wide approach for assessing goodwill for impairment and compare our market value, plus an appropriate control premium, to net book value to determine if a potential impairment exists and whether a formal impairment evaluation is required. If we determine through the impairment evaluation process that goodwill has been impaired, we would record the impairment charge in our consolidated statement of income. 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, such as exit costs related to lease obligations.

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:

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

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

º •
º a significant negative industry or economic trend; and

º •
º 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.

There were no impairment losses related to goodwill or intangible assets during the first quarter of fiscal 2009, which ended on February 20, 2009. However, from February 20, 2009 to March 20, 2009, our stock price has declined from previous levels. We attribute the recent stock price decline to both industry-wide and company-specific factors. Despite the declines, our entity-wide fair value exceeds net book value, and therefore, there has not been an indication of impairment. We will continue to closely monitor our market capitalization and in the event that our average stock price subsequently declines and our market capitalization plus control premium declines below net book value and remains below book value for a period we consider to be other-than-temporary, we will perform an evaluation of the carrying value of goodwill and other intangibles.

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. SFAS No. 109, "Accounting for 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 based on the facts and circumstances affecting each subsidiary. Had we not recorded these allowances, we would have reported a lower effective tax rate than was recognized in our statements of income in fiscal 2008 and during the first twelve weeks of fiscal 2009. If the realization of deferred tax assets is considered more likely than not, an adjustment to the net 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 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.

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.

Results of Operations-For the Twelve Weeks Ended February 20, 2009, Compared to the Twelve Weeks Ended February 15, 2008

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

                                                              Twelve
                                                            Weeks Ended
                                                   February 20,    February 15,
                                                       2009            2008
     Revenues                                              100.0 %         100.0 %
     Costs of services                                      65.4            65.4

     Gross margin                                           34.6            34.6
     Selling, general and administrative
     expenses                                               29.1            27.8

     Income from operations                                  5.5             6.8
     Interest income                                         0.2             1.4
     Interest expense                                       (1.1 )          (0.9 )
     Other income (expense)                                 (0.1 )           0.1

     Income before provision for income taxes,
     minority interest, and equity method
     investment gain (loss)                                  4.5             7.4
     Provision for income taxes                             (3.7 )          (3.8 )

     Income before minority interest and equity
     method investment gain (loss)                           0.8             3.6
     Minority interest                                       0.3               -
     Equity method investment gain (loss), net
     of tax                                                    -               -

     Net income                                              1.1 %           3.6 %

Revenues. Revenues decreased $20.3 million, or 23.6%, to $65.8 million for the first quarter of fiscal 2009 from $86.1 million for the first quarter of fiscal 2008. Our revenue decline was primarily the result of a decrease in the demand for our services, a portion of which is the result of the global economic crisis and credit crunch. In addition, our revenue decline was due in part to the divestiture of our Australian-based operations and the divestiture of our capital projects, legal business consulting, forensic computing and investigations, and other small practices during fiscal 2008. The divested operations generated approximately $4.0 million of revenue during the twelve weeks ended February 15, 2008. In addition, the reported amount of our foreign currency denominated revenue declined in the first quarter of fiscal 2009 because of the strengthening of the U.S. dollar relative to the British pound and other foreign currencies. Another factor contributing to our revenue decline was the decrease in client reimbursable expenses. Client reimbursable expenses are pass-through expenses that

carry little to no margin. These decreases in revenue were partially offset by an increase in revenue of $1.5 million due to the consolidation of NeuCo, Inc., a subsidiary that we have an approximately 50% interest in, and increased billing rates for our employee consultants, which were in effect at the beginning of the first quarter of fiscal 2009.

