United
States
 Securities
and Exchange Commission
 Washington,
D.C. 20549
  FORM 20-F
  (Mark One)
 o
                  REGISTRATION
      STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
      OF 1934
  OR
  x
                  ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For the
fiscal year ended: December 31, 2008
   OR
  o
                  TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.
  Commission
      file number:
                  000-29714
    ICON public limited company
 (Exact
name of Registrant as specified in its charter)
   Ireland
 (Jurisdiction
of incorporation or organization)
  South
County Business Park, Leopardstown, Dublin 18, Ireland.
 (Address
of principal executive offices)
  Ciaran Murray,
CFO
 South
County Business Park Leopardstown, Dublin 18, Ireland.
 Ciaran.Murray@iconplc.com
 0011-353-1-291-2000
 
 (Name,
telephone number, email and/or facsmile number and address of Company contact
person)
  Securities
registered or to be registered pursuant to Section 12(b) of the
Act:
  Title
      of each class
                  
                  Name
      of exchange
                    on
      which registeredAmerican
      Depository Shares, representing Ordinary Shares, par value €0.06 each
      Ordinary
      Shares, par value €0.06 each
                  
                  NASDAQ
      Global Select Market
  Securities
registered or to be registered pursuant to Section 12(g) of the
Act:
 Title of
each class
 
  None
 
  Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act:
 None
 
 (Title of
Class)
   Indicate
the number of outstanding shares of each of the issuer’s classes of capital or
common stock as of the close of the period covered by the annual report:
58,518,195 Ordinary Shares.
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as determined
in Rule 405 of the Securities Act.
  Yes
      x
                  No
      o
  If this
report is an annual or transition report, indicate by check mark if registrant
is not required to file reports pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934.
  Yes
      o
                  No
      x
  
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days:
  Yes
      x
                  No
      o
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non- accelerated filer
  Large
      Accelerated filer x
                  Accelerated
      filer o
                  Non-accelerated
      filer o
 
 Indicate
by check mark which basis of accounting the registrant has used to prepare the
financial statements included in this filing:
  U.S.
      GAAP x
                        International
      Financial Reporting Standards as issued o
                        Other
      oby
      the International Accounting Standards Board
  If
"Other" has been checked in response to the previous question, indicate by check
mark which financial statement item the registrant has elected to
follow.
 Item
      17 o
                  Item
      18 o
 
  If this
is an annual report, indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act)
  Yes
      o
                  No
      x
  
 
 TABLE OF CONTENTS
  General
                      
                      
                      1Cautionary Statement
                      
                      
                      1Part IItem
1.
                      Identity of Directors, Senior
      Management and Advisors
                      2Item
2.
                      Offer Statistics and Expected
      Timetable
                      2Item
3.
                      Key
      Information
                      2Item
4.
                      Information on the
      Company
                      9Item
5.
                      Operating and Financial Review
      and Prospects
                      22Item
6.
                      Directors, Senior Management and
      Employees.
                      31Item
7.
                      Major Shareholders and Related
      Party Transactions
                      41Item
8.
                      Financial
      Information
                      43Item
9.
                      The Offer and the
      Listing
                      43Item
    10.
                      Additional
      Information
                      44Item
    11.
                      Quantitative and Qualitative
      Disclosures about Market Risk
                      50Item
    12.
                      Description of Securities Other
      than Equity Securities
                      51Part IIItem
    13.
                      Defaults, Dividend Arrearages
      and Delinquencies
                      51Item
    14.
                      Material Modifications to the
      Rights of Security Holders and Use of Proceeds
                      51Item
    15.
                      Controls and
      Procedures
                      52Item
    16.
                      Reserved
                      52Part IIIItem
    17.
                      Financial
      Statements
                      53Item
    18.
                      Financial
      Statements
                      53Item
    19.
                      Financial Statements and
      Exhibits
                      54
 General
  As used
herein, “ICON plc”, “ICON”, the “Company” and “we” or “us” refer to ICON public
limited company and its consolidated subsidiaries, unless the context requires
otherwise.
  Unless
otherwise indicated, ICON plc’s financial statements and other financial data
contained in this Form 20-F are presented in United States dollars (“$”) and are
prepared in accordance with generally accepted accounting principles in the
United States (“U.S. GAAP”).
  In this
Form 20-F, references to “U.S. dollars”, “U.S.$” or “$” are to the lawful
currency of the United States, references to “pounds sterling”, “sterling”, “£”,
“pence” or “p” are to the lawful currency of the United Kingdom, references to
“Euro” or “€” are to the European single currency adopted by sixteen members of
the European Union (including the Republic of Ireland, France, Germany, Spain,
Italy, Finland and the Netherlands). ICON publishes its consolidated financial
statements in U.S. dollars.
  On July
21, 2008, the Company’s shareholders approved a bonus issue of ordinary shares
(the “Bonus Issue”) to shareholders of record as of the close of business on
August 8, 2008 (the “Record Date”). The Bonus Issue provided for each
shareholder to receive one bonus ordinary share for each ordinary share held as
of the Record Date, effecting the equivalent of a 2-for-1 stock split. The Bonus
shares were issued on August 11, 2008, to Ordinary Shareholders and on August
12, 2008, to holders of American Depositary Shares (“ADSs”). The trading price
of ICON’s ADSs was adjusted on NASDAQ to effect the Bonus Issue prior to the
opening of trading on August 13, 2008. All outstanding ordinary share amounts
referenced in the consolidated financial statements and the notes thereto have
been retrospectively restated to give effect to the Bonus Issue as if it had
occurred as of the date referenced.
  On
September 29, 2006, ICON’s shareholders approved a bonus issue of ordinary
shares (the “Bonus Issue”) to shareholders of record as of the close of business
on October 13, 2006 (the “Record Date”). The Bonus Issue provided for each
shareholder to receive one bonus ordinary share for each ordinary share held as
of the Record Date, effecting the equivalent of a 2-for-1 stock split. The Bonus
shares were issued on October 16, 2006, to ordinary shareholders and on October
23, 2006 to holders of American Depositary Shares (“ADSs”). The trading price of
ICON’s ADSs was adjusted on NASDAQ to effect the Bonus Issue prior to the
opening of trading on October 24, 2006. All outstanding ordinary share amounts
referenced in the consolidated financial statements and the notes thereto have
been retrospectively restated to give effect to the Bonus Issue as if it had
occurred as of the date referenced.
  Cautionary Statement
  Statements
included herein which are not historical facts are forward looking statements.
Such forward looking statements are made pursuant to the safe harbor provisions
of the U.S. Private Securities Litigation Reform Act of 1995 (the “PSLRA”). The
forward looking statements involve a number of risks and uncertainties and are
subject to change at any time. In the event such risks or uncertainties
materialize, our results could be materially affected. The risks and
uncertainties include, but are not limited to, dependence on the pharmaceutical
industry and certain clients, the need to regularly win projects and then to
execute them efficiently, the challenges presented by rapid growth, competition
and the continuing consolidation of the industry, the dependence on certain key
executives and other factors identified in the Company’s Securities and Exchange
Commission filings. The Company has no obligation under the PSLRA to update any
forward looking statements and does not intend to do so.
  1
  Part
I
 Item 1.Identity of Directors, Senior Management and
Advisors.
  Not
applicable.
  Item 2.
Offer
Statistics and Expected Timetable.
  Not
applicable.
  Item 3.
Key Information.
  Selected
Historical Consolidated Financial Data for ICON plc
 The
following selected financial data set forth below are derived from ICON’s
consolidated financial statements and should be read in conjunction with, and
are qualified by reference to, Item 5 “Operating and Financial Review and
Prospects” and ICON’s consolidated financial statements and related notes
thereto included elsewhere in this Form 20-F.
  2
  Year
                                                                                                                                                                                                                                          ended
                                                                                                                                                                                                                                          May
                                                                                                                                                                                                                                          31
                                                                                                                                                                                                                                          2004
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        Year
                                                                                                                                                                                                                                          ended
                                                                                                                                                                                                                                          May
                                                                                                                                                                                                                                          31
                                                                                                                                                                                                                                          2005
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        7
      month
                                                                                                                                                                                                                                          Period
                                                                                                                                                                                                                                          endedDecember
                                                                                                                                                                                                                                          31,
                                                                                                                                                                                                                                          2005
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        Year
                                                                                                                                                                                                                                          ended
                                                                                                                                                                                                                                          December
                                                                                                                                                                                                                                          31,
                                                                                                                                                                                                                                          2006
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        Year
                                                                                                                                                                                                                                          ended
                                                                                                                                                                                                                                          December
                                                                                                                                                                                                                                          31,
                                                                                                                                                                                                                                          2007
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        Year
                                                                                                                                                                                                                                          ended
                                                                                                                                                                                                                                          December
                                                                                                                                                                                                                                          31,
                                                                                                                                                                                                                                          2008(in
      thousands, except share and per share data)Statement
      of Operations Data:Gross
      revenue
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        443,875
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        469,583
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        275,586
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        649,826
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        867,473
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        1,209,451Reimbursable
      expenses (1)
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (146,952
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (142,925
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (73,636
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (194,229
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (236,751
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (344,203
                                                                                                                                                                                                                                        )Net
      revenue
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        296,923
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        326,658
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        201,950
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        455,597
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        630,722
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        865,248Costs
      and expenses:Direct
      costs
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        162,562
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        179,661
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        114,004
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        256,263
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        354,479
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        489,238Selling,
      general and administrative
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        88,807
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        103,784
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        62,276
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        136,569
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        187,993
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        248,778Depreciation
      and amortization
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        11,171
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        13,331
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        8,094
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        14,949
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        19,008
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        27,728Share
      based compensation (2)
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        —
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        —
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        6,024
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        —
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        —
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        —Other
      charges (4)
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        —
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        11,275
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        —
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        —
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        —
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        —Total
      costs and expenses
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        262,540
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        308,051
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        190,398
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        407,781
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        561,480
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        765,744Income
      from operations
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        34,383
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        18,607
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        11,552
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        47,816
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        69,242
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        99,504Net
      interest income / (expense)
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        288
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        979
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        1,272
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        3,640
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        2,738
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (1,224
                                                                                                                                                                                                                                        )Income
      before provision for income taxes
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        34,671
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        19,586
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        12,824
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        51,456
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        71,980
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        98,280Provision
      for income taxes
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (8,929
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (5,852
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (5,396
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (12,924
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (15,830
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (19,967
                                                                                                                                                                                                                                        )Minority
      interest
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        —
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (189
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (10
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (228
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (187
                                                                                                                                                                                                                                        )
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        (193
                                                                                                                                                                                                                                        )Net
      income
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        25,742
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        13,545
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        7,418
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        38,304
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        55,963
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        78,120Net
      income per ordinary share (3):Basic
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        0.49
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        0.24
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        0.13
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        0.68
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        0.97
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        1.34Diluted
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        0.47
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        0.24
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        0.13
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        0.66
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        0.94
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        $
                                                                                                                                                                                                                                        1.30Weighted
      average number  of ordinary shares outstanding:Basic
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        53,070,124
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        55,440,812
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        55,880,424
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        56,629,970
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        57,410,544
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        58,245,240Diluted
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        54,812,652
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        56,613,780
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        56,990,168
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        57,726,668
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        59,495,928
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                        60,221,587
  3
  As
      of May 31,
                                                            
                                                            
                                                            As
      of December 31,2004
                                                            
                                                            
                                                            2005
                                                            
                                                            
                                                            2005
                                                            
                                                            
                                                            2006
                                                            
                                                            
                                                            2007
                                                            
                                                            
                                                            2008(in
      thousands)Balance
      Sheet Data:Cash
      and cash equivalents
                                                            
                                                            $
                                                            55,678
                                                            
                                                            
                                                            $
                                                            56,341
                                                            
                                                            
                                                            $
                                                            59,509
                                                            
                                                            
                                                            $
                                                            63,039
                                                            
                                                            
                                                            $
                                                            76,881
                                                            
                                                            
                                                            $
                                                            58,378Short
      term investments
                                                            
                                                            
                                                            23,085
                                                            
                                                            
                                                            
                                                            22,034
                                                            
                                                            
                                                            
                                                            22,809
                                                            
                                                            
                                                            
                                                            39,822
                                                            
                                                            
                                                            
                                                            41,752
                                                            
                                                            
                                                            
                                                            42,726Working
      capital
                                                            
                                                            
                                                            113,813
                                                            
                                                            
                                                            
                                                            125,288
                                                            
                                                            
                                                            
                                                            132,312
                                                            
                                                            
                                                            
                                                            160,321
                                                            
                                                            
                                                            
                                                            193,271
                                                            
                                                            
                                                            
                                                            185,957Total
      assets
                                                            
                                                            
                                                            335,323
                                                            
                                                            
                                                            
                                                            347,553
                                                            
                                                            
                                                            
                                                            349,067
                                                            
                                                            
                                                            
                                                            476,341
                                                            
                                                            
                                                            
                                                            693,138
                                                            
                                                            
                                                            
                                                            867,285Total
      debt
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            
                                                            4,856
                                                            
                                                            
                                                            
                                                            5,000
                                                            
                                                            
                                                            
                                                            94,829
                                                            
                                                            
                                                            
                                                            105,379Long
      term government grants
                                                            
                                                            
                                                            1,411
                                                            
                                                            
                                                            
                                                            1,257
                                                            
                                                            
                                                            
                                                            1,160
                                                            
                                                            
                                                            
                                                            1,170
                                                            
                                                            
                                                            
                                                            1,179
                                                            
                                                            
                                                            
