Charles River Associates Announces First-Quarter Fiscal 2001 Financial Results.

Business/Technology Editors

BOSTON--(BUSINESS WIRE)--March 13, 2001

Charles River Associates Incorporated (Nasdaq: CRAI), a leading provider of economic, financial, and business strategy consulting, today reported financial results for the first fiscal quarter ended February 16, 2001. Revenues for the quarter increased 12.1 percent to $21.1 million, compared with revenues of $18.9 million for the first quarter of fiscal 2000. Net income for the first quarter of fiscal 2001 was $1.4 million, or $0.16 per share on a diluted basis, compared with net income of $2.4 million, or $0.28 per share on a diluted basis, for the first quarter a year earlier.

"Although business in some of our core practice areas remained soft and our expenses were higher than anticipated, revenue generated by our new practice areas and recently opened offices allowed us to meet our revenue and earnings expectations for the first quarter," said James C. Burrows, CRA president and chief executive officer. "Another important development during the quarter was our adding some seasoned industry experts in a number of emerging and established practice areas. These individuals are well known in their respective fields and were attractive from a new business generating perspective."

"Costs associated with these senior additions and a drop-off in NeuCo revenue combined to impede our bottom-line results in the first quarter," Burrows continued. "However, these costs were offset by the initial benefits of our shift into new business consulting practices and the opening of new international and domestic offices that we executed during the third and fourth quarters of fiscal 2000. We saw several additional encouraging signs in the first quarter that bode well for the second half of fiscal 2001. Utilization increased, as anticipated, and we believe it will continue to grow through the year. Our new senior consultants are generating increased revenue, and our international offices, particularly London, Toronto and CRA's Asia-Pacific tandem, are all performing above expectations."

"In the first quarter, we continued to shift our resources to align with emerging business trends and geographical locations where CRA sees its greatest growth prospects," Burrows continued. "As part of this initiative, we expanded our electric utilities practice and sought senior level consultants who could be significant revenue contributors. We furthered this objective in the first quarter with several senior hires, including the addition of Howard Pifer. Howard brings to CRA a long and distinguished career, including having been a founder of Putnam, Hayes and Bartlett, a former competitor. In addition, we continued to expand our business internationally by increasing staff at CRA UK and by establishing CRA Asia-Pacific offices in Australia and New Zealand. These moves have paid off. London business is strong. CRA Asia-Pacific generated healthy revenue in the first quarter and is bidding on numerous engagements."

Commenting on CRA's NeuCo subsidiary, Burrows said, "Although NeuCo's revenue for the quarter was lower than expected, current backlog continues to be strong. Work on our existing backlog should pick up in earnest during the second quarter. We will continue to seek opportunities to grow this business by demonstrating the effectiveness of NeuCo's technology."

"Going forward, we see some strengthening of our core practice areas, such as antitrust, in the second quarter. In addition, the success of our newer business practice areas and offices during the first quarter increases our confidence in forecasting continued growth in fiscal 2001. As the year continues, the higher fixed costs associated with our new senior personnel and offices should be offset by stronger revenue contributions from these individuals and locations. As a result, we expect to see second-quarter revenue of between $21 million and $23 million and EPS in the range of $0.18 to $0.21. We remain committed to our goal of 20% to 25% revenue growth for fiscal 2001. And, given our performance during the first quarter, we remain optimistic that CRA can achieve this level of growth," concluded Burrows.

To listen to a live audio Webcast of CRA's first-quarter fiscal 2001 financial results conference call, visit the Company's Web page at www.crai.com. The conference call begins at 11:00 a.m. EST today.

About CRA

Founded in 1965, CRA is a leading provider of sophisticated economic and financial consulting services, expert testimony and litigation support, and business consulting. The firm's areas of expertise include auctions, antitrust, mergers and acquisitions, policy impact assessments, corporate finance, strategy and business operations, and regulatory economics. CRA has advised corporate clients, government agencies, and other organizations in thousands of engagements. In addition to its corporate headquarters in Boston and international offices in London, Melbourne, Mexico City, Toronto, and Wellington, New Zealand, CRA also has U.S. offices in Berkeley/Oakland, College Station, Los Angeles, Palo Alto, Salt Lake City, and Washington, D.C. More information about the Company can be found on its Web site at www.crai.com.

Statements in this press release concerning the future business, operating results, 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. Such 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, dependence on key personnel, attracting and retaining qualified consultants, dependence on outside experts, utilization rates, risks inherent in international operations, NeuCo's performance, management of new offices, dependence on growth of the Company's business consulting practice, the ability of the Company to successfully integrate new consultants into its practice, intense competition, 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 press release.

                 Charles River Associates Incorporated
                      Consolidated Balance Sheets
                   (In thousands, except share data)

                                     November 25,  February 16,
                                            2000          2001
Assets
Current assets:
  Cash and cash equivalents             $ 20,305    $ 14,927
  Available-for-sale securities            5,758       5,293
  Accounts receivable, net of
    allowances of $1,321
    in 2000 and $1,126 in 2001
    for doubtful accounts                 18,338      19,450
  Unbilled services                       11,162      12,212
  Refundable income taxes                    419       1,424
  Prepaid expenses                           602         764
  Deferred income taxes                      636         636

Total current assets                      57,220      54,706

Property and equipment, net                5,942       6,404
Goodwill, net of accumulated
  amortization of $1,089 in
  2000 and $1,291 in 2001                 14,845      14,609
Intangible assets, net of
  accumulated amortization
  of $337 in 2000 and $381 in 2001         1,170       1,162
Other assets                               1,103       3,155

Total assets                            $ 80,280    $ 80,036

Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                      $  3,978    $  3,849
  Accrued expenses                        10,113       8,512
  Deferred revenue and other
    liabilities                              105          84
  Current portion of notes payable
    to former stockholders                   177         177

Total current liabilities                 14,373      12,622

Notes payable to former
 stockholders, net of current portion        102         102
Notes payable to minority interest          --          --

Deferred rent                              1,640       1,666
Minority interest                          1,827       1,704

Commitments and contingencies

Stockholders' equity:
  Preferred stock, no par value;
    1,000,000 shares authorized;
    none issued and outstanding             --          --
  Common stock, no par value;
    25,000,000 shares authorized;
    9,091,523 shares in 2000 and
    9,107,529 shares in 2001 issued
    and outstanding                       45,737      45,834
  Receivable from stockholder             (4,500)     (4,500)
  Deferred compensation                     (112)        (84)
  Retained earnings                       21,362      22,775
  Foreign currency translation              (149)        (83)

Total stockholders' equity                62,338      63,942

Total liabilities and
  stockholders' equity                  $ 80,280    $ 80,036


                   Consolidated Statements of Income
            (In thousands, except share and per share data)
                              (unaudited)
                                                 Twelve Weeks Ended
                                                Feb. 18,      Feb. 16,
                                                  2000          2001

Revenues                                        $18,869       $21,144
Costs of services                                10,529        12,531
Gross profit                                      8,340         8,613
Selling, general and administrative               4,496         6,580
Income from operations                            3,844         2,033
Interest income, net                                305           339
Income before provision for income taxes          4,149         2,372
  and minority interest
Provision for income taxes                       (1,714)       (1,082)
Income before minority interest                   2,435         1,290
Minority interest                                  --             123
Net income                                       $2,435        $1,413
Net income per share:

  Basic                                           $0.28         $0.16
  Diluted                                         $0.28         $0.16
Weighted average number of shares outstanding:
  Basic                                       8,684,338     9,104,444
  Diluted                                     8,838,847     9,104,476