Jim Burrows - President and Chief Executive Officer Wayne Mackey - Executive Vice President and Chief Financial Officer

Tim McQue - William Blair and Company Randy Hugan Jim Janesky - Stifel Nicolaus Andrew Fones - UBS Securities Matt Magherty - Sentinel Management

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 of the revenue climate was magnified by an increase in our costs in the European and middle eastern component of the CNP practice. Our international operations were also adversely affected by certain other cost increases.

These included a charge per earnings of approximately $600,000 for the cost of reducing head count in our forensic investigations and forensic computing units in London and in the Australian transfer price practice. We continue to incur higher rent expense in London resulting from our consolidation of space and the temporary repairing of extra space in our former location.

Finally our Q1 tax rate was unusually high, at 51% as a result of the international losses which could not be offset against US policy. Q1 is generally back end loaded for us because of the holiday period falls in the middle of the quarter.

Similarly we see a substantial pick up in revenue and utilization during the last third of Q1 as we move out of the holiday season and into the new calendar year. That late quarter rebound did not materialize this year, especially overseas.

Utilization of the first quarter 2008 was 70%, compared with 77% in F1Q07 and 74% in Q4. A portion of this decline was caused by the reduction in work in the European and middle eastern component f our chemicals and petroleum practice.

Some of the decline was also caused by slower than expected recovery from the holiday weeks and other practices in regions. Net income in the F1Q08 was$3.1 million or $.28 per diluted share, below expectations not only due to the lower utilization rate but also because of lower operating margins.

Operating margins reflected a greater than anticipated percentage of revenue represented by reimbursable and expenses which carry little or no mark up. This increased percentage of revenue represented by reimbursable expenses was even more pronounced in our overseas operations.

Looking at the consultant head count we ended up the quarter with 722 consultants as compared to 771 as of F4Q07. Our current breakdown is 230 junior employee consultants, 492 senior employee consultants.

Before I describe the actions we have taken in response to the Q1 shortfall I’d like to address the performance of our business platforms. The litigation and applied economics platforms net revenue increased by nearly 10% from F1Q07, this increase was fueled by competition practice, both domestically and internationally which extended the growth momentum as exhibited in the past several quarters which posted a greater than 20% increase over the year ago period.

In terms of notable accumulative projects and competition, CRA works with the acquisition of Lakeport brewing. The new acquisition of a North American paper manufacturing business, the [inaudible] Bell Water merger, and the Thomson-Reuters Merger in Europe.

We also provided testimony on behalf of XM Satellite Radio and Sirius Satellite Radio before the US copyright royalty award unreasonable royalties. During the quarter CRA also held its fifth annual conference on economic developments in European competition policy in Brussels on December 13.

Over 300 attendees held presentations on topics such as developments and antitrusts, merger analysis and policy, the role of completion authorities, and fines to antitrust damages. Intellectual property net revenue was down more than 10% for the quarter compared with F1Q07.

As we’ve referenced on our past several calls, we’re taking a number of actions to expand our business in IT consulting. We are increasing our cross selling efforts with CRA practice areas, which IT issues also intersect with our client needs, such as transfer pricing and business consulting.

We are extending signs of an uptake in utilization in F2Q08 that we anticipate will result in increased revenue. With respect, IP litigation activity in Q1 CRA worked for outside technologies to avoid certain trademark licenses with Intersist and for Boston Scientific patent dispute with the University of California and Microtherapudics related to endovascular coils.

As is the case for many patent disputes Boston Scientific project involved antitrust claims as well as patent infringement claims and our competition practice collaborated with the IP practice in this case. After four quarters of excellent growth, revenues for our transfer pricing practice declined nearly 10%, from F1Q07.

The decline in revenue was driven by a slow down in several large projects, some of which has been backfilled by some smaller projects. We believe that [inaudible] complied with FAN 48, a recently enacted tax accounting rule, my have pulled some of our clients away from transfer price meeting their year end requirements.