                                                            1,386Shareholders’
      equity
                                                            
                                                            $
                                                            216,760
                                                            
                                                            
                                                            $
                                                            233,066
                                                            
                                                            
                                                            $
                                                            241,558
                                                            
                                                            
                                                            $
                                                            302,738
                                                            
                                                            
                                                            $
                                                            388,400
                                                            
                                                            
                                                            $
                                                            456,366
  (1)
                  Reimbursable
      expenses are comprised of investigator payments and certain other costs
      reimbursed by clients under terms specific to each of ICON’s contracts.
      See Note 2 (d) to the Audited Consolidated Financial
      Statements.(2)
                  $6.0
      million share-based compensation expensed during the period ended December
      31, 2005, was recorded in relation to the transfer of 576,000 shares from
      the founders of the Company to the Chief Executive
  Officer.(3)
                  Net
      income per ordinary share is based on the weighted average number of
      outstanding ordinary shares. Diluted net income per share includes
      potential ordinary shares from the exercise of options.(4)
                  Other
      operating charges of $11.3 million were recorded in the year ended May 31,
      2005. These charges related to the recognition of an impairment in the
      carrying value of our investment in the central laboratory, a write-down
      of certain fixed assets and the lease termination and exit costs
      associated with the consolidation of some of our office facilities in the
      US.
  Risk
Factors
  We
are dependent on the continued outsourcing of research and development by the
pharmaceutical, biotechnology and medical device industries.
  We are
dependent upon the ability and willingness of the pharmaceutical, biotechnology
and medical device companies to continue to spend on research and development
and to outsource the services that we provide. We are therefore subject to
risks, uncertainties and trends that affect companies in these industries. We
have benefited to date from the tendency of pharmaceutical, biotechnology and
medical device companies to outsource clinical research projects. Any downturn
in these industries or reduction in spending or outsourcing could adversely
affect our business. For example, if these companies expanded upon their
in-house clinical or development capabilities, they would be less likely to
utilize our services. In addition, if governmental regulations were changed,
they could affect the ability of our clients to operate profitably, which may
lead to a decrease in research spending and therefore this could have a material
adverse effect on our business.
  The
current economic and financial downturn may have a material adverse effect on
our results.
  Many of
the world’s largest economies and financial institutions currently face extreme
financial difficulty, including a decline in asset prices, liquidity problems
and limited availability of credit. It is uncertain how long this downturn will
last, but many countries are concerned that their economies may enter a deep and
prolonged recession. Such difficult economic times may have a material adverse
effect on our revenues, results of operations, financial condition and ability
to raise capital.
  4
  We
depend on a limited number of clients and a loss of or significant decrease in
business from them could affect our business.
  We have
in the past and may in the future derive a significant portion of our net
revenue from a relatively limited number of clients. A loss of, or a significant
decrease in business from any one or more of such clients could have a material
adverse effect on our business. During the year ended December 31, 2008, 29% of
our net revenue was derived from our top five clients. During 2008, no client
contributed more than 10% of net revenues. During the year ended December 31,
2007, 30% of our net revenue was derived from our top five clients. During 2007,
no client contributed more than 10% of net revenues. During the year ended
December 31, 2006, 35% of our net revenue was derived from our top five clients.
During 2006, no client contributed more than 10% of net revenues.
  If
our clients discontinue using our services, or cancel or discontinue projects,
our revenue will be adversely affected and we may not receive their business in
the future or may not be able to attract new clients.
  Our
clients may discontinue using our services completely or cancel some projects
either without notice or upon short notice. The termination or delay of a large
contract or of multiple contracts could have a material adverse effect on our
revenue and profitability. Historically, clients have cancelled or discontinued
projects and may in the future cancel their contracts with us for reasons
including:
 ●
                the
      failure of products being tested to satisfy safety or efficacy
      requirements;●
                unexpected
      or undesired clinical results of the product;●
                a
      decision that a particular study is no longer
necessary;●
                poor
      project performance, insufficient patient enrollment or investigator
      recruitment; or●
                production
      problems resulting in shortages of the
drug.
  If we
lose clients, we may not be able to attract new ones, and if we lose individual
projects, we may not be able to replace them.
  We
compete against many companies and research institutions that may be larger or
more efficient than we are. This may preclude us from being given the
opportunity to bid, or may prevent us from being able to competitively bid on
and win new contracts.
  The
market for Contract Research Organizations (“CROs”) is highly competitive. We
primarily compete against in-house departments of pharmaceutical companies and
other CROs including Covance Inc., i3 Research (United Health Group
Incorporated), Kendle International Inc., MDS Inc., Omnicare Inc., PAREXEL
International Corporation, Pharmaceutical Product Development Inc., PharmaNet
Development Group Inc., PRA International Inc. and Quintiles Transnational
Corporation. Some of these competitors have substantially greater capital,
research and development capabilities and human resources than we do. As a
result, they may be selected as preferred vendors of our clients or potential
clients for all projects or for significant projects, or they may be able to
price projects more competitively than us. Any of these factors may prevent us
from getting the opportunity to bid on new projects or prevent us from being
competitive in bidding on new contracts.
  Our
quarterly results are dependent upon a number of factors and can fluctuate from
quarter to quarter.
  Our
results of operations in any quarter can fluctuate depending upon, among other
things, the number and scope of ongoing client projects, the commencement,
postponement, variation and cancellation or termination of projects in the
quarter, the mix of revenue, cost overruns, employee hiring and other factors.
Our net revenue in any period is directly related to the number of employees and
the percentage of these employees who were working on projects and billed to the
client during that period. We may be unable to compensate for periods of
underutilization during one part of a fiscal period by augmenting revenues
during another part of that period. We believe that operating results for any
particular quarter are not necessarily a meaningful indication of future
results.
  5
  Approximately
71% of our net revenue is earned from long-term fixed-fee contracts. We would
lose money in performing these contracts if the costs of performance exceed the
fixed fees for these projects.
  Approximately
71% of our net revenue is earned from long-term fixed fee contracts.
Revenues on these contracts are agreed on contract initiation between the
Company and the customer and are based on estimated time inputs to the contract.
Factors considered in estimating time requirements include the complexity of the
study, the number of geographical sites where trials are to be conducted and the
number of patients to be recruited at each site. The Company regularly reviews
the estimated hours on each contract to determine if the budget accurately
reflects the agreed tasks to be performed taking into account the state of
progress at the time of review. The Company further ensures that changes in
scope are appropriately monitored and change orders for additional revenue are
promptly negotiated for the additional work. If we were to fail to
recognise and negotiate change orders for changes in the resources
required or the scope of the work to be performed the Company could lose
money if the costs of performance of these contracts exceeded their fixed
fees.
  If
we fail to attract or retain qualified staff, our performance may
suffer.
  Our
business, future success and ability to expand operations depends upon our
ability to attract, hire, train and retain qualified professional, scientific
and technical operating staff. We compete for qualified professionals with other
CROs, temporary staffing agencies and the in-house departments of
pharmaceutical, biotechnology and medical device companies. Although we have not
had any difficulty attracting or retaining qualified staff in the past, there is
no guarantee that we will be able to continue to attract a sufficient number of
clinical research professionals at an acceptable cost.
  We
are highly dependent on information technology. If our systems fail or are
unreliable our operations may be adversely impacted.
  The
efficient operation of our business depends on our information technology
infrastructure and our management information systems. Our information
technology infrastructure includes both third party solutions and applications
designed and maintained internally. Since our Company operates on multiple
platforms, the failure of our information technology infrastructure and/or our
management information systems to perform could severely disrupt our business
and adversely affect our results of operation. In addition, our information
technology infrastructure and/or our management information systems are
vulnerable to damage or interruption from natural or man-made disasters,
terrorist attacks, computer viruses or hackers, power loss, or other computer
systems, Internet telecommunications or data network failures. Any such
interruption could adversely affect our business and results of
operations.
  Failure
to comply with the regulations of the U.S. Food and Drug Administration and
other regulatory authorities could result in substantial penalties and/or loss
of business.
  The U.S.
Food and Drug Administration, or FDA, and other regulatory authorities inspect
us from time to time to ensure that we comply with their regulations and
guidelines, including environmental and health and safety matters. In addition,
we must comply with the applicable regulatory requirements governing the conduct
of clinical trials in all countries in which we operate. If we fail to comply
with any of these requirements we could suffer:
 ●
                the
      termination of any research;●
                the
      disqualification of data;●
                the
      denial of the right to conduct business;●
                criminal
      penalties; and●
                other
      enforcement actions.
  6
  Our
exposure to exchange rate fluctuations could adversely affect our results of
operations.
  We
derived approximately 56% of our consolidated net revenue in the year ended
December 31, 2008, from our operations outside of the United States. Our
financial statements are presented in U.S. dollars. Accordingly, changes in
exchange rates between the U.S. dollar and other currencies in which we report
local results, including the pound sterling and the euro, will affect the
translation of a subsidiary’s financial results into U.S. dollars for purposes
of reporting our consolidated financial results.
  In
addition, our contracts with our clients are sometimes denominated in currencies
other than the currency in which we incur expenses related to such contracts.
Where expenses are incurred in currencies other than those in which contracts
are priced, fluctuations in the relative value of those currencies could have a
material adverse effect on our results of operations. This risk is partially
mitigated by clauses in certain of our contracts which allow for price
renegotiation with our clients if changes in the relative value of those
currencies exceed predetermined tolerances. We regularly review our currency
exchange exposure and on occasion hedge a portion of this exposure using forward
exchange contracts.
  Liability
claims brought against us could result in payment of substantial damages to
plaintiffs and decrease our profitability.
  We
contract with physicians who serve as investigators in conducting clinical
trials to test new drugs on their patients. This testing creates the risk of
liability for personal injury to or death of the patients. Although
investigators are generally required by law to maintain their own liability
insurance, we could be named in lawsuits and incur expenses arising from any
professional malpractice actions against the investigators with whom we
contract. To date, we have not been subject to any liability claims that are
expected to have a material effect on us.
  Indemnifications
provided by our clients against the risk of liability for personal injury to or
death of the patients vary from client to client and from trial to trial and may
not be sufficient in scope or amount or the providers may not have the financial
ability to fulfill their indemnification obligations. Furthermore, we would be
liable for our own negligence and that of our employees.
  In
addition, we maintain an appropriate level of worldwide Professional
Liability/Error and Omissions Insurance. The amount of coverage we maintain
depends upon the nature of the trial. We may in the future be unable to maintain
or continue our current insurance coverage on the same or similar terms. If we
are liable for a claim that is beyond the level of insurance coverage, we may be
responsible for paying all or part of any award.
  We
may lose business opportunities as a result of health care reform and the
expansion of managed care organizations.
  Numerous
governments, including the U.S. government and governments outside of the U.S.,
have undertaken efforts to control growing health care costs through
legislation, regulation and voluntary agreements with medical care providers and
drug companies. If these efforts are successful, pharmaceutical, biotechnology
and medical device companies may react by spending less on research and
development and therefore this could have a material adverse effect on our
business.
  For
instance, in the past the U.S. Congress has entertained several comprehensive
healthcare reform proposals. The proposals were generally intended to expand
healthcare coverage for the uninsured and reduce the growth of total healthcare
expenditures. While the U.S. Congress has not yet adopted any comprehensive
reform proposals, members of Congress may raise similar proposals in the future.
We are unable to predict the likelihood that healthcare reform proposals will be
enacted into law.
  In
addition to healthcare reform proposals, the expansion of managed care
organizations in the healthcare market may result in reduced spending on
research and development. Managed care organizations’ efforts to cut costs by
limiting expenditures on pharmaceuticals and medical devices could result in
pharmaceutical, biotechnology and medical device companies spending less on
research and development. If this were to occur, we would have fewer business
opportunities and our revenues could decrease, possibly
materially.
  7
  We
may lose business as a result of changes in the regulatory
environment
  Various
regulatory bodies throughout the world may enact legislation which could
introduce changes to the regulatory environment for drug development and
research. The adoption and implementation of such legislation is difficult to
predict and therefore could have a material adverse effect on our
business.
  We
may not be able to successfully develop and market or acquire new
services.
  We may
seek to develop and market new services that complement or expand our existing
business or expand our service offerings through acquisition. If we are unable
to develop new services and/or create demand for those newly developed services,
or expand our service offerings through acquisition, our future business,
results of operations, financial condition, and cash flows could be adversely
affected.
  We
rely on third parties for important services.
  We depend
on third parties to provide us with services critical to our business. The
failure of any of these third parties to adequately provide the required