Revenues for our competition practice decreased by approximately 25% compared to the first quarter of fiscal 2008 reflecting the divestiture of our Australian-based operations and the strengthening of the U.S. dollar relative to the British pound and other foreign currencies in the first quarter of fiscal 2009. Our competition practice continues to be our largest practice in terms of revenue. In our finance practice, revenues decreased approximately 35% compared to the first quarter of fiscal 2008. The decrease is primarily due to a decrease in U.S. finance litigation practice revenue because of litigation cases that have been put on hold. Revenues for our global industrial consulting practice declined approximately 25% in the first quarter of fiscal 2009 compared to the first quarter of fiscal 2008 in part because of the strengthening of the U.S. dollar relative to the British pound and other foreign currencies in the first quarter of fiscal 2009. In addition, several major client engagements in the U.S. concluded and the expected follow-on work was delayed due to the impact of the economic crisis on the chemicals industry. Our intellectual property practice revenues decreased approximately 25% in the first quarter of fiscal 2009 compared to the first quarter of fiscal 2008 due to a decrease in the demand for our services. In our energy practice revenues decreased approximately 25% in the first quarter of fiscal 2009 compared to the first quarter of fiscal 2008. The decline in energy practice revenues is partially due to the postponement of revenues from some major clients in the Middle East. These revenues are anticipated to be recognized during the remainder of the year.

Although they are a relatively small portion of our overall revenues, revenues from our life sciences and labor and employment practices increased during the first quarter of fiscal 2009. Revenues in our life sciences practice increased approximately 30% because we benefited from our involvement in new product launches and contracting strategies. This practice has also been engaged in a number of litigation matters relating to pharmaceutical pricing. In addition, our labor and employment practice generated revenue growth compared to the first quarter of fiscal 2008. This practice continues to be actively engaged in a wide variety of matters including Equal Employment Opportunities and wage and hour litigation.

Overall, revenues outside of the U.S. represented approximately 21% of total revenues for the first quarter of fiscal 2009, compared with 22% of total revenues for the first quarter of fiscal 2008. The decline in international revenues is due primarily to the divesture of our Australian-based operations during fiscal 2008, which generated approximately $2.5 million of revenue during the twelve weeks ended February 15, 2008.

The total number of employee consultants decreased to 595 as of the end of the first quarter of fiscal 2009 from 772 as of the end of the first quarter of fiscal 2008, which is primarily due to workforce reductions, the divestiture of our Australia-based operations, and the divestiture of our capital projects, legal business consulting, forensic computing and investigations, and other small practices, completed during fiscal 2008. In addition, during the second quarter of fiscal 2009, we completed an employee workforce reduction that eliminated 34 consulting positions in offices around the world and across practices. Utilization was 68% for the first quarter fiscal 2009 compared with 70% for the first quarter fiscal 2008. Revenues derived from fixed-price engagements increased to 9.9% of total revenues for the first quarter of fiscal 2009 compared with 7.2% for the first quarter of fiscal 2008.

Costs of Services. Costs of services decreased $13.3 million, or 23.6%, to $43.1 million for the first quarter of fiscal 2009 from $56.3 million for the first quarter of fiscal 2008. Excluding NeuCo's cost of services of $0.9 million for the first quarter of fiscal 2009, cost of services decreased $14.2 million, or 25.2%, which is mainly due to a decrease in compensation expense for our employee consultants of

$10.6 million or 24.2%. The decrease is due to a decrease in the average number of employee consultants and a decrease in the reported amount of cost of services due to the strengthening of the U.S. dollar relative to the British pound and other foreign currencies. In addition, client reimbursable expenses decreased $3.6 million, or 28.8%, to $8.9 million for the first quarter of fiscal 2009 from $12.5 million for the first quarter of fiscal 2008. Included in cost of services are $0.5 million and $0.6 million of employee separation and other compensation costs related to the workforce reductions completed during the first quarters of fiscal 2009 and fiscal 2008, respectively. As a percentage of revenues, costs of services remained flat at 65.4% for the first quarter of fiscal 2009 and fiscal 2008. Client reimbursable expenses decreased as a percentage of revenues by 1.0%, while NeuCo's cost of services in the first quarter of fiscal 2009 resulted in an increase as a percentage of revenue by 1.4%.

During the second quarter of fiscal 2009, we completed a series of employee workforce reductions that eliminated 34 consulting positions in offices around the world and across practices and 22 support personnel. We anticipate that these restructuring activities will result in a second-quarter charge of approximately $1.8 million in cost of services and selling, general, and administrative expenses.

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses decreased by $4.8 million, or 19.9%, to $19.2 million for the first quarter of fiscal 2009 from $24.0 million for the first quarter of fiscal 2008. Excluding NeuCo selling, general, and administrative expenses of $1.1 million for the first quarter of fiscal 2009, selling, general, and administrative expenses decreased $5.9 million, or 24.5%. The decrease is largely due to a decrease in compensation expense due to a reduction in support . . .