It is also possible that we are feeling the impact of a slowing economy, although our experience has been the transfer price will remain steady regardless of recessions. F1Q08 transfer pricing revenues were driven by a significant EPA negotiation and working on their behalf is a significant pharmaceutical, automotive, luxury goods and software client.

Our labor and employment practice recorded its third consecutive quarter growth as it continues to steadily expand its client base. Early in Q1 the practice of assisting clients and implementing the requirements of multiple settlement agreements.

In addition, the practice has also assisted several clients with internal equity audits of compensation practices. Practice have been engaged by a number of clients to consult on matters involving equal opportunity, equal employment opportunity, and wage and hour litigation.

Turing to our business and consulting platform, revenue was down less than 5% for the first quarter, reflecting declines in energy, environmental and life sciences as a capital projects, offset impart by gains in aerospace defense and other smaller practices. In chemicals and petroleum revenue was flat, in comparison with Q1 of the prior year.

The strong performance of North America offset the decline in revenues in Europe and the Middle East. As I mentioned earlier this practice was adversely affected by the phase down of several long running projects in the Middle East, combined with the impact of holiday down time.

The notable assignments in out CNT practice in Q1 included work in a variety of projects involving alternative energy renewables, including a coal to liquid plant in India, a wind energy plant in Jordan, and a European photo project, continuing in our long running assistance to Saudi Arabia industrial development strategy and work for private equity firms and fine chemicals, petroleum exportation and petroleum refining. Energy and Environment practice revenue declined about 5% due to weakness in Asia Pacific, which was primarily related to the relocation of our staff from Australia and New Zealand to establish an E&E presence in its Hong Kong office.

In Q1, E&E worked on a broad range of projects including assistance with the reorganization of a federal electricity and water authority in the UAE, advising energy companies in connection with the financial applications of climate change policies in operations, more than a dozen projects related to electricity capacity markets, options services working for IWE the wide stream electric utility in connection with a series of fully auctions and self powered directly from its power plants to customers. One of our smaller practices, Aerospace and Defense grew more than 65% over the same quarter last year.

The steady growth in aerospace and defense reflects accelerating globalization f this industry and the breadth of serious relationships with several of the key businesses driving this trend. Notable assignments for the first quarter included work for a major defense contractor, associating market trends for a strategic plan, the strategic assessment of a space sector for a global aerospace company, and a regulatory strategy for a private equity company related to the supply chain for military vehicles.

Turning to our Finance platform, overall revenue was flat from Q1 of last year as work in our primary finance leveled off as a result of several large cases settling in the quarter. There has been some reduction in the volume of litigation work many of the larger ongoing engagements continue.

We are also seeing decreased levels of financial consulting including analysis of revenue recognition internal controls and risk management. With respect to sub prime lending activity we are working on a number of significant engagements for large financial institutions.

We are consulting on client investment portfolios, providing risk management and analytic assessment and reviewing accounting and reporting implications. We are also working on litigation relating engagements dealing with government investigations and inquiries as well as a sign cant number of lawsuits.

We believe that sub prime and overall credit crunch consulting and litigation demand environment continues to grow and we are expanding our toolkit in this area. Finance practice has been retained in a number of new negotiations during the past quarter, and we expect that utilization of revenue in this practice will only increase in Q2.

Revenues of our forensic accounting practice grew nearly 20% from Q1 of last year. This is in large part attributed to the continuing demand for services in the international arbitration arena and a significant arbitration going through final hearing in January 2008.

The forensic practice continues to assist on a portfolio international arbitration matter and a number of other litigation investigation assignments. Looking across all of our platforms underlying demand for our core businesses remains healthy and we continue to win significant number of projects.

We are in a rebuilding situation in the Middle East but we are optimistic about the relief stream in that region. Our focus going forward will be to better align our practices and call structure with the size and areas that strengthen our business particularly overseas.

For the near term we are concentrating our resources on promising opportunities such as finance projects related to the sub prime credit crisis, as well as financial accounting evaluation consulting. At the same time we are looking closely at every possible means to reducing our operating expenses, raising our utilization, and alternately improving our margins and profitability, in addition to reallocating consultants to our most active practices and locations, utilizing staff attritions to improve utilization where appropriate.