services could have a material adverse effect on our business.
  We
may make acquisitions in the future, which may lead to disruptions to our
ongoing business.
  We have
made a number of acquisitions and will continue to review new acquisition
opportunities. If we are unable to successfully integrate an acquired company,
the acquisition could lead to disruptions to the business. The success of an
acquisition will depend upon, among other things, our ability to:
 ●
                assimilate
      the operations and services or products of the acquired
      company;●
                integrate
      acquired personnel;●
                retain
      and motivate key employees;●
                retain
      customers; and●
                minimize
      the diversion of management’s attention from other business
      concerns.
  Acquisitions
of foreign companies may also involve additional risks, including assimilating
differences in foreign business practices and overcoming language and cultural
barriers.
  In the
event that the operations of an acquired business do not meet our performance
expectations, we may have to restructure the acquired business or write-off the
value of some or all of the assets of the acquired business.
  Failure
to raise sufficient finance may affect our ability to sustain future development
of the business
  We have
financed our operations and growth since inception primarily with cash flows
from operations, net proceeds of $49.1 million raised in our initial public
offering in May 1998, net proceeds of $44.3 million raised in our public
offering in August 2003 and net borrowings of $105.4 million. Although we have
not had difficulty in raising finance in the past, there is no guarantee that we
will be able to raise sufficient capital, at an appropriate cost to the Company,
to sustain future development of the business.
  We
rely on our interactive voice response systems to provide accurate information
regarding the randomization of patients and the dosage required for patients
enrolled in the trials.
  We
develop and maintain computer run interactive voice response systems to
automatically manage the randomization of patients in trials, assign the study
drug, and adjust the dosage when required for patients enrolled in trials we
support. An error in the design, programming or validation of these systems
could lead to inappropriate assignment or dosing of patients which could give
rise to patient safety issues, invalidation of the trial, liability claims
against the Company or all three.
  8
  We
rely on various control measures to mitigate the risk of a serious adverse event
resulting from healthy volunteer Phase I trials.
  We
conduct healthy volunteer Phase I trials including first-into-man trials for new
clinical entities in the UK and the US. Due to the experimental nature of these
studies, serious adverse events may arise. We mitigate such events by following
Good Clinical Practice and ensuring appropriately trained and experienced
clinical physicians are managing these trials and that internal Standard
Operating Procedures and client protocols are rigorously adhered to. We also
ensure that a signed contract is in place with the client in advance of clinical
dosing with appropriate indemnifications and insurance coverage. We maintain our
own no-faults clinical trial insurance. Following our internal review and
submission, an Independent Ethics committee approves the study protocol and
appropriate approval is obtained from the relevant regulatory body.
  Item 4.Information on the Company.
  General
 We are a
contract research organization (“CRO”), providing outsourced development
services on a global basis to the pharmaceutical, biotechnology and medical
device industries. We specialize in the strategic development, management and
analysis of programs that support Clinical Development - from compound selection
to Phase I-IV clinical studies.
  In a
highly fragmented industry, we are one of a small number of companies with the
capability and expertise to conduct clinical trials in all major therapeutic
areas on a global basis. At December 31, 2008, we had 6,975 employees, in 71
locations in 38 countries, providing Phase I - IV Clinical Trial Management,
Drug Development Support Services, Data Management and Biostatistical, Central
Laboratory and Imaging Services. We have the operational flexibility to provide
development services on a stand-alone basis or as part of an integrated “full
service” solution.
  Headquartered
in Dublin, Ireland, we began operations in 1990 and have expanded our business
through internal growth and strategic acquisitions. For the year ended December
31, 2008, we derived approximately 43.8%, 47.8 % and 8.4 % of our net revenue in
the United States, Europe and Rest of World, respectively.
  During
the year ended December 31, 2008, we commenced operations in Edinburgh,
Scotland; Bogota, Colombia and New Dehli, India.
  On
February 11, 2008, the Company acquired 100% of the common stock of Healthcare
Discoveries Inc., for an initial cash consideration of $10.9 million, excluding
costs of acquisition. Healthcare Discoveries, located in San Antonio, Texas, is
engaged in the provision of Phase I clinical trial management services. Certain
performance milestones were built into the acquisition agreement requiring
payment of additional consideration of up to $10.0 million if these milestones
were achieved during the year ended December 31, 2008. No amounts have been
accrued at December 31, 2008, as the milestones have not been
achieved.
  On
November 14, 2008, the Company acquired 100% of the common stock of Prevalere
Life Sciences Inc. (“Prevalere”), for an initial cash consideration of $36.8
million, excluding costs of acquisition. Prevalere, located in Whitesboro, New
York, is a leading provider of bioanalytical and immunoassay services to
pharmaceutical and biotechnology companies. Certain performance milestones were
built into the acquisition agreement requiring potential additional
consideration of up to $8.2 million if these milestones are achieved during the
years ended December 31, 2008 and 2009. Additional consideration of $5.0 million
has been accrued at December 31, 2008, in respect of the milestones for the year
ended December 31, 2008. No amounts have been accrued for additional
consideration potentially payable in respect of the milestones for the year
ended December 31, 2009.
  9
  On July
1, 2004, the Company acquired 70% of the common stock of Beacon Biosciences Inc.
(“Beacon”), a leading specialist CRO, which provides a range of medical imaging
services to the pharmaceutical, biotechnology and medical device industries, for
an initial cash consideration of $9.9 million, excluding costs of acquisition.
On December 31, 2008, the remaining 30% of the common stock was acquired by the
Company for $17.4 million, excluding costs of acquisition. Certain performance
milestones were built into the acquisition agreement for the remaining 30% of
Beacon requiring potential additional consideration of up to $3.0 million if
these milestones are achieved during the year ended December 31, 2009. At
December 31, 2008, no amounts have been accrued in respect of the potential
additional consideration.
  On July
9, 2007, ICON plc entered into a five year committed multi-currency facility
agreement for €35 million ($48.9 million) with The Governor and Company of the
Bank of Ireland. Our obligations under the facility are secured by certain
composite guarantees, indemnities and pledges in favor of the bank. The facility
bears interest at an annual rate equal to EURIBOR plus a margin. On July 10,
2007, the Company drew down €29.5 million ($41.2 million) of the facility to
fund the acquisition of DOCS International. On October 15, 2007, the remaining
€5.5 million ($7.7 million) of the facility was drawn down to fund expenditure
on the expansion of the Company’s facility in Dublin, Republic of
Ireland.
  On
January 2, 2009, an additional four year committed credit facility was
negotiated with The Governor and Company of the Bank of Ireland for $25 million.
The facility bears interest at LIBOR plus a margin and is secured by certain
composite guarantees, indemnities and pledges in favor of the bank.
  On
October 17, 2007, an uncommitted credit facility was negotiated with Allied
Irish Banks plc, for €30 million ($41.9 million). Interest is calculated at the
EUR interbank rate plus a margin. The facility is secured by the same composite
guarantees and indemnities in place for the Bank of Ireland committed facility.
The funds were used to refinance overdraft facilities in place to fund
expenditure on the expansion of the Dublin facility. On January 8, 2008, the
facility with Allied Irish Banks plc was increased to €50 million ($69.9
million).
  On
December 22, 2008, committed credit facilities were negotiated with Allied Irish
Bank plc for $75 million. The facilities comprise a one year Euro facility of
approximately €20 million ($28.0 million), with the balance comprising a three
year US dollar facility. The Euro facility bears interest at EURIBOR plus a
margin and the US dollar facility bears interest at LIBOR plus a margin. Both
facilities are secured by certain composite guarantees and pledges in favour of
the bank. These facilities replace the uncommitted facilities negotiated on
January 8, 2008. $28.4 million of these facilities were used to fund the
acquisition of Prevalere with the remaining balance used to refinance the
previous drawn uncommitted facilities.
  On
February 4, 2008, an uncommitted credit facility was negotiated with Citibank
N.A, for $30 million. Interest is calculated at the London Interbank Market rate
plus a margin. $12.0 million of this facility was drawn down in February 2008 to
fund the acquisition of Healthcare Discoveries. On September 30, 2008, the $12.0
million previously drawn was repaid in full. At December 31, 2008, this facility
remained un-drawn and available to the Company.
  The
average margin payable on the above mentioned facilities is 1.70 per
cent.
  On July
21, 2008, the Company’s shareholders approved a bonus issue of ordinary shares
(the “Bonus Issue”) to shareholders of record as of the close of business on
August 8, 2008 (the “Record Date”). The Bonus Issue provided for each
shareholder to receive one bonus ordinary share for each ordinary share held as
of the Record Date, effecting the equivalent of a 2-for-1 stock split. The Bonus
shares were issued on August 11, 2008, to Ordinary Shareholders and on August
12, 2008, to holders of American Depositary Shares (“ADSs”). The trading price
of ICON’s ADSs was adjusted on NASDAQ to effect the Bonus Issue prior to the
opening of trading on August 13, 2008. All outstanding ordinary share amounts
referenced in the consolidated financial statements and the notes thereto have
been retrospectively restated to give effect to the Bonus Issue as if it had
occurred as of the date referenced.
  On
September 29, 2006, ICON’s shareholders approved a bonus issue of ordinary
shares (the “Bonus Issue”) to shareholders of record as of the close of business
on October 13, 2006 (the “Record Date”). The Bonus Issue provided for each
shareholder to receive one bonus ordinary share for each ordinary share held as
of the Record Date, effecting the equivalent of a 2-for-1 stock split. The Bonus
shares were issued on October 16, 2006, to Ordinary Shareholders and on October
23, 2006, to holders of American Depositary Shares (“ADSs”). The trading price
of ICON’s ADSs was adjusted on NASDAQ to effect the Bonus Issue prior to the
opening of trading on October 24, 2006. All outstanding ordinary share amounts
referenced in the consolidated financial statements and the notes thereto have
been retrospectively restated to give effect to the Bonus Issue as if it had
occurred as of the date referenced.
  10
  ICON
plc’s principal executive office is located at: South County Business Park,
Leopardstown, Dublin 18, Republic of Ireland. The contact telephone number of
this office is 353 (1) 291 2000.
  Industry
Overview
  The CRO
industry provides independent product development services for the
pharmaceutical, biotechnology and medical device industries. Companies in these
industries outsource product development services to CROs in order to manage the
drug development process more efficiently and to cost-effectively maximize the
profit potential of both patent-protected and generic products. The CRO industry
has evolved since the 1970s from a small number of companies that provided
limited clinical services to a larger number of CROs that offer a range of
services that encompass the entire research and development process, including
pre-clinical development, clinical trials management, clinical data management,
study design, biostatistical analysis, post marketing surveillance, central
laboratory and regulatory affairs services. CROs are required to provide these
services in accordance with good clinical and laboratory practices, as governed
by the applicable regulatory authorities.
  The CRO
industry is highly fragmented, consisting of several hundred small,
limited-service providers and a limited number of medium-sized and large CROs
with global operations. Although there are few barriers to entry for small,
limited-service providers, we believe there are significant barriers to becoming
a CRO with global capabilities. Some of these barriers include the
infrastructure and experience necessary to serve the global demands of clients,
the ability to manage simultaneously complex clinical trials in numerous
countries, broad therapeutic expertise and the development and maintenance of
the complex information technology systems required to integrate these
capabilities. In recent years, the CRO industry has experienced consolidation,
resulting in the emergence of a select group of CROs that have the capital,
technical resources, integrated global capabilities and expertise to conduct
multiple phases of clinical trials on behalf of pharmaceutical, biotechnology
and medical device companies. We believe that some large pharmaceutical
companies, rather than utilizing many CRO service providers, are selecting a
limited number of CROs who are invited to bid for projects. We believe that this
trend will further concentrate the market share among CROs with a track record
of quality, speed, flexibility, responsiveness, global capabilities and overall
development experience and expertise.
  New
Drug Development –Ethical Pharmaceuticals and Biologics - An Overview
  Before a
new drug or biologic may be marketed, it must undergo extensive testing and
regulatory review in order to determine that it is safe and effective. The
following discussion primarily relates to the FDA approval process for such
products. Similar procedures must be followed for product development with
global regulatory agencies. The stages of this development process are as
follows:
  Preclinical
Research (approximately1
to 3.5 years). “In vitro” (test tube) and animal studies must be
conducted in accordance with applicable regulations to establish the relative
toxicity of the drug over a wide range of doses and to detect any potential to
cause birth defects or cancer. If results warrant continuing development of the
drug or biologic, the manufacturer will file for an Investigational New Drug
Application, or IND, which must become effective by the FDA before starting the
proposed clinical studies.
  Clinical
Trials (approximately 3.5 to 6 years).
  Phase
I(6
months to 1 year). Consists ofbasic
safety and pharmacology testing in 20 to 80 human subjects, usually healthy
volunteers, and includes studies to determine how the drug works, if it is safe,
how it is affected by other drugs, where it goes in the body, how long it
remains active and how it is broken down and eliminated from the
body.
  Phase
II(1
to 2 years). Includes basic efficacy (effectiveness) and dose-range
testing in a limited patient population (usually) 100 to 200 patients to help
determine the best effective dose, confirm that the drug works as expected, and
provide additional safety data. If the Phase II results are satisfactory and no
clinical hold is enforced by the FDA, the Sponsor may proceed to Phase III
studies.
  11
  Phase
III(2
to 3 years). Efficacy and safety studies in hundreds or thousands of
patients at many investigational sites (hospitals and clinics). These studies
can be placebo-controlled trials, in which the new drug is compared with a
“sugar pill”, or studies comparing the new drug with one or more drugs with
established safety and efficacy profiles in the same therapeutic
category.
  TIND
(may span late Phase II, Phase III, and FDA review). When results from
Phase II or Phase III show special promise in the treatment of a serious
condition for which existing therapeutic options are limited or of minimal
value, the FDA may allow the Sponsor to make the new drug or biologic available
to a larger number of patients through the regulated provision of a Treatment
Investigational New Drug, or TIND. Although less scientifically rigorous than a
controlled clinical trial, a TIND may enroll and collect a substantial amount of
data from tens of thousands of patients.
  NDA
or BLA Preparation and Submission. Upon completion of Phase III trials,
the Sponsor assembles the statistically analyzed data from all phases of
development into a single large submission along with the Chemistry and
Manufacturing and preclinical data and the proposed labeling into the New Drug
Application (NDA), or Biologics License Application (BLA) which today comprises,
on average, approximately 100,000 pages.
  FDA
Review & Approval of NDA or BLA (1 to 1.5 years). Data from all
phases of development (including a TIND) is scrutinized to confirm that the
manufacturer has complied with all applicable regulations and that the drug or
biologic is safe and effective for the specific use (or “indication”) under
study. The FDA may refuse to accept the NDA or BLA if the Sponsor’s application
has certain administrative or content criteria which do meet FDA standards. The
FDA may also deny approval of the drug or biologic product if applicable
regulatory requirements are not satisfied.
  Post-Marketing
Surveillance and Phase IV Studies. Federal regulation requires the
Sponsor to collect and periodically report to the FDA additional safety and
efficacy data on the drug or biologic for as long as the Sponsor markets it
(post-marketing surveillance). If the product is marketed outside the U.S.,
these reports must include data from all countries in which the drug is sold.
Additional studies (Phase IV) may be undertaken after initial approval to find
new uses for the drug, to test new dosage formulations, or to confirm selected
non-clinical benefits, e.g., increased cost-effectiveness or improved quality of
life. Additionally, FDA and other regulatory agencies are requiring Sponsors of
marketed drugs or biologics to prepare Risk Management plans which are aimed at
assessing areas of product risk and plans for managing such risk should they
occur. The FDA Amendment Act of 2007 has imposed additional regulatory
requirements on Sponsors which address product safety, to conduct post-marketing
surveillance studies and to submit the clinical trial information, including
clinical study results, of investigational and marketed products to a databank
managed and maintained by the National Institutes of Health. The information is
accessible to the public via the worldwide web. This action was taken as a
result to increase “public transparency” of Sponsor’s clinical studies and
respective clinical results.
  Key
Trends Affecting the CRO Industry
  CROs
derive substantially all of their revenue from the research and development
expenditures of pharmaceutical, biotechnology and medical device companies.
Based on industry surveys and investment analyst research, we estimate that
clinical development expenditures outsourced by pharmaceutical and biotechnology
companies worldwide in 2007 was approximately $18 billion. We believe that the
following trends create further growth opportunities for global CROs, although
there is no assurance that growth will materialize.
  Innovation
driving new Drug Development activity.
  Technologies
such as combinational chemistry and high throughput screening, together with
improved understanding of disease pathology (driven by scientific advances such
as the mapping of the human genome) have greatly increased the number of new
drug candidates being investigated in early development and greatly broadened
the number of biological mechanisms being targeted by such candidates. Arising
from this innovation, funding for research and development, particularly by
biotechnology companies, grew strongly in recent years. This lead to significant
increased activity in both Preclinical and Phase I development which we believe
will lead to more treatments in Phase II-III clinical trials. As the number of
trials that need to be performed increases, we believe that drug developers will
increasingly rely on CROs to manage these trials in order to continue to focus
on drug discovery. However, this growth in Preclinical and Phase I development
activity in the near term may be impacted by the current global economic
downturn and the reduction in the availability of funding for research and
development activities, in particular for smaller biotech
companies.
  12
  Declining
productivity within Research and Development programs.
  Whilst
the total number of compounds that have entered clinical development has risen
over the last few years, the number of novel drugs that have successfully been
approved for marketing has remained relatively stable. Pharmaceutical and
biotechnology companies have responded in a number of ways including looking to
extend the product life cycle of existing drugs and initiating programs to drive
efficiency in the development process. One example of this has been the efforts
to achieve a more seamless transition across development phases, particularly
Phase I-III. In parallel regulatory initiatives such as the FDA’s “Critical
Path” and the emergence of techniques such as adaptive trial design are focused
on ensuring unsafe or ineffective drugs are eliminated from the development
process earlier, allowing effective treatments to get to patients quicker at
potentially reduced development costs.
  Pressure
to Accelerate Time to Markets; Globalization of the Marketplace.
  Reducing
product development time maximizes the client’s potential period of patent
exclusivity, which in turn maximizes potential economic returns. We believe that
clients are increasingly using CROs that have the appropriate expertise to
improve the speed of product development to assist them in improving economic
returns. In addition, applying for regulatory approval in multiple markets and
for multiple indications simultaneously, rather than sequentially, reduces
product development time and thereby maximizes economic returns. We believe that
CROs with global operations and experience in a broad range of therapeutic areas
are a key resource to support a global regulatory approval strategy. Alongside
this, the increasing need to access pools of “treatment naive” patients is
leading to the conduct of clinical trials in new “emerging regions” such as
Eastern Europe, Latin America, South America and India. We believe that having
access to both traditional and emerging clinical research markets gives global
CROs a competitive advantage.
  Emergence
of the Biotechnology Sector
  The
nature of the drugs being developed is changing. Biotechnology is enabling the
development of targeted drugs with diagnostic tests to determine a priori
whether a drug will be effective given a patient’s genomic profile. An
increasing proportion of research and development (“R&D”) expenditure is
being spent on the development of highly technical drugs to treat very specific
therapeutic areas. Much of this discovery expertise is found in smaller
biotechnology firms. We believe that it is to these organizations that the large
pharmaceutical companies will look for an increasing proportion of their new
drug pipelines. Whether it is through licensing agreements, joint ventures or
equity investment, we believe we will see the emergence of more strategic
relationships between small discovery firms and the larger pharmaceutical
groups. As the majority of these biotechnology companies do not have a clinical
development infrastructure, we believe that the services offered by CROs will
continue to be in demand from such companies.
  Funding
of Research and Development Activities of the Biotechnology Sector
  The
emergence of the Biotechnology sector and the increasing number of highly
technical drugs being developed by these companies has resulted in increased
funding for research and development in recent years. Much of this funding was
aimed at small biotechniology companies who do not derive revenues from the sale
of other product lines and are dependent on external funding and investment to
support their research activities. The current global downturn has reduced the
availability of funding to support research and development activities which may
reduce the number of treatments in Phase II-III clinical trials in future years.
As many of these companies are dependent on the CRO industry to manage their
trials the reduction in funding may impact demand for such
activities.
  13
  Cost
Containment Pressures.
  Over the
past several years, drug companies have sought more efficient ways of conducting
business due to margin pressures stemming from patent expirations, greater
acceptance of generic drugs, pricing pressures caused by the impact of managed
care, purchasing alliances and regulatory consideration of the economic benefit
of new drugs. Consequently, drug companies are centralizing research and
development, streamlining their internal structures and outsourcing certain
functions to CROs, thereby converting previously fixed costs to variable costs.
The CRO industry, by specializing in clinical trials management, is often able
to perform the needed services with greater focus and at a lower cost than the
client could perform internally.
  Increasing
Number of Large Long-Term Studies
  We
believe that to establish competitive claims, to obtain reimbursement
authorization from bodies such as the National Institute for Health and Clinical
Excellence in the UK, and to encourage drug prescription by physicians in some
large and competitive categories, more clients need to conduct outcome studies
to demonstrate, for example, that mortality rates are reduced by certain drugs.
To verify such outcomes, very large patient numbers are required and they must
be monitored over long time periods. We believe that as these types of studies
increase there will be a commensurate increase in demand for the services of
CROs who have the ability to quickly assemble large patient populations,
globally if necessary, and manage this complex process throughout its
duration.
  A
focus on long–term product safety
  In the
wake of a number of high profile recalls of previously approved drugs,
regulatory authorities, such as the FDA and EMEA, are increasingly demanding
that sponsors make arrangements to track the long-term safety of their products.
The clinical trial approval process can only detect major and common adverse
side effects of drugs; less common but no less serious effects may only become
apparent after many years of use. As a result, there is an increase in the
number of drugs given “conditional approvals” where further ‘post-approval’
studies are being mandated. In addition, prudent sponsors undertake similar
studies to detect early warning signs of any potential problems with their
products. Such studies may take the form of prospective long-term safety
studies, simpler observational studies or registries where patients meeting
specific criteria for disease or drug use are followed for long periods to
detect any safety issues. CROs are well positioned to perform these studies on
behalf of sponsors. Furthermore, a variety of healthcare databases containing
medical and prescribing records can be “data mined” to collect patient data from
very large populations in support of on-going safety and efficacy assessments.
Again, this sort of data management and biostatistical activity is well
performed by CROs.
  Increasing
Regulatory Demands.
  We
believe that regulatory agencies are becoming more demanding with regard to the
data required to support new drug approvals and are seeking more evidence that
new drugs are safer and more effective than existing products. As a result, the
complexity of clinical trials and the size of regulatory submissions are driving
the demand for services provided by CROs.
  The
ICON Strategy
  ICON’s
mission is to provide flexible, superior quality, global pharmaceutical
development services, that enable clients to expedite development, reduce costs
and establish the benefits of treatments that enhance people’s
lives.
  We
provide these development services to clients on a stand-alone basis or as part
of an integrated “full service” solution. Our primary approach is to use
dedicated teams to achieve optimum results. While we believe that this operating
model differentiates us from our competition in the CRO industry and enables us
to deliver high quality services to our clients, we do retain the operational
flexibility to implement a range of resourcing models to suit client
requirements.
  Our
strategy is to continue to grow by penetrating further our existing client base
and adding new clients within the Phase I-IV outsourced development services
market; the aim being to ensure we will be considered by every company for every
major Phase I – IV project.
  14
  We intend
to implement our strategy by continuing to deliver high quality services, by
increasing our geographic presence, expanding the scale and range of our
services and, where appropriate, cross selling these services into clients. As
needed, we intend to supplement our internal growth with strategic
acquisitions.
 ○
                  Continue
      to Deliver High Quality Services and Customer Satisfaction. ICON’s
      core competency is project management, built up over the last eighteen
      years managing complex projects and underpinned by comprehensive and
      consistent processes which conform to the ISO9001:2000 quality
      standard.We
      have extensive therapeutic and scientific knowledge residing in the
      organization and the capability to consistently solve the challenges that
      arise during clinical trials, each of which is the equivalent of a unique
      scientific study.We
      believe our quality processes, extensive experience, customer focus and
      flexibility allow us to provide consistent high quality, timely and cost
      effective services. We believe that the resulting customer satisfaction
      and enhanced reputation in the industry will continue to enable us to
      penetrate our existing client base and add new clients.○
                  Expand
      Geographic Presence. In a highly fragmented industry, we are one of
      a small group of organizations with the capability and expertise to
      conduct clinical trials on a global basis. We believe that this capability
      to provide our services globally in most major and developing
      pharmaceutical markets enhances our ability to compete for new business
      from large multinational pharmaceutical, biotechnology and medical device
      companies. We have expanded geographically through the establishment of 71
      offices in 38 countries and intend to continue expanding in regions that
      have the potential to increase our client base or increase our
      investigator and patient populations. We have most recently been expanding
      our presence in Eastern Europe and Latin America as well as parts of Asia
      including India and Japan.○
                  Increase
      Scale and Range of Services. We seek to enhance our competitive
      position by increasing the scale and range of our services. We intend to
      expand our clinical trials, central laboratory, digital imaging, IVRS
      (interactive voice recognition system), data management, statistical and
      consulting operations in order to capitalize further on the outsourcing
      opportunities currently available from our clients. The recent high
      profile withdrawal of several drugs from the market is also placing the
      spotlight on drug safety which will lead to greater emphasis, by all
      involved in drug development, on post-marketing safety monitoring. ICON’s
      acquisition of Healthcare Discoveries and Prevalere have increased our
      capability in the early phase of clinical development and will enable ICON
      to offer integrated Phase I/Bioanalytical services to
      clients.○
                  Cross
      Sell Services. By building up a full range of development services,
      ICON can support clients through all stages of their product lifecycle.
      There are signs that certain client segments are looking to rationalize
      their supply base down to a small number of CROs who can provide this
      breadth of service. A core part of our business development strategy is to
      “cross sell” ICON’s service portfolio. By developing and maintaining close
      relationships with clients, we gain repeat business and achieve lateral
      penetration of services with the client
      organization.○
                  Strategic
      acquisitions. Alongside organic growth, we will continue to seek
      strategic acquisitions that fall within and are complimentary to our
      existing service
lines.
  15
  Services
  ICON is a
global provider of outsourced development services to the pharmaceutical,
biotechnology and medical device industries. We specialize in the strategic
development, management and analysis of programs that support Clinical
Development - from compound selection to Phase I-IV clinical
studies.
  Our core
Clinical Research business specializes in the planning, management, execution
and analysis of Phase I – IV clinical trials, ranging from small studies to
complex, multinational projects. Specific clinical research services offered
include:
 ○
                Investigator
      Recruitment○
                Study
      Monitoring and Data Collection○
                Case
      Report Form (“CRF”) Preparation○
                Patient
      Safety Monitoring○
                Clinical
      Data Management○
                IVR
      (Interactive Voice Response)○
                Medical
      Reporting○
                Patient
      Registries○
                Outcomes
      Research○
                Health
      Economics○
                Strategic
      Analysis and Data Operations○
                Clinical
      Pharmacology○
                Bioanalysis○
                Immunoassay
      development○
                Pharmacokinetic
      and Pharmacodynamic analysis○
                Study
      Protocol Preparation○
                Regulatory
      Consulting○
                Product
      Development Planning○
                Strategic
      Consulting○
                Medical
      Imaging○
                Contract
      Staffing
  An
important element in monitoring patient safety during a clinical trial is the
conduct of various laboratory tests on the patient’s blood, urine and other
bodily fluids at appropriate intervals during the trial. The analysis of these
samples must be standardized and the results must be promptly transmitted to the
investigator. ICON Central Laboratories provides global central laboratory
services dedicated exclusively to clinical trials. Specific services offered by
ICON Central Laboratories include:
 ○
                Sample
      analyses○
                Safety
      testing○
                Microbiology○
                Custom
      flow cytometry○
                Electronic
      transmission of test
results
  16
  Organizational
Structure
 Name
                    