We have implemented a reduction in our employee workforce, this will result in an approximately $2 million in restructuring costs in Q2, while generating an estimated annualized cost savings starting in Q3 of a proximately $7 million. As we mentioned during our year end conference call, we’ve initiated a business process improvement review for an outside consultant who was helping us craft a plan to reduce SG&A expenses in a number of areas.

Included in the review is an evaluation of our current administrative practices and infrastructure. The objective is to identify opportunities for further cost reductions including out travel policies, changes in ?

methods and other adjustments. Along these lines the second quarter we plan to close offices in Palo Alto in London as we consolidate those offices a process that is already underway in London.

These actions are expected to result in a Q2 charge estimate approximately $4.1 million and estimated annualized cost saving starting in Q3 of approximately $2.4 million. Terms of practice realignment, as previously mentioned, we have already exited our forensic investigations business, and we eliminated our on the ground transfer price capability in Australia.

We have scaled back our or exited a portion of our forensic computing business. Our first quarter results included approximately $600,000 in restructuring costs related to these initiatives.

We are in the process of investing the majority of our Australia and New Zealand based operations which generating approximately $12 million of revenue and small operating loss in fiscal 2007. We expect these operations to be completed in the second quarter and to result in an estimated charge of operating income of approximately $3 million.

I will now turn the call over to Mr. Wayne for the financial review.

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 savings starting in Q3 of approximately $2.4 million.

We were also impacted by other operating cost increases as a percentage of revenue of 2.4% points, including compensation expense, performance payments earned by outside consultants, professional legal and recruiting fees. F1Q08 operating income was $5.8 million compared to $11.6 million in F1Q07.

Operating margin for F1Q08 was 6.8% compared to 13.9% of Q1 last year reflecting a revue shortfall, higher than anticipated expenses and other factors previously mentioned. Interest income was $1.2 million in F1Q08 compared to $1.6 million in Q1 a year ago, reflecting primarily lower cash balances resulting from our share repurchase program during fiscal 2007.

CRA did not purchase any shares under the share repurchase program during the first quarter of 2008. CRA has approximately 585,000 shares of remaining capacity under its existing share repurchasing program approved by its board.

Our affective tax rate in Q1 was 50.8% compared to 41.3% in F1Q07. The higher tax rate in Q1 was primarily due to losses outside of North American locations against with we could not record tax benefits.

F1Q08 net income was $3.1 million or $.28 per diluted share compared with net income of $7.1 million or $.56 per diluted share for the same period 2007. We calculated F1Q08 earnings per share using 11.4 million weighted average diluted shares outstanding compared to 12.6 million shares outstanding in Q1 last year.

Reduction in outstanding shares is a direct result of the company’s share repurchase program during F07. Turing to the balance sheet billed and unbilled receivables in Q1 were $114.3 million compared to $131 million at the end of Q4.

Current liabilities were $76.3 million ate the end of Q1 compared with $98.8 million at the end Q4 reflecting the payment of F07 staff bonuses. Total DSO, day sales outstanding, were 107 days.

This consists of 41 days of unbilled and 66 days of billed versus 109 days in Q4, which consisted of 37 days of unbilled and 72 days of billed. We’ve seen some signs of improvement in DSO, reductions occurring below 100 days earlier in the quarter; however we still expect to see sustained improvement from DSO program that was fully implemented in Q4 of last year.

We continue to target total DSO below 100 days. Cash and equivalents stood at $101.4 million at the end of Q1, up from $100.5 million ate the end of F1Q07.

Our capital expenditures totaled $1.5 million for the quarter compared to $1.2 million F1Q07. The higher capital expenditures program reflected our investment London’s new space.

Depreciation and Amortization expense is approximately $2.4 million in Q1 compared to $2.3 million in F1Q07. Now back to Jim.

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.

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.

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.

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.

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

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

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

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

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