                    Country
      of incorporation
                    
                    Group
      ownership*ICON
      Clinical Research Limited
                    
                    Republic
      of Ireland
                    
                    100%ICON
      Clinical Research Inc.
                    
                    USA
                    
                    100%Ovation
      Healthcare Research 2, Inc.
                    
                    USA
                    
                    100%ICON
      Clinical Research (UK) Limited
                    
                    United
      Kingdom
                    
                    100%ICON
      Clinical Research GmbH
                    
                    Germany
                    
                    100%ICON
      Clinical Research SARL
                    
                    France
                    
                    100%ICON
      Clinical Research Israel Limited
                    
                    Israel
                    
                    100%ICON
      Clinical Research Espana S.L.
                    
                    Spain
                    
                    100%ICON
      Clinical Research Kft
                    
                    Hungary
                    
                    100%ICON
      Clinical Research S.R.L.
                    
                    Romania
                    
                    100%ICON
      Clinical Research LLC
                    
                    Ukraine
                    
                    100%ICON
      Holdings
                    
                    Republic
      of Ireland
                    
                    100%ICON
      Holdings Clinical Research International Limited
                    
                    Republic
      of Ireland
                    
                    100%ICON
      Clinical Research S.R.O.
                    
                    Czech
      Republic
                    
                    100%ICON
      Clinical Research (Canada) Inc.
                    
                    Canada
                    
                    100%ICON
      Clinical Research Pty Limited
                    
                    Australia
                    
                    100%ICON
      Clinical Research (New Zealand) Limited
                    
                    New
      Zealand
                    
                    100%ICON
      Japan K.K.
                    
                    Japan
                    
                    100%ICON
      Clinical Research Pte. Limited
                    
                    Singapore
                    
                    100%ICON
      Clinical Research Korea Yuhan Hoesa
                    
                    Korea
                    
                    100%ICON
      Clinical Research India Private Limited
                    
                    India
                    
                    100%ICON
      Clinical Research S.A.
                    
                    Argentina
                    
                    100%ICON
      Pesquisas Clinicas LTDA
                    
                    Brazil
                    
                    100%ICON
      Clinical Research México, S.A. de C.V.
                    
                    Mexico
                    
                    100%ICON
      Chile Limitada
                    
                    Chile
                    
                    100%ICON
      Clinical Research Peru SA
                    
                    Peru
                    
                    100%ICON
      Clinical Research Sucursal Colombia
                    
                    Colombia
                    
                    100%
  ICON
      Development Solutions Limited
                
                UK
                
                100%ICON
      Contracting Solutions, Inc.
                
                USA
                
                100%DOCS
      International BV
                
                Netherlands
                
                100%ICON
      Development Solutions Inc.
                
                USA
                
                100%ICON
      Central Laboratories Inc.
                
                USA
                
                100%Beacon
      Bioscience, Inc.
                
                USA
                
                100%Healthcare
      Discoveries Inc
                
                USA
                
                100%Prevalere
      Life Sciences Inc
                
                USA
                
                100%
  
 17
  Information
Systems
  Our
information technology strategy is built around deploying IT systems to enable
the delivery of our business services in a global environment. The focus is to
provide ease of access to information for our staff and clients globally. Our
current information systems are built on open standards and leading commercial
business applications from vendors including Microsoft, Oracle, EMC, BEA, Phase
Forward and Medidata. IT expenditure is authorized by strict IT Governance
policies requiring senior level approval of all strategic IT expenditure. All
critical business systems are formally delivered following a structured project
management and systems delivery life cycle approach. Critical clinical
information systems, which manage clinical data, are validated in accordance
with FDA regulations and those of other equivalent regulatory bodies throughout
the world.
  In
Clinical Operations, we have deployed a suite of software applications that
assist in the management and tracking of our clinical trials activities. These
software applications are both internally developed and commercially available
applications from leading vendors in the industry. These include a clinical
trials management application that tracks all relevant data in a trial and
automates all management and reporting processes. In our Data Management
function, we have deployed leading clinical data management solutions including
Electronic Data Capture (EDC) solutions from leading industry vendors. Our state
of the art workflow technology allows us to process clinical trials data
seamlessly throughout the Company. We have also developed an interactive voice
response system to increase the efficiency of clinical trials. This system
provides features such as centralized patient randomization, drug inventory
management, patient diary collection and provides our clients with a fully
flexible data retrieval solution which can be utilized via telephone, internet
browser or a WAP enabled device.
  Recognizing
that each client has its own requirements and systems, we seek to ensure an
entirely flexible approach to client needs. An example of this flexibility is in
the provision of portal solutions that allows clients access to study related
information via a secure web based environment. We also provide secure remote
access to client systems for clients who require us to utilize their internal
platforms.
  ICON’s
strategy of using technology to enhance our global processes can be seen in our
deployment of a global SOP Document Management system and a WEB based training
delivery solution.
  In our
central laboratory, we utilize a comprehensive suite of software, including a
laboratory information management system (LIMS), a kit/sample management system
and a web interface system to allow clients to review results
online.
  Our IT
systems are operated from two centralized hubs in Philadelphia and Dublin. Other
offices are linked to these hubs through a resilient network that is managed by
a tier one global telecommunications provider. Traveling staff can also access
all systems via secure remote dial up facilities. A global corporate intranet
portal provides access to all authorized data and applications for our internal
staff as well as providing an internal platform for company wide
communication.
  18
  Sales
and Marketing
  Our
global sales and marketing strategy is to focus our business development efforts
on pharmaceutical, biotechnology and medical device companies whose development
projects are advancing. By developing and maintaining close relationships with
our clients, we gain repeat business, can leverage a full service portfolio and
achieve lateral penetration into other therapeutic divisions where applicable.
Simultaneously, we are actively establishing new client
relationships.
  While our
sales and marketing activities are carried out locally by executives in each of
the major locations, the sales and marketing process is coordinated centrally to
ensure a consistent and differentiated market positioning for ICON and ongoing
development of the ICON brand. In addition, all our business development
professionals, senior executives and project team leaders share responsibility
for the maintenance of key client relationships and business development
activities.
  Clients
  In the
year ended December 31, 2008, revenue was earned from over 400 clients,
including all of the top 20 pharmaceutical companies as ranked by 2007
revenues.
  We have
in the past and may in the future derive a significant portion of our net
revenue from a relatively limited number of major projects or clients. During
the year ended December 31, 2008, 29% of our net revenue was derived from our
top five clients and no one client contributed more than 10% of net revenues.
During the year ended December 31, 2007, 30% of our net revenue was derived from
our top five clients and no one client contributed more than 10% of net
revenues. During the year ended December 31, 2006, 35% of our net revenue was
derived from our top five clients and no one client contributed more than 10% of
net revenues. We believe that the importance of certain clients reflects our
success in penetrating our client base. The loss of, or a significant decrease
in business from one or more of these key clients could result in a material
adverse effect.
  Contractual
Arrangements
  We are
generally awarded contracts based upon our response to requests for proposals
received from pharmaceutical, biotechnology and medical device
industries.
  Most of
our revenues are earned from contracts which are fixed price, based on certain
activities and performance specifications. Payment terms usually provide either
for payments based on the achievement of certain identified milestones or
activity levels or monthly payments according to a fixed payment schedule over
the life of the contract. Where clients request changes in the scope of a trial
or in the services to be provided by us, a change order or amendment is issued
often resulting in additional revenues for us. We also contract on a
“fee-for-service,” or “time and materials” basis, but this accounts for a small
portion of overall project activities.
  Contract
terms may range from several weeks to several years depending on the nature of
the work to be performed. In most cases, a portion of the contract fee,
typically 10% to 20%, is paid at the time the study or trial is started. The
balance of the contract fee payable is generally payable in installments over
the study or trial duration and may be based on the achievement of certain
performance targets or “milestones” or, to a lesser extent, on a fixed monthly
payment schedule. For instance, installment payments may be based on patient
enrollment or delivery of the database. Reimbursable expenses are typically
estimated and budgeted within the contract and invoiced on a monthly basis.
Reimbursable expenses include payments to investigators, travel and
accommodation costs and various other direct costs incurred in the course of the
clinical trial which are fully reimbursable by the client.
  Most of
our contracts are terminable immediately by the client with justifiable cause or
with 30 to 90 days notice without cause. In the event of termination, we are
entitled to all sums owed for work performed through the notice of termination
and certain costs associated with termination of the study. Termination or delay
in the performance of a contract occurs for various reasons, including, but not
limited to, unexpected or undesired results, production problems resulting in
shortages of the drug, adverse patient reactions to the drug, the client’s
decision to de-emphasize a particular trial or inadequate patient enrollment or
investigator recruitment.
  19
  Backlog
  Our
backlog consists of potential net revenue yet to be earned from projects awarded
by clients.
  At
December 31, 2008, we had a backlog of approximately $1.7 billion, compared with
approximately $1.3 billion at December 31, 2007. We believe that our backlog as
of any date is not necessarily a meaningful predictor of future results, due to
the potential for cancellation or delay of the projects underlying the backlog,
and no assurances can be given that we will be able to realize this backlog as
net revenue.
  Competition
  The CRO
industry is highly fragmented, consisting of several hundred small,
limited-service providers and a limited number of medium-sized and large CROs
with global operations. We primarily compete against in-house departments of
pharmaceutical companies and other CROs with global operations. Some of these
competitors have substantially greater capital, technical and other resources
than us. CROs generally compete on the basis of previous experience, the quality
of contract research, the ability to organize and manage large-scale trials on a
global basis, the ability to manage large and complex medical databases, the
ability to provide statistical and regulatory services, the ability to recruit
suitable investigators, the ability to integrate information technology with
systems to improve the efficiency of contract research, an international
presence with strategically located facilities, financial viability, medical and
scientific expertise in specific therapeutic areas and price. We believe that we
compete favorably in these areas. Our principal CRO competitors are Covance
Inc., i3 Research (United Health Group Incorporated), Kendle International Inc.,
MDS Inc., Omnicare Inc., PAREXEL International Corporation, Pharmaceutical
Product Development Inc., PharmaNet Development Group Inc., PRA International
Inc. and Quintiles Transnational Corporation. The trend toward CRO industry
consolidation has resulted in heightened competition among the larger CROs for
clients and acquisition candidates.
  Government
Regulation
  Regulation
of Clinical Trials
  The
clinical investigation of new drugs is highly regulated by government agencies.
The standard for the conduct of clinical research and development studies is
Good Clinical Practice, which stipulates procedures designed to ensure the
quality and integrity of data obtained from clinical testing and to protect the
rights and safety of clinical subjects.
  Regulatory
authorities, including the FDA, have promulgated regulations and guidelines that
pertain to applications to initiate trials of products, the approval and conduct
of studies, report and record retention, informed consent, applications for the
approval of drugs and post-marketing requirements. Pursuant to these regulations
and guidelines, service providers that assume the obligations of a drug sponsor
are required to comply with applicable regulations and are subject to regulatory
action for failure to comply with such regulations and guidelines. In the United
States and Europe, the trend has been in the direction of increased regulation
by the applicable regulatory authority.
  In
providing our services in the United States, we are obligated to comply with FDA
requirements governing such activities. These include ensuring that the study is
approved by an appropriate independent review board (IRB)/Ethics Committee,
obtaining patient informed consents, verifying qualifications of investigators,
reporting patients’ adverse reactions to drugs and maintaining thorough and
accurate records. We must maintain critical documents for each study for
specified periods, and such documents may be reviewed by the study sponsor and
the FDA during audits.
  The
services we provide outside the United States are ultimately subject to similar
regulation by the relevant regulatory authority, including the Medicines Control
Agency in the United Kingdom and the Bundesinstitut für Arzneimittel und
Medizinprodukte in Germany. In addition, our activities in Europe are affected
by the European Medicines Evaluation Agency, which is based in London,
England.
  20
  We must
retain records for each study for specified periods for inspection by the client
and by the applicable regulatory authority during audits. If such audits
document that we have failed to comply adequately with applicable regulations
and guidelines, it could result in a material adverse effect. In addition, our
failure to comply with applicable regulation and guidelines, depending on the
extent of the failure, could result in fines, debarment, termination or
suspension of ongoing research or the disqualification of data, any of which
could also result in a material adverse effect.
  Potential
Liability and Insurance
  We
contract with physicians who serve as investigators in conducting clinical
trials to test new drugs on their patients. Such testing creates a risk of
liability for personal injury to or death of the patients resulting from adverse
reactions to the drugs administered. In addition, although we do not believe
that we are legally accountable for the medical care rendered by third party
investigators, it is possible that we could be subject to claims and expenses
arising from any professional malpractice of the investigators with whom we
contract. We also could be held liable for errors or omissions in connection
with the services we perform.
  From time
to time, we are asked to act as the legal representative of a client in certain
jurisdictions where the client does not itself have a legal entity but where
legislation requires it to do so. As we believe that acting as legal
representative of clients might expose us to a higher risk of liability, there
is an entity within the ICON Group designated to provide this service in
relevant jurisdictions subject to certain preconditions being met. The
preconditions relate to obtaining protections such as specific insurance and
indemnities from the client to cover the nature of the exposure.
  We
believe that the risk of liability to patients in clinical trials is mitigated
by various regulatory requirements, including the role of institutional review
boards and the need to obtain each patient’s informed consent. The FDA requires
each human clinical trial to be reviewed and approved by the institutional
review board at each study site. An institutional review board is an independent
committee that includes both medical and non-medical personnel and is obligated
to protect the interests of patients enrolled in the trial. After the trial
begins, the institutional review board monitors the protocol and measures
designed to protect patients, such as the requirement to obtain informed
consent.
  We
further attempt to reduce our risks through contractual indemnification
provisions with clients and through insurance maintained by clients,
investigators and us. However, the contractual indemnifications generally do not
protect us against certain of our own actions such as negligence, the terms and
scope of such indemnification vary from client to client and from trial to
trial, and the financial performance of these indemnities is not secured.
Therefore, we bear the risk that the indemnity may not be sufficient or that the
indemnifying party may not have the financial ability to fulfill its
indemnification obligations. We maintain worldwide professional liability
insurance. We believe that our insurance coverage is adequate. There can be no
assurance, however, that we will be able to maintain such insurance coverage on
terms acceptable to us, if at all. We could be materially adversely affected if
we were required to pay damages or bear the costs of defending any claim outside
the scope of or in excess of a contractual indemnification provision or beyond
the level of insurance coverage or in the event that an indemnifying party does
not fulfill its indemnification obligations.
  Description
of Property
  We lease
all but one of our facilities under operating leases.
  Our
principal executive offices are located in South County Business Park,
Leopardstown, Dublin, Republic of Ireland, where we own an office facility on
approximately four and a half acres. In July 2008 we completed an expansion of
this facility, extending the facility by approximately 12,900 square meters to
approximately 15,800 square meters.
  We
maintain three offices in New York, two offices in each of the following US
cities: Philadelphia, Chicago, San Antonio and San Francisco, and one office in
each of the following US cities: Irvine, Nashville, Wilmington, Raleigh,
Baltimore, Tampa, San Diego, Salt Lake City and Houston.
  Our
European operations maintain two offices in Manchester, Paris, Amsterdam,
Stockholm and Warsaw, and one office in each of the following cities:
Southampton, Cambridge, Marlow, Frankfurt, Munich, Berlin, Helsinki, Copenhagen,
Milan, Barcelona, Riga, Budapest, Vilinius, Prague, Kiev, Bucharest, Moscow,
Novosibirsk and Tel Aviv.
  21
  Our Rest
of World offices are located in Auckland, Sydney, Tokyo, Osaka, Seoul, Beijing,
Taipei, Hong Kong, Bangkok, Singapore, Chennai, Bangalore, New Dehli,
Johannesburg, Montreal, Mexico City, Sao Paolo, Lima, Buenos Aires, Bogota and
Santiago.
  Unresolved
Staff Comments
  Not
applicable.
  Item 5.Operating and Financial Review and
Prospects
  The
following discussion and analysis should be read in conjunction with our
Consolidated Financial Statements, accompanying notes and other financial
information, appearing in Item 18. The Consolidated Financial Statements have
been prepared in accordance with accounting principles generally accepted in the
United States.
  Overview
  We are a
contract research organization (“CRO”), providing outsourced development
services on a global basis to the pharmaceutical, biotechnology and medical
device industries. We specialize in the strategic development, management and
analysis of programs that support Clinical Development - from compound selection
to Phase I-IV clinical studies. We have the operational flexibility to provide
development services on a stand-alone basis or as part of an integrated “full
service” solution. Our preferred approach is to use dedicated teams to achieve
optimum results, but we can implement a range of resourcing models to suit
client requirements, and increasingly our teams are flexibly applied to minimize
costs for our clients.
  In a
highly fragmented industry, we are one of a small number of companies with the
capability and expertise to conduct clinical trials in all major therapeutic
areas on a global basis. Currently, we have 6,975 employees, in 71 locations in
38 countries, providing Phase I - IV Clinical Trial Management, Drug Development
Support Services, Data Management and Biostatistics and Central Laboratory and
Imaging Services. For the year ended December 31, 2008, we derived approximately
43.8%, 47.8% and 8.4% of our net revenue in the United States, Europe and Rest
of World, respectively.
  Revenue
consists primarily of fees earned under contracts with third-party clients. In
most cases, a portion of the contract fee is paid at the time the study or trial
is started, with the balance of the contract fee generally payable in
installments over the study or trial duration, based on the achievement of
certain performance targets or “milestones”. Revenue for contracts is recognized
on a proportional performance method based on the relationship between time
incurred and the total estimated duration of the trial or on a fee-for-service
basis according to the particular circumstances of the contract. As is customary
in the CRO industry, we contract with third party investigators in connection
with clinical trials. All investigator fees and certain other costs, where
reimbursed by clients, are, in accordance with industry practice, deducted from
gross revenue to arrive at net revenue. As these costs vary from contract to
contract, we view net revenue as our primary measure of revenue
growth.
  Direct
costs consist primarily of compensation, associated fringe benefits and share
based compensation expense for project-related employees and other direct
project driven costs. Selling, general and administrative expenses consist of
compensation, related fringe benefits and share based compensation expense for
selling and administrative employees, professional services, advertising costs
and all costs related to facilities and information systems.
  Our
backlog consists of potential net revenue yet to be earned from projects awarded
by clients. At December 31, 2008, we had a backlog of approximately $1.7
billion, compared with approximately $1.3 billion at December 31, 2007. We
believe that our backlog as of any date is not necessarily a meaningful
predictor of future results, due to the potential for cancellation or delay of
the projects underlying the backlog, and no assurances can be given that we will
be able to realize this backlog as net revenue.
  As the
nature of ICON’s business involves the management of projects having a typical
duration of one to three years, the commencement or completion of projects in a
fiscal year can have a material impact on revenues earned with the relevant
clients in such years. In addition, as we typically work with some, but not all,
divisions of a client, fluctuations in the number and status of available
projects within such divisions can also have a material impact on revenues
earned from such clients from year to year.
  22
  Although
we are domiciled in Ireland, we report our results in U.S. dollars. As a
consequence the results of our non-U.S. based operations, when translated into
U.S. dollars, could be materially affected by fluctuations in exchange rates
between the U.S. dollar and the currencies of those operations.
  In
addition to translation exposures, we are also subject to transaction exposures
because the currency in which contracts are priced can be different from the
currencies in which costs relating to those contracts are incurred. We have 20
operations operating in U.S. dollars, 11 trading in Euros, 5 in pounds Sterling,
3 in Indian Rupee, 2 each in Russian Rouble, Japanese Yen, Swedish Krona and
Polish Zloty, and 1 each in Australian dollars, Singapore dollars, Israeli New
Shekels, Latvian Lats, Argentine Peso, South African Rand, Canadian dollar,
Hungarian Forint, Danish Krone, Czech Koruna, Ukraine Hryvnia, Romanian New Leu,
Hong Kong dollar, Taiwan dollar, Mexican Peso, Brazilian Real, Chilean Peso,
South Korean Won, Thai Baht, Chinese Yuan Renminbi, Lithuanian Litas, Colombian
Peso, Peruvian Neuvo Sol & New Zealand dollars. Our operations in the United
States are not materially exposed to such currency differences as the majority
of our revenues and costs are in U.S. dollars. However, outside the United
States the multinational nature of our activities means that contracts are
usually priced in a single currency, most often U.S. dollars, Euros or pounds
Sterling, while costs arise in a number of currencies, depending, among other
things, on which of our offices provide staff for the contract, and the location
of investigator sites. Although many such contracts benefit from some degree of
natural hedging due to the matching of contract revenues and costs in the same
currency, where costs are incurred in currencies other than those in which
contracts are priced, fluctuations in the relative value of those currencies
could have a material effect on ICON’s results of operations. We regularly
review our currency exposures and, when appropriate, hedge a portion of these,
using forward exchange contracts, where they are not covered by natural hedges.
In addition, we usually negotiate currency fluctuation clauses in our contracts
which allow for price negotiation if changes in the relative value of those
currencies exceed predetermined tolerances.
  As we
conduct operations on a global basis, our effective tax rate has depended and
will depend on the geographic distribution of our revenue and earnings among
locations with varying tax rates. ICON’s results of operations therefore may be
affected by changes in the tax rates of the various jurisdictions. In
particular, as the geographic mix of our results of operations among various tax
jurisdictions changes, our effective tax rate may vary significantly from period
to period.
  Operating
Results
  The
following table sets forth for the periods indicated certain financial data as a
percentage of net revenue and the percentage change in these items compared to
the prior comparable period. The trends illustrated in the following table may
not be indicative of future results.
 Jan
      1, 2007
                    to
      Dec 31, 2007
                  
                  
                  Jan
      1, 2008 to
                    Dec
      31, 2008
                  
                  
                  Jan
      1, 2007 to
                    Dec
      31, 2007
                  
                  
                  Jan
      1, 2008 to
                    Dec
      31, 2008Percentage
      of Net Revenue
                  
                  
                  Percentage
      IncreaseNet
      revenue
                  
                  
                  100
                  %
                  
                  
                  100
                  %
                  
                  
                  38.4
                  %
                  
                  
                  37.2
                  %Costs
      and expenses: Direct costs
                  
                  
                  56.2
                  %
                  
                  
                  56.5
                  %
                  
                  
                  38.3
                  %
                  
                  
                  38.0
                  %Selling,
      general and administrative
                  
                  
                  29.8
                  %
                  
                  
                  28.8
                  %
                  
                  
                  37.6
                  %
                  
                  
                  32.3
                  %Depreciation
      and amortization
                  
                  
                  3.0
                  %
                  
                  
                  3.2
                  %
                  
                  
                  27.2
                  %
                  
                  
                  45.9
                  %Income
      from operations
                  
                  
                  11.0
                  %
                  
                  
                  11.5
                  %
                  
                  
                  44.8
                  %
                  
                  
                  43.7
                  %
  23
  Year
ended December 31, 2008 compared to year ended December 31, 2007
  Net
revenue for the year increased by $234.5 million, or 37.2%, from $630.7 million
for the year ended December 31, 2007 to $865.2 million for the year ended
December 31, 2008. Revenues in the United States, Europe and the Rest of World
increased by 20.0%, 48.3%, and 102.2% respectively. In the year ended December
31, 2008, net revenue from our central laboratory business increased by 32.9%,
from $53.5 million, to $71.1 million, while our clinical research segment
improved by 37.6%, from $577.2 million to $794.1 million. This increase has
resulted from a combination of increased business from existing clients,
business won from new clients and increased use of outsourcing by the
pharmaceutical, biotechnology and medical device industries.
  Direct
costs for the year increased by $134.8 million, or 38.0%, from $354.5 million
for the year ended December 31, 2007 to $489.2 million for the year ended
December 31, 2008. Direct costs as a percentage of net revenue increased to
56.5% in the year ended December 31, 2008, compared to 56.2% in the year ended
December 31, 2007. The primary reason for this increase was an increase in
personnel related costs of $120.7 million resulting from an increase in the
number of project related employees of over 990. The remainder of the increase
resulted primarily from increased laboratory and consulting
expenses.
  Selling,
general and administrative expenses for the year increased by $60.8 million, or
32.3%, from $188.0 million for the year ended December 31, 2007, to $248.8
million for the year ended December 31, 2008. As a percentage of net revenue,
selling, general and administrative expenses, decreased from 29.8% for the year
ended December 31, 2007, to 28.8% for the year ended December 31, 2008. The
increase in absolute terms is primarily driven by increased personnel costs of
$34.5 million, principally driven by increased levels of both administrative and
operations infrastructure staff to support expanding operations and revenue
growth. In addition to these personnel costs there were additional rental
charges of $7.5 million, from further office openings in 2008, increased
professional, legal and accounting costs of $5.4 million, increased utility
costs of $5.5 million and an increase of $4.3 million in relation to support and
maintenance costs. These increases were partially offset by a gain in relation
to realized and unrealized foreign exchange of $2.3 million which compared with
a loss of $6.3 million for the year ended December 31, 2007. These gains arise
on the revaluation of monetary assets and liabilities throughout the
year.
  Total
share based compensation expense recognized during the year ended December 31,
2008, amounted to $6.1 milllion compared to $5.7 million during the year ended
December 31, 2007.
  Depreciation
and amortization expense for the year increased by $8.7 million, or 45.9%, from
$19.0 million for the year ended December 31, 2007, to $27.7 million for the
year ended December 31, 2008. As a percentage of net revenue, depreciation and
amortization increased from 3.0% of net revenues for the year ended December 31,
2007, to 3.2% for the year ended December 31, 2008. This increase relates
primarily to our investment in facilities and equipment to enable our continued
growth. Capital expenditures were $71.4 million in 2008. $24.6 million of this
spend is attributable to expenditure on the expansion of our facility in Dublin,
Republic of Ireland, while the balance relates to the Company’s continued
investment in facilities and information technology to support our continued
growth globally. We expect depreciation in 2009 to increase as a result of this
investment.
  Income
from operations for the year increased by $30.3 million, or 43.7%, from $69.2
million for the year ended December 31, 2007 to $99.5 million for the year ended
December 31, 2008. As a percentage of net revenue, income from operations
increased from 11.0% of net revenues for the year ended December 31, 2007, to
11.5% for the year ended December 31, 2008. Operating margins for our central
laboratory business were 7.8% for the year ended December 31, 2008, compared to
6.9% for the year ended December 31, 2007. The central laboratory constitutes
approximately 8.2% of our business revenues for the year ended December 31,
2008. Operating margins for our clinical research segment increased to 11.8% for
the year ended December 31, 2008, from 11.4% for the year ended December 31,
2007.
  Net
interest expense for the year ended December 31, 2008, was $1.2 million,
compared with net interest income of $2.7 million for the year ended December
31, 2007. The Company has entered into a number of significant banking
facilities since July 2007. These facilities have been used to fund the
acquisitions of DOCS International in July 2007, Healthcare Discoveries in
February 2008 and Prevalere in November 2008, and also to fund the expansion of
the Company’s Dublin facility.
  24
  Our
provision for income taxes increased from $15.8 million for the year ended
December 31, 2007, to $20.0 million for the year ended December 31, 2008. ICON
plc’s effective tax rate for the year ended December 31, 2008, was 20.3%
compared with 22.0% for the year ended December 31, 2007. The effective tax rate
is principally a function of the distribution of pre-tax profits in the
territories in which the Group operates.
  Year
ended December 31, 2007 compared to year ended December 31, 2006
  Net
revenue increased by $175.1 million, or 38.4%, from $455.6 million to $630.7
million. Revenues in the United States, Europe and the Rest of World increased
by 18.7%, 71.2% and 35.0% respectively. In the year ended December 31, 2007, net
revenue from our central laboratory business increased by 13.3%, from $47.2
million, to $53.5 million, while our clinical research segment improved by
41.3%, from $408.4 million to $577.2 million, over the prior period. This
increase in net revenue has resulted from a combination of increased business
from existing clients, business won from new clients, increased use of
outsourcing by the pharmaceutical, biotechnology and medical device industries
and an underlying increase in research and development spending.
  Direct
costs increased by $98.2 million, or 38.3%, from $256.3 million to $354.5
million. Direct costs as a percentage of net revenue remained static at 56.2% in
the year ended December 31, 2007, compared to the year ended December 31, 2006.
The primary reason for the increase in direct costs was the increase in
personnel related costs of $86.3 million resulting from the increase in direct
headcount of over 1,100 employees. The remainder of the increase resulted
primarily from increased laboratory and consulting expenses.
  Selling,
general and administrative expenses increased by $51.4 million, or 37.6%, from
$136.6 million to $188.0 million. As a percentage of net revenue, selling,
general and administrative expenses, decreased from 30.0% for the year ended
December 31, 2006, to 29.8% for the year ended December 31, 2007. The increase
in SG&A costs is primarily driven by increased personnel costs of $22.0
million principally driven by the increased levels of both administrative and
operations infrastructure staff to support expanding operations and revenue
growth. In addition to these personnel costs there were additional rental
charges of $4.9 million from further office openings in 2007, increased
professional, legal and accounting costs of $4.5 million, increased information
technology costs of $3.8 million, an increase of $4.7 million in relation to
realized and unrealized foreign exchange loss and increased temporary staff and
recruitment costs of $6.6 million.
  The total
share based compensation expense recognized during the year ended December 31,
2007 amounted to $5.7m compared to $4.1 million during the year ended December
31, 2006.
  Depreciation
and amortization expense increased by $4.1 million, or 27.2%, from $14.9 million
to $19.0 million. As a percentage of net revenue, depreciation and amortization
decreased from 3.3% of net revenues for the year ended December 31, 2006, to
3.0% for the year ended December 31, 2007. This increase in absolute terms
relates primarily to our investment in facilities and equipment to enable our
continued growth. Capital expenditures were $75.7 million in 2007. $37.9 million
of this spend is attributable to the construction of the Company’s new
headquarter building in Dublin, Republic of Ireland, while the balance relates
to the Company’s continued investment in facilities and information technology
to support its continued growth globally. We expect depreciation in 2008 to
increase as a result of this investment.
  Income
from operations increased by $21.4 million, or 44.8%, from $47.8 million to
$69.2 million. As a percentage of net revenue, income from operations increased
from 10.5% of net revenues for the year ended December 31, 2006, to 11% for the
year ended December 31, 2007. The year ended December 31, 2007, saw a continued
improvement in the performance of the central laboratory business, with results
improving from an operating profit of 4.9% for the year ended December 31, 2006,
to an operating profit of 6.9% for the year ended December 31, 2007. The central
laboratory constitutes approximately 8.5% of our business revenues for the year
ended December 31, 2007. Operating margins for our clinical research segment
increased to 11.4% in the year ended December 31, 2007, from 11.1% for the year
ended December 31, 2006.
  Net
interest income for the year ended December 31, 2007, was $2.7 million, a
decrease of $0.9 million from the year ended December 31, 2006. The Company
entered into two significant banking facilities during 2007 to fund the
acquisition of DOCS International in July 2007 $40.6 million (€29.5 million) and
expenditure on the expansion of the Company’s facility.
  25
  Our
provision for income taxes increased from $12.9 million for the year ended
December 31, 2006, to $15.8 million for the year ended December 31, 2007. ICON
plc’s effective tax rate for the year ended December 31, 2007, was 22% compared
with 25% for the year ended December 31, 2006. The effective tax rate is
principally a function of the distribution of pre-tax profits in the territories
in which the Group operates.
  Liquidity
and Capital Resources
  The CRO
industry generally is not capital intensive. Since our inception, we have
financed our operations and growth primarily with cash flows from operations,
net proceeds of $49.1 million raised in our initial public offering in May 1998,
net proceeds of $44.3 million raised in our public offering in August 2003 and
net borrowings of $105.4 million. Our principal operating cash needs are payment
of salaries, office rents, travel expenditures and payments to investigators.
The aggregate amount of employee compensation, excluding stock compensation
expense, paid by us and our subsidiaries for the years ended December 31, 2006,
December 31, 2007 and December 31, 2008, amounted to $274.6 million, $382.7
million and $528.5 million respectively. Investing activities primarily reflect
capital expenditures for facilities, information systems enhancements, the
purchase of short-term investments and acquisitions.
  Our
clinical research and development contracts are generally fixed price with some
variable components and range in duration from a few weeks to several years.
Revenue from contracts is generally recognized as income on the basis of the
relationship between time incurred and the total estimated contract duration or
on a fee-for-service basis. The cash flow from contracts typically consists of a
down payment of between 10% and 20% paid at the time the contract is entered
into, with the balance paid in installments over the contract’s duration, in
some cases on the achievement of certain milestones. Accordingly, cash receipts
do not correspond to costs incurred and revenue recognized on
contracts.
  As of
December 31, 2008, our working capital was $186.0 million, compared to $193.3
million at December 31, 2007. The most significant influence on our operating
cash flow is revenue outstanding, which comprises accounts receivable and
unbilled revenue, less payments on account. The dollar values of these amounts
and the related days revenue outstanding can vary due to the achievement of
contractual milestones and the timing of cash receipts. The number of days
revenue outstanding was 70 days at December 31, 2008 and 66 days at December 31,
2007.
  Net cash
provided by operating activities was $81.3 million for the year ended December
31, 2008, compared with $43.0 million for the year ended December 31, 2007 and
$50.5 million for the year ended December 31, 2006. The increase in cash
provided from operating activities arises primarily from an increase in the
profits of the Company during the current year.
  Net cash
used in investing activities was $117.4 million for the year ended December 31,
2008, compared with $118.5 million for the year ended December 31, 2007 and
$55.3 million in the year ended December 31, 2006. Net cash used in the year
ended December 31, 2008 arises principally from capital expenditure and the
purchase of subsidiary undertakings.
Capital expenditure for the year ended December 31, 2008, amounted to $67.9
million, and included expenditure on the expansion of the Company’s facility in
Dublin, Republic of Ireland, together with continued investment in global
infrastructure and information technology systems to support ongoing expansion.
Cash paid for the purchase of subsidiary undertakings during the year ended
December 31, 2008, amounted to $49.5 million, and included the acquisitions of
Healthcare Discoveries in February 2008 and Prevalere Life Sciences in November
2008.
  Net cash
provided by financing activities was $22.3 million for the year ended December
31, 2008, compared with $94.0 million for the year ended December 31, 2007 and
$7.7 million in the year ended December 31, 2006. We received an additional
$10.0 million in net borrowings during the year ended December 31, 2008, $8.5
million on the exercise of share options and $4.1 million in income tax benefits
from the exercise of share options. During the year ended December 31, 2007, we
received $89.8 million in net borrowings, $5.3 million from the exercise of
share options and $1.5 million in income tax benefits from the exercise of share
options.
  As a
result of these cash flows, cash and cash equivalents at December 31, 2008, was
$58.4 million, a decrease of $18.5 million for the year ended December 31, 2008,
compared to an increase of $13.8 million for the year ended December 31, 2007,
and an increase of $3.5 million for the year ended December 31, 2006. Net debt
at December 31, 2008, amounted to $4.3 million, comprising cash and cash
equivalents of $58.4 million, short term investments of $42.7 million, less bank
credit lines and loan facilities of $105.4 million. Net cash at December 31,
2007, amounted to $23.8 million, comprising cash and cash equivalents of $76.9
million, short term investments of $41.6 million, less bank credit lines and
facilities of $94.8 million.
  26
  On July
9, 2007, ICON plc entered into a five year committed multi-currency facility
agreement for €35 million ($48.9 million) with The Governor and Company of the
Bank of Ireland. Our obligations under the facility are secured by certain
composite guarantees, indemnities and pledges in favor of the bank. The facility
bears interest at an annual rate equal to the EURIBOR plus a margin. On July 10,
2007, the Company drew down €29.5 million ($41.2 million) of the facility to
fund the acquisition of DOCS International. On October 15, 2007, the remaining
€5.5 million ($7.7 million) of the facility was drawn down to fund expenditure
on the expansion of the Company’s facility in Dublin, Republic of
Ireland.
  On
January 2, 2009, an additional four year committed credit facility was
negotiated with The Governor and Company of the Bank of Ireland for $25 million.
The facility bears interest at LIBOR plus a margin and is secured by certain
composite guarantees, indemnities and pledges in favour of the
bank.
  On
October 17, 2007, an uncommitted credit facility was negotiated with Allied
Irish Bank plc, for €30 million ($41.9 million). Interest is calculated at the
EUR interbank rate plus a margin. The facility is secured by the same composite
guarantees and indemnities in place for the Bank of Ireland committed facility.
The funds were used to refinance overdraft facilities in place to fund
expenditure on the expansion of the Dublin facility. On January 8, 2008, the
facility with Allied Irish Banks plc was increased to €50 million ($69.9
million).
  On
December 22, 2008, committed credit facilities were negotiated with Allied Irish
Bank plc for $75 million. The facilities comprise a one year Euro facility of
approximately €20 million ($28.0 million), with the balance comprising a three
year US dollar facility. The Euro facility bears interest at EURIBOR plus a
margin and the US dollar facility bears interest at LIBOR plus a margin. Both
facilities are secured by certain composite guarantees and pledges in favour of
the bank. These facilities replace the uncommitted facilities negotiated on
January 8, 2008. $28.4 million of these facilities were used to fund the
acquisition of Prevalere with the remaining balance used to refinance the
previous drawn uncommitted facilities.
  On
February 4, 2008, an uncommitted credit facility was negotiated with Citibank
N.A, for $30 million. Interest is calculated at the London Interbank Market rate
plus a margin. $12.0 million of this facility was drawn down in February 2008 to
fund the acquisition of Healthcare Discoveries. On September 30, 2008, the $12.0
million previously drawn was repaid in full. At December 31, 2008, this facility
remained un-drawn and available to the Company.
  The
average margin payable on the above mentioned facilities is 1.70 per
cent..
  On
February 11, 2008, the Company acquired 100% of the common stock of Healthcare
Discoveries Inc., for an initial cash consideration of $10.9 million, excluding
costs of acquisition. Healthcare Discoveries, located in San Antonio, Texas, is
engaged in the provision of Phase I clinical trial management services. Certain
performance milestones were built into the acquisition agreement requiring
payment of additional consideration of up to $10.0 million if these milestones
were achieved during the year ended December 31, 2008. No amounts have been
accrued at December 31, 2008, as the milestones have not been
achieved.
  On
November 14, 2008, the Company acquired 100% of the common stock of Prevalere
Life Sciences Inc. (“Prevalere”), for an initial cash consideration of $36.8
million, excluding costs of acquisition. Prevalere, located in Whitesboro, New
York, is a leading provider of bioanalytical and immunoassay services to
pharmaceutical and biotechnology companies. Certain performance milestones were
built into the acquisition agreement requiring potential additional
consideration of up to $8.2 million if these milestones are achieved during the
years ended December 31, 2008 and 2009. Additional consideration of $5.0 million
has been accrued at December 31, 2008, in respect of the milestones for the year
ended December 31, 2008. No amounts have been accrued for additional
consideration potentially payable in respect of the milestones for the year
ended December 31, 2009.
  27
  On July
1, 2004, the Company acquired 70% of the common stock of Beacon Biosciences Inc.
(“Beacon”), a leading specialist CRO, which provides a range of medical imaging
services to the pharmaceutical, biotechnology and medical device industries, for
an initial cash consideration of $9.9 million, excluding costs of acquisition.
On December 31, 2008, the remaining 30% of the common stock was acquired by the
Company for $17.4 million, excluding costs of acquisition. Certain performance
milestones were built into the acquisition agreement for the remaining 30% of
Beacon requiring potential additional consideration of up $3.0 million if these
milestones are achieved during the year ended December 31, 2009. At December 31,
2008, no amounts have been accrued in respect of the potential additional
consideration.
  On July
12, 2007, the Company acquired 100% of the common stock of DOCS International, a
European based clinical research staffing organization, for a cash consideration
of $40.6 million (€29.5 million). DOCS International operates in eight European
countries and focuses on the training and supply of contract and permanent
clinical research personnel to the pharmaceutical and biotech
industry.
  As at
December 31, 2008, the Company had $285.8 million in contractual obligations and
commercial commitments. As at December 31, 2008, the Company had known
obligations of $168.6 million in respect of operating leases, primarily relating
to leased office facilities. Additionally, the Company had bank debt of $105.4
million used to finance the acquisition of DOCS International in July 2007,
Healthcare Discoveries in February 2008, Prevalere in November 2008, and
expenditure on the expansion of our Dublin facility.
  Contractual
obligations table
  The
following table represents our contractual obligations and commercial
commitments as of December 31, 2008:
 Payments
      due by periodTotal
                                                                                          
                                                                                          
                                                                                          Less
      than 1

                                                                                            year
                                                                                          
                                                                                          
                                                                                          1
      to 3

                                                                                            years
                                                                                          
                                                                                          
                                                                                          3
      to 5

                                                                                            years
                                                                                          
                                                                                          
                                                                                          More
      than5years(U.S.$
      in millions)Operating
      lease obligations
                                                                                          
                                                                                          
                                                                                          168.6
                                                                                          
                                                                                          
                                                                                          
                                                                                          38.2
                                                                                          
                                                                                          
                                                                                          
                                                                                          60.5
                                                                                          
                                                                                          
                                                                                          
                                                                                          40.2
                                                                                          
                                                                                          
                                                                                          
                                                                                          29.7Capital
      lease obligations
                                                                                          
                                                                                          
                                                                                          0.7
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.3
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.4
                                                                                          
                                                                                          
                                                                                          
                                                                                          —
                                                                                          
                                                                                          
                                                                                          
                                                                                          —Bank
      credit lines and loans facilities
                                                                                          
                                                                                          
                                                                                          105.4
                                                                                          
                                                                                          
                                                                                          
                                                                                          40.2
                                                                                          
                                                                                          
                                                                                          
                                                                                          53.0
                                                                                          
                                                                                          
                                                                                          
                                                                                          12.2
                                                                                          
                                                                                          
                                                                                          
                                                                                          —Non-current
      tax liabilities
                                                                                          
                                                                                          
                                                                                          11.1
                                                                                          
                                                                                          
                                                                                          
                                                                                          —
                                                                                          
                                                                                          
                                                                                          
                                                                                          8.0
                                                                                          
                                                                                          
                                                                                          
                                                                                          3.1
                                                                                          
                                                                                          
                                                                                          
                                                                                          —Total
      (U.S.$ in millions)
                                                                                          
                                                                                          $
                                                                                          285.8
                                                                                          
                                                                                          
                                                                                          $
                                                                                          78.7
                                                                                          
                                                                                          
                                                                                          $
                                                                                          121.9
                                                                                          
                                                                                          
                                                                                          $
                                                                                          55.5
                                                                                          
                                                                                          
                                                                                          $
                                                                                          29.7
  We expect
to spend approximately $50 million in the next twelve months on further
investments in information technology, the expansion of existing facilities and
the addition of new offices. We expect to increase this level of spending in
subsequent years. We believe that we will be able to fund our additional
foreseeable cash needs for the next twelve months from cash flow from operations
and existing cash balances. In the future, we may consider acquiring businesses
to enhance our service offerings and global presence. Any such acquisitions
could require additional external financing and we may from time to time seek to
obtain funds from public or private issues of equity or debt securities. There
can be no assurance that such financing will be available on terms acceptable to
us.
  Critical
Accounting Policies
  The
preparation of consolidated financial statements in accordance with generally
accepted accounting principles in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reported period.
  We base
our estimates and judgments on historical experience and on the other factors
that we believe are reasonable under current circumstances. Actual results may
differ from these estimates if these assumptions prove to be incorrect or if
conditions develop other than as assumed for the purposes of such estimates. The
following is a discussion of the accounting policies used by us, which we
believe are critical in that they require estimates and judgments by
management.
  28
  Revenue
Recognition
  Significant
management judgments and estimates must be made and used in connection with the
recognition of revenue in any accounting period. Material differences in the
amount of revenue in any given period may result if these judgments or estimates
prove to be incorrect or if management’s estimates change on the basis of
development of the business or market conditions. To date there have been no
material differences arising from these judgments and estimates.
  We earn
revenues by providing a number of different services to our clients. These
services include clinical trials management, biometric activities, consulting,
and imaging and laboratory services. Revenue for services, as rendered, are
recognized only after persuasive evidence of an arrangement exists, the sales
price is fixed or determinable and collectibility is reasonably
assured.
  We
recognize biometric revenues on a fee-for-service basis as each unit of data is
prepared. Imaging revenue is recognized on a fee-for-service basis recognizing
revenue for each image completed. Consulting revenue is recognized on a
fee-for-service- basis recognizing revenue as each hour of the related service
is performed.
  We
recognize laboratory service revenue on a fee-for-service basis. We account for
laboratory service contracts as multiple element arrangements, with contractual
elements comprising laboratory kits and laboratory testing, each of which can be
sold separately. Fair values for contractual elements are determined by
reference to objective and reliable evidence of the fair values. Revenues for
contractual elements are recognized on the basis of the number of deliverable
units completed in the period.
  We
recognize Clinical trials management revenue on a proportional performance
method based on the relationship between hours incurred and the total estimated
hours of the trial. We use the input (effort expended) method to measure
progress towards completion as there is a direct relationship between input and
productivity. Contract costs equate to the product of labor hours incurred and
compensation rates. Contract revenue is the product of the aggregated labor
hours required to complete the specified contract tasks at the agreed contract
rates.
  We
invoice our customers upon achievement of specified contractual milestones. This
mechanism, which allows us to receive payment from our customers throughout the
duration of the contract, is not reflective of revenue earned. We recognize
revenues over the period from the awarding of the customer’s contract to study
completion and acceptance. This requires us to estimate total expected revenue,
time inputs, contract costs, profitability and expected duration of the clinical
trial. The Company regularly reviews the estimate of total contract time to
ensure such estimates remain appropriate taking into account actual contract
stage of completion, remaining time to complete and any identified changes to
the contract scope. Remaining time to complete depends on the specific contract
tasks and the complexity of the contract and can include geographical site
selection and initiation, patient enrolment, patient testing and level of
results analysis required. While we may routinely adjust time estimates,
estimates and assumptions historically have been accurate in all material
respects in the aggregate.
  If we do
not accurately estimate the resources required or the scope of the work to be
performed, or do not manage our projects properly within the planned cost or
satisfy our obligations under the contracts, then future results may be
significantly and negatively affected.
  Goodwill
  We review
our goodwill for impairment annually, or more frequently if facts or
circumstances warrant such a review. We evaluate goodwill for impairment by
comparing the fair value of each reporting segment to its carrying value. Fair
value is determined using the market approach, by assessing the market value of
each reporting unit, and the income approach, based on estimated discounted
future cash flows. Estimates and judgments used include those relating to
commercial risk, revenue and cost projections, our intention with respect to the
acquired goodwill, the impact of competition, the impact of any reorganization
or change of our business focus, the level of third party interest in our
operations and market conditions.
  If the
implied fair value of reporting unit goodwill is lower than its carrying amount,
goodwill is impaired and written down to its implied fair value. If we were to
use different estimates or judgments, particularly with respect to expected
revenue and cost projections or the impact of any reorganization or change of
business focus, a material impairment charge to the statement of operations
could arise. We believe that we have used reasonable estimates and judgments in
assessing the carrying value of our goodwill.
  29
  Taxation
  Given the
global nature of our business and the multiple taxing jurisdictions in which we
operate, the determination of the Company’s provision for income taxes requires
significant judgments and estimates, the ultimate tax outcome of which may not
be certain. Although we believe our estimates are reasonable, the final outcome
of these matters may be different than those reflected in our historical income
tax provisions and accruals. Such differences could have a material effect on
our income tax provision and results in the period during which such
determination is made.
  Deferred
tax assets and liabilities are determined using enacted or substantially enacted
tax rates for the effects of net operating losses and temporary differences
between the book and tax bases of assets and liabilities. In assessing the
realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. While management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment, there can be no assurance that these
deferred tax assets may be realizable.
  We
operate within multiple taxing jurisdictions and are subject to audits in these
jurisdictions. These audits can involve complex issues which may require an
extended period of time for resolution. Management believe that adequate
provisions for income taxes have been made in the financial
statements.
  Inflation
  We
believe that the effects of inflation generally do not have a material adverse
impact on our operations or financial conditions.
  New
Accounting Pronouncements
  In
October 2008, the FASB issued FSP 157-3, Determining
the Fair Value of a Financial Asset When the Market for That Asset Is Not
Active”(FSP 157-3). FSP 157-3 clarifies the application of SFAS No. 157
in a market that is not active and addresses application issues such as the use
of internal assumptions when relevant observable data does not exist, the use of
observable information when the market is not active and the use of market
quotes when assessing the relevance of observable and unobservable data. FSP
157-3 is effective for all periods presented in accordance with SFAS No. 157.
The Company does not expect the adoption of FSP 157-3 to have a material impact
on the financial statements.
  In April
2008, the FASB issued FSP 142-3 Determination
of the Useful Life of Intangible Assets (FSP 142-3). FSP 142-3 amends the
factors an entity should consider in developing renewal or extension assumptions
used in determining the useful life of recognized intangible assets under FASB
Statement No. 142 Goodwill
and Other Intangible Assets(SFAS No. 142). FSP 142-3 applies
prospectively to intangible assets that are acquired individually or with a
group of other assets in a business combination or asset acquisition. The
Company does not expect the adoption of FSP 142-3 to have a material impact on
the financial statements.
  In
December 2007, the FASB issued FASB Statement No. 141R, Business
Combinations (SFAS No. 141R) and FASB Statement No. 160, Noncontrolling
Interests in Consolidated Financial Statements– an amendment to ARB No.
51 (SFAS No. 160). SFAS No. 141R and SFAS No. 160 require most
identifiable assets, liabilities, noncontrolling interests, and goodwill
acquired in a business combination to be recorded at “full fair value” and
require noncontrolling interests (previously referred to as minority interests)
to be reported as a component of equity, which changes the accounting for
transactions with noncontrolling interest holders. Both Statements are effective
for periods beginning on or after December 15, 2008, and earlier adoption is
prohibited. SFAS No. 141R will be applied to business combinations occurring
after the effective date. SFAS No. 160 will be applied prospectively to all
noncontrolling interests, including any that arose before the effective date.
The Company does not expect the adoption of SFAS No. 141R and SFAS No. 160 to
have a material impact on the financial statements.
  30
  In
September 2006, the FASB issued FASB Statement No. 157, Fair
Value Measurement(SFAS No. 157). Statement 157 defines fair value,
establishes a framework for the measurement of fair value, and enhances
disclosures about fair value measurements. The Statement does not require any
new fair value measures. The Statement is effective for fair value measures
already required or permitted by other standards for fiscal years beginning
after November 15, 2007. The Company was
required to adopt SFAS No. 157 beginning on January 1, 2008. SFAS No. 157 is
required to be applied prospectively, except for certain financial instruments.
Any transition adjustment will be recognized as an adjustment to opening
retained earnings in the year of adoption. In November 2007, the FASB proposed a
one-year deferral of SFAS No. 157’s fair-value measurement requirements for
nonfinancial assets and liabilities that are not required or permitted to be
measured at fair value on a recurring basis. The adoption of SFAS No. 157 has
not had a material impact on the financial statements.
  Item 6.Directors, Senior Management and
Employees.
  Directors
and Senior Management
  The
following table and accompanying biographies set forth certain information
concerning each of ICON plc’s directors, officers and other key employees as of
December 31, 2008.
 Name
              
              Age
              
              PositionDr.
      John Climax (1)(5)
              
              56
              
              Chairman
      of the Board, DirectorPeter
      Gray (1)(5)
              
              54
              
              Chief
      Executive Officer, DirectorCiaran
      Murray (1)(5)
              
              46
              
              Chief
      Financial OfficerDr.
      Ronan Lambe
              
              69
              
              DirectorThomas
      Lynch (2)(3)(4)
              
              52
              
              DirectorEdward
      Roberts (2)(3)(4)
              
              74
              
              DirectorShuji
      Higuchi
              
              68
              
              DirectorDr.
      Bruce Given (2)(3)(4)
              
              54
              
              DirectorProfessor
      Dermot Kelleher
              
              53
              
              DirectorWilliam
      Taaffe
              
              60
              
              President
      Corporate DevelopmentDr.
      John Hubbard
              
              52
              
              President
      ICON Clinical ResearchRobert
      Scott-Edwards
              
              55
              
              President
      ICON LaboratoriesSean
      Leech
              
              38
              
              President
      ICON Contracting SolutionsDr.
      Thomas Frey
              
              56
              
              President
      ICON Development SolutionsJosephine
      Coyle
              
              51
              
              Vice
      President for Corporate Quality AssuranceEimear
      Kenny
              
              39
              
              Vice
      President for Strategic Human ResourcesSimon
      Holmes
              
              42
              
              Vice
      President Group Marketing and Market DevelopmentMichael
      McGrath
              
              46
              
              Senior
      Vice President of Group Information
Technology
 (1)
                Executive
      Officer of the Company.(2)
                Member
      of Compensation Committee.(3)
                Member
      of Audit Committee.(4)
                Member
      of Nomination Committee.(5)
                Member
      of Executive Committee.
  Dr.
John Climax, one of the Company’s co-founders, has served as a director
of the Company and its subsidiaries since June 1990. Dr. Climax served as Chief
Executive Officer from June 1990 to October 2002 and was appointed Chairman of
the Board in November 2002. Dr. Climax has over 22 years of experience in the
contract research industry in both Europe and the United States. Dr. Climax
received his primary degree in pharmacy in 1977 from the University of
Singapore, his masters in applied pharmacology in 1979 from the University of
Wales and his PhD. in pharmacology from the National University of Ireland in
1982.
  Peter
Gray has served as the Chief Executive Officer of ICON and its
subsidiaries since November 2002. He served as the Group Chief Operating Officer
of ICON and its subsidiaries from June 2001, and was Chief Financial Officer
from June 1997 to June 2001. He has been a director of the Company since June
1997. Mr. Gray has over 17 years experience in the pharmaceutical services
industry and has also worked in the engineering and food sectors. Mr. Gray
received a degree in Law from Trinity College Dublin in 1977 and became a
chartered accountant in 1980.
  31
  Ciaran
Murray was appointed as Chief Financial Officer of ICON and its
subsidiaries in October 2005. Mr. Murray developed his experience in senior
financial positions in the technology and food sectors, in such companies as
Kraft Foods, Inc. and Novell, Inc. Prior to joining ICON, Mr. Murray served as
the CFO of Codec Systems from 1999 to 2005, a technology company headquartered
in Ireland. Mr. Murray is a business graduate of University College Dublin. He
trained as a chartered accountant with PricewaterhouseCoopers and is a Fellow of
the Institute of Chartered Accountants in Ireland.
  Dr.
Ronan Lambe, one of the Company’s co-founders, served as Chairman of the
Board of the Company from June 1990 to November 2002. He currently holds a
position as an outside director since January 2008. Dr. Lambe has over 25 years
of experience in the contract research industry in Europe. Dr. Lambe attended
the National University of Ireland where he received his Bachelor of Science
degree in chemistry in 1959, his masters in biochemistry in 1962 and his PhD. in
pharmacology in 1976.
  Thomas
Lynch has served as an outside director of the Company since January
1996. Mr. Lynch served as a director of Nanogen Inc., from 1996 to 2000. Mr.
Lynch is currently Chairman and Chief Executive Officer of Amarin Corporation
plc, a director of Royal Opera House (Covent Garden) and a non-executive
director of IDA Ireland. In the period from May 1993 to July 2004, Mr. Lynch
held several senior positions in Elan Corporation, plc, a specialty
pharmaceutical company, including Executive Vice President, Chief Financial
Officer, Vice Chairman and Senior Advisor to the Chairman of the Board of Elan
Corporation, plc. Mr. Lynch was a partner at KPMG from May 1990 to May
1993.
  Edward
Roberts has served as an outside director of the Company since February
1998. Mr. Roberts was Managing Director of the Pharmaceutical Division of Merck
KGaA from 1990 to 1998. Prior to that, he held a number of senior management
positions with Eli Lilly International in Europe and the United States. Mr.
Roberts has over 40 years of experience in the pharmaceutical industry. Mr
Roberts serves as Chairman of Merz & Co. GmbH and is also on the Board of
Lupin.
  Mr.
Shuji Higuchi has served as an outside director of the Company since
September 2004. Dr. Higuchi has over 40 years of experience in the
pharmaceutical industry. Dr. Higuchi is currently Director of R&D and
Corporate Integration, Kyoto University Hospital, Japan. Prior to this Dr.
Higuchi has served as President of Takeda Pharma GmbH from 1983 to 1992,
President of Takeda Europe R&D Centre, Frankfurt / London from 1992 to 2002,
and served as a Corporate Officer of Takeda Chemical Industries Limited, Japan
from 1999 to 2002.
  Dr.
Bruce Givenhas served as an outside director of the Company since
September 2004. From March 2002 until June 2007 he served as President and Chief
Executive Officer of Encysive Pharmaceuticals Inc. Previously, Dr. Given has
held various positions in Johnson & Johnson group companies. Dr. Given
obtained his doctorate from the University of Chicago in
1980.
  Professor
Dermot Kelleherhas served as an outside director of the Company since
May 2008. Professor Kelleher is currently Head of the School of Medicine at
Trinity College, Dublin, Ireland and Director of the Institute of Molecular
Medicine in Dublin.
  William
Taaffe has served as President Corporate Development since April 2005.
Prior to this Mr. Taaffe served as President and Chief Executive Officer of ICON
Clinical Research - U.S. since 1993. Mr. Taaffe has over 30 years of experience
in the contract research and pharmaceutical industries in Ireland, Canada and
the United States. Mr. Taaffe received his bachelor of science degree in 1970
from University College Dublin.
  Dr.
John W. Hubbard has served as President of ICON Clinical Research since
March 2007. Previously he served as President of ICON Clinical Research - U.S.
since April 2005 and as Chief Operating Officer, U.S Operations since October
1999. Dr. Hubbard has more than 20 years of experience in pharmaceutical
research and development. He has held positions of increasing responsibility at
Revlon Health Care Group, Hoechst Marion Roussel Pharmaceuticals, Parexel
International Corporation, and from July 1997 until joining ICON, he held the
position of Senior Vice President of Clinical Research Operations at Clinical
Studies, an industry leading site management organization and division of
Innovative Clinical Solutions, Ltd. Dr. Hubbard received a B.S. in
Psychology/Biology from the University of Santa Clara, a Ph.D. in Cardiovascular
Physiology from the University of Tennessee, and was a NIH Postdoctoral Fellow
in Cardiovascular Pharmacology at the University of Texas Health Sciences
Center.
  32
  Robert
Scott-Edwards,has served the Company as President of ICON Laboratories
since August 2004, having previously held the position of Vice President, Sales
& Marketing for ICON Laboratories since June 2000. Prior to joining ICON,
Mr. Scott-Edwards held various senior positions at Bristol-Myers Squibb from
1979 through 1997. Mr. Scott-Edwards began his career in the pharmaceutical
industry in 1971 at Wyeth.
  Sean
Leech has served as President of ICON Contracting Solutions since March
2007. Prior to this Mr. Leech served as Executive Vice President Commercial and
Organization Development since October 2005, as the Chief Financial Officer of
ICON and its subsidiaries since June 2001 and Group Vice President of Finance
from June 1999. Mr. Leech was Group Financial Controller of Jones Group plc, a
shipping, manufacturing and fuel distribution company based in Ireland, from
1997 to 1999. Mr. Leech is an associate member of the Chartered Institute of
Management Accountants.
  Dr.
Thomas Frey has served as President of ICON Developments Solutions since
June 2005. He previously held positions as Chief Operating Officer for ICON
Clinical Research Europe from June 2001 and Vice President of ICON Clinical
Operations Europe from January 2000 to May 2005. Dr. Frey has 20 years
experience in pharmaceutical research and development. He started his career in
1987 with Hoechst Pharmaceuticals. From 1995 to the end of 1999 he was Senior
Director of Clinical Development Europe at Hoechst Pharmaceuticals. Dr. Frey
received his medical degree in 1980 from the University of
Heidelberg.
  Josephine
Coyle has served as Vice President for Corporate Quality Assurance since
April 2000. Ms. Coyle has held positions of increasing responsibility in ICON
since August 1992 and previously held the position of Director of Quality
Assurance.
  Eimear
Kenny, has served as Vice President for Strategic Human Resources since
April 2007, having previously held the position of Vice President of Human
Resources for ICON Clinical Research Europe and Rest of World since joining the
Company in November 1999. Prior to joining ICON, Ms. Kenny was HR Manager for GE
Global Consumer Finance Ireland. Ms. Kenny holds a degree in both business
studies from Portobello College, Dublin and human resource management from the
National College of Ireland. She is also a Member of the Chartered Institute of
Personnel and Development.
  Simon
Holmes has served as Vice President Group Marketing and Market
Development since November 2007. In this role Mr Holmes is responsible for
ICON’s global marketing function and for managing ICON’s internal process for
the proactive identification and evaluation of potential acquisition
candidates. Prior to this role, Mr. Holmes was Group Director of Marketing,
a position he assumed on joining ICON in July 2005. Mr. Holmes has held senior
positions within Microsoft, LogicaCMG
and Cable and Wireless. A graduate of the University of East Anglia and
Cambridge University he holds an MBA from the UCD Smurfit Business
School.
  Michael
McGrath has served as Senior Vice President of Group Information
Technology since June 2007. He joined ICON in December 2002 as Director for
Information Technology of Europe before moving to a role as Global Vice
President of Information Technology for the Clinical Research Division. He
previously held a number of senior Information Technology positions in the
Financial Services Industry with GE Capital and Woodchester Bank Ltd. Prior to
this he worked as an IT Consultant and also as a Software Engineer. He has over
15 years experience in the IT industry across many areas including
Pharmaceuticals, Financial Services and Utilities. He holds an MSc in
Information Technology Management from Dublin City University and a Higher
Diploma in Electronic Engineering.
  Board
of Directors
 ICON’s
Articles of Association provide that, unless otherwise determined by ICON at a
general meeting, the number of directors shall not be more than 15 nor less than
3. At each annual general meeting, one third of the directors who are subject to
retirement by rotation, rounded down to the next whole number if it is a
fractional number, shall retire from office. The directors to retire shall be
those who have been longest in office, but as between persons who became or were
last re-appointed on the same day, those to retire shall be determined, unless
otherwise agreed, by lot. Accordingly, at the annual general meeting of ICON to
be held in 2009, it is anticipated that two directors will retire by rotation
and offer themselves for re-election, such directors to be determined, unless
otherwise agreed, by lot. Any additional director appointed by us shall hold
office until the next annual general meeting and will be subject to re-election
at that meeting.
  33
  Board
committees
 ICON
established a compensation committee and an audit committee in 1998, a
nomination committee in 2004, and an executive committee in 2005, all of which
are committees of the Board of Directors and are, with the exception of the
Executive Committee, composed of non-executive directors of ICON
plc.
  Compensation
Committee
 The
Compensation Committee comprises Thomas Lynch (Chairman), Edward Roberts, and
Dr. Bruce Given. It deals with all aspects of senior executive remuneration. The
committee aims to ensure that remuneration packages are competitive so that
individuals are appropriately rewarded relative to their responsibility,
experience and value to ICON.
  Annual
bonuses for executive directors are determined by the committee based on the
achievement of ICON’s objectives.
  Audit
Committee
 The Audit
Committee comprises Edward Roberts (Chairman), Thomas Lynch and Dr. Bruce Given.
It reviews the annual report, the quarterly earnings releases, the effectiveness
of the system of internal controls, compliance with our ethical code and legal
requirements, and approves the appointment and removal of the external auditors.
It also addresses all issues raised and recommendations made by the external
auditors and pre-approves all auditor services.
  Nomination
Committee
 The
Nomination Committee comprises Thomas Lynch (Chairman), Edward Roberts and Dr.
Bruce Given. On an ongoing basis it reviews the membership of the board of
directors and board committees. It identifies and recommends individuals to fill
any vacancy that is anticipated or arises on the board of directors. It reviews
and recommends the corporate governance principles of the Company.
  Executive
Committee
 The
Executive Committee comprises Dr. John Climax, Peter Gray (Chairman) and Ciaran
Murray. Established in March 2005, this Committee is responsible for the
management of the Company in intervals between meetings of the Board and
exercises business judgment to act in what the Committee members reasonably
believe to be in the best interest of the Company and its shareholders. All
powers exercised by the Executive Committee are ratified at board meetings. This
Committee convenes as often as it determines to be necessary or
appropriate.
  The
aggregate compensation (including share-based compensation of $0.4m) paid by
ICON to all persons who served in the capacity of director or executive officer
in 2008 (9 persons) was approximately $4.5 million, but does not include
expenses reimbursed to directors and executive officers (including business
travel, professional and business association dues and expenses). As of December
31, 2008, options granted to directors and executive officers of ICON to
purchase an aggregate of 407,200 of our ordinary shares were outstanding. The
options are exercisable at prices between $7.00 and $36.04 and expire between
January 11, 2010 and May 27, 2016.
  In
addition, our officers are eligible to participate in the Company’s equity
incentive plans, including the Company’s share options plans and restricted
share unit plan. See Note 10 to the Consolidated Financial
Statements.
  Employees
  We
employed 6,975, 5,610 and 4,290 people for the years ended December 31, 2008,
December 31, 2007, and December 31, 2006, respectively. Our employees are not
unionized and we believe that our relations with our employees are
good.
  34
  Share
Ownership
  The
following table sets forth certain information regarding beneficial ownership of
our ordinary shares (including Amercian Depository Securities, ADS’s) as of
February 19, 2009, by all of our current directors and executive officers.
Unless otherwise indicated below, to our knowledge, all persons listed below
have sole voting and investment power with respect to their ordinary shares,
except to the extent authority is shared by spouses under applicable
law.
 Name
      of Owner or
                              Identity
      of Group
                            
                            No.
      of
                              Shares
      (1)
                            
                            
                            %
      of total
                              Shares
                            
                            
                            No.
      of Options
                              (2)
                            
                            
                            Exercise
                              price
                            
                            
                            Expiration
      DateDr.
      John Climax
                            
                            
                            3,107,568
                            
                            
                            
                            5.3
                            %
                            
                            
                            20,000
                            
                            
                            $
                            7.25
                            
                            
                            
                            January
      11, 201020,000
                            
                            
                            $
                            7.00
                            
                            
                            
                            January
      21, 201120,000
                            
                            
                            $
                            8.88
                            
                            
                            
                            February
      4, 201212,000
                            
                            
                            $
                            11.00
                            
                            
                            
                            February
      3, 201412,000
                            
                            
                            $
                            21.25
                            
                            
                            
                            February
      16, 201510,000
                            
                            
                            $
                            35.33
                            
                            
                            
                            February
      26, 2016Dr.
      Ronan Lambe
                            
                            
                            725,380
                            
                            
                            
                            1.3
                            %
                            
                            
                            12,000
                            
                            
                            $
                            7.25
                            
                            
                            
                            January
      11, 20106,000
                            
                            
                            $
                            7.00
                            
                            
                            
                            January
      21, 20116,000
                            
                            
                            $
                            8.88
                            
                            
                            
                            February
      4, 20124,000
                            
                            
                            $
                            8.60
                            
                            
                            
                            February
      24, 20134,000
                            
                            
                            $
                            11.00
                            
                            
                            
                            February
      3, 20142,000
                            
                            
                            $
                            21.25
                            
                            
                            
                            February
      16, 20152,000
                            
                            
                            $
                            35.33
                            
                            
                            
                            February
      26, 2016Mr.
      Peter Gray
                            
                            
                            444,288
                            
                            
                            
                            0.8
                            %
                            
                            
                            20,000
                            
                            
                            $
                            7.25
                            
                            
                            
                            January
      11, 201020,000
                            
                            
                            $
                            7.00
                            
                            
                            
                            January
      21, 201120,000
                            
                            
                            $
                            8.88
                            
                            
                            
                            February
      4, 201212,000
                            
                            
                            $
                            11.00
                            
                            
                            
                            February
      3, 201412,000
                            
                            
                            $
                            21.25
                            
                            
                            
                            February
      16, 201514,000
                            
                            
                            $
                            35.33
                            
                            
                            
                            February
      26, 2016Mr.
      Ciaran Murray
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            60,000
                            
                            
                            $
                            10.42
                            
                            
                            
                            January
      17, 201418,000
                            
                            
                            $
                            11.00
                            
                            
                            
                            February
      3, 201416,000
                            
                            
                            $
                            21.25
                            
                            
                            
                            February
      16, 201514,000
                            
                            
                            $
                            35.33
                            
                            
                            
                            February
      26, 2016Mr.
      Thomas Lynch
                            
                            
                            4
                            
                            
                            
                            —
                            
                            
                            
                            1,200
                            
                            
                            $
                            7.00
                            
                            
                            
                            January
      21, 20112,400
                            
                            
                            $
                            8.88
                            
                            
                            
                            February
      4, 20122,400
                            
                            
                            $
                            8.60
                            
                            
                            
                            February
      24, 20133,200
                            
                            
                            $
                            11.00
                            
                            
                            
                            February
      3, 20144,000
                            
                            
                            $
                            21.25
                            
                            
                            
                            February
      16, 20152,000
                            
                            
                            $
                            35.33
                            
                            
                            
                            February
      26, 2016Mr.
      Edward Roberts
                            
                            
                            16,004
                            
                            
                            
                            —
                            
                            
                            
                            2,000
                            
                            
                            $
                            8.88
                            
                            
                            
                            February
      4, 20124,000
                            
                            
                            $
                            8.60
                            
                            
                            
                            February
      24, 20134,000
                            
                            
                            $
                            11.00
                            
                            
                            
                            February
      3, 20144,000
                            
                            
                            $
                            21.25
                            
                            
                            
                            February
      16, 20152,000
                            
                            
                            $
                            35.33
                            
                            
                            
                            February
      26, 2016Mr.
      Shugi Higuchi
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            6,000
                            
                            
                            $
                            8.88
                            
                            
                            
                            February
      4, 20124,000
                            
                            
                            $
                            8.60
                            
                            
                            
                            February
      24, 20134,000
                            
                            
                            $
                            11.00
                            
                            
                            
                            February
      3, 20144,000
                            
                            
                            $
                            21.25
                            
                            
                            
                            February
      16, 20152,000
                            
                            
                            $
                            35.33
                            
                            
                            
                            February
      26, 2016Dr.
      Bruce Given
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            4,000
                            
                            
                            $
                            8.60
                            
                            
                            
                            February
      24, 20134,000
                            
                            
                            $
                            11.00
                            
                            
                            
                            February
      3, 20144,000
                            
                            
                            $
                            21.25
                            
                            
                            
                            February
      16, 20152,000
                            
                            
                            $
                            35.33
                            
                            
                            
                            February
      26, 2016Professor
      Dermot Kelleher
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            6,000
                            
                            
                            $
                            36.04
                            
                            
                            
                            May
      27,
2016
  (1)
                As
      used in this table, each person has the sole or shared power to vote or
      direct the voting of a security, or the sole or shared investment power
      with respect to a security (i.e.
      the power to dispose, or direct the disposition, of a security). A person
      is deemed as of any date to have “beneficial ownership” of any security if
      that such person has the right to acquire such security within 60 days
      after such date.(2)
                The
      title of securities covered by all of the above options are non-revenue
      qualified.
  35
  Employee
Share Option Schemes
  On July
21, 2008, the Company adopted the Employee Share Option Plan 2008 (the “2008
Employee Plan”) pursuant to which the Compensation Committee of the Company’s
Board of Directors may grant options to any employee, or any director holding a
salaried office or employment with the Company or a Subsidiary for the purchase
of ordinary shares. On the same date, the Company also adopted the Consultants
Share Option Plan 2008 (the “2008 Consultants Plan”), pursuant to which the
Compensation Committee of the Company’s Board of Directors may grant options to
any consultant, adviser or non-executive director retained by the Company or any
Subsidiary for the purchase of ordinary shares.
  Each
option granted under the 2008 Employee Plan or the 2008 Consultants Plan
(together the “2008 Option plans”) will be an employee stock option, or NSO.
Each grant of an option under the 2008 Options Plans will be evidenced by a
Stock Option Agreement between the optionee and the Company. The exercise price
will be specified in each Stock Option Agreement.
  An
aggregate of 6.0 million ordinary shares have been reserved under the 2008
Employee Plan as reduced by any shares issued or to be issued pursuant to
options granted under the 2008 Consultants Plan under which a limit of 400,000
shares applies. Further, the maximum number of ordinary shares with respect to
which options may be granted under the 2008 Employee Plan during any calendar
year to any employee shall be 400,000 ordinary shares. There is no individual
limit under the 2008 Consultants Plan. No options may be granted under the plans
after July 21, 2018.
  On July
21, 2008, the Company adopted the the 2008 Employees Restricted Share Unit Plan
(the “2008 RSU Plan”) pursuant to which the Compensation Committee of the
Company’s Board of Directors may select any employee, or any director holding a
salaried office or employment with the Company or a Subsidiary to receive an
award under the plan. An aggregate of 1.0 million ordinary shares have been
reserved for issuance under the 2008 RSU Plan. Awards under the 2008 RSU may be
settled in cash or shares.
  On
January 17, 2003, the Company adopted the Share Option Plan 2003, (“the 2003
Plan”), pursuant to which the Compensation Committee of the Board may grant
options to employees of the Company or its subsidiaries for the purchase of
ordinary shares. Each option will be an employee stock option, or NSO. Each
grant of an option under the 2003 Plan will be evidenced by a Stock Option
Agreement between the optionee and the Company. The exercise price will be
specified in each Stock Option Agreement.
  An
aggregate of 6.0 million ordinary shares have been reserved under the 2003 Plan;
and, in no event will the number of ordinary shares that may be issued pursuant
to options awarded under the 2003 Plan exceed 10% of the outstanding shares, as
defined in the 2003 Plan, at the time of the grant. Further, the maximum number
of ordinary shares with respect to which options may be granted under the 2003
Plan during any calendar year to any employee shall be 400,000 ordinary shares.
No options can be granted after January 17, 2013.
  36
  Executive
Officers and Directors Remuneration
  Compensation
Discussion & Analysis
  Overview
 The
Compensation Committee (the “Committee”) seeks to achieve the following goals
with the Company’s executive compensation programs: to attract, motivate and
retain key executives and to reward executives for value creation. The Committee
seeks to foster a performance-oriented environment by tying a significant
portion of each executive’s cash and equity compensation to the achievement of
performance targets that are important to the Company and its
shareholders.
  The
Company’s executive compensation program has three elements: base salary, a
bonus plan and equity incentives in the form of stock related awards granted
under the Company’s equity incentive plans. All elements of executive
compensation are determined by the Committee based on the achievement of ICON’s
objectives.
  In the
year ended December 31, 2008, the officers earned a bonus and the Company
awarded executive officers equity incentives in the form of stock
options.
  Base
Salary and Bonus Incentive
 Total
cash compensation is divided into a base salary portion and a bonus incentive
portion. Base salary is established based on peer group and is adjusted based on
individual performance and experience. The Committee targets total cash
compensation at the peer group median of comparable Irish companies and peer CRO
companies, adjusted upward or downward based on individual performance and
experience. The Committee believes that the higher the executive’s level of
responsibility within the Company, the greater the percentage of the executive’s
compensation that should be tied to the Company’s performance. Target bonus
incentive for executive officers is 80% of base salary.
  For
fiscal 2008, based upon the Company’s income performance relative to the targets
set by the Committee and individual objectives approved by the Committee, the
Company’s named executive officers, excluding the Chief Executive Officer,
earned an aggregate bonus of $780,002.
  Equity
Incentive
 The
Company’s executive officers are eligible to receive equity incentives,
including stock options and restricted share units, granted under the Company’s
equity incentive plans. If executive officers receive equity incentive grants,
they are awarded annually at the first regularly scheduled meeting of the
Committee in the fiscal year. Newly hired executive officers may receive sign-on
grants, if approved by the Committee. In addition, the Committee may, in its
discretion, issue additional equity incentive awards to executive officers if
the Committee determines the awards are necessary for retention. The number of
equity awards granted to each participant is determined primarily based on an
award range determined by the Committee at the start of each year. The extent of
existing options is not generally considered in granting equity awards, except
that the Company occasionally grants an initial round of equity awards to newly
recruited executives to provide them a stake in the Company’s success from the
commencement of their employment. The Company granted equity incentive awards,
in the form of share options, to executive officers in its fiscal years ended
December 31, 2007 and 2008.
  On
February 3, 2006, the Company granted performance-based stock options to certain
executive officers. The purpose of these grants is to align management and
shareholder interests as measured by both revenue growth and the stock markets’
assessment of the Company’s performance.
  Chief
Executive Officer Compensation
 The
Committee uses the same factors in determining the compensation of the Chief
Executive Officer as it does for the other participants. The Chief Executive
Officer’s base salary for the year ended December 31, 2008, was €496,500
($734,402).
  37
  Executive
Compensation
  Summary
compensation table - Year ended December 31, 2008
 Name
      & principal position
                                                                
                                                                Year
                                                                
                                                                
                                                                Salary
                                                                
                                                                
                                                                Bonus
                                                                
                                                                
                                                                Pensioncontribution
                                                                
                                                                
                                                                All
      othercompensation
                                                                
                                                                
                                                                Subtotal
                                                                
                                                                
                                                                Subtotal
                                                                
                                                                
                                                                Share-basedcompensation
                                                                
                                                                
                                                                TotalcompensationEuro
                                                                  (€)
                                                                
                                                                
                                                                
                                                                Euro
                                                                  (€)
                                                                
                                                                
                                                                
                                                                Euro
                                                                  (€)
                                                                
                                                                
                                                                
                                                                Euro
                                                                  (€)
                                                                
                                                                
                                                                
                                                                Euro
                                                                  (€)
                                                                
                                                                
                                                                
                                                                USD
                                                                  ($)
                                                                
                                                                
                                                                
                                                                USD
                                                                  ($)
                                                                
                                                                
                                                                
                                                                USD
                                                                  ($)Peter
      Gray,
                                                                  Chief
      Executive Officer
                                                                
                                                                2008
                                                                
                                                                
                                                                
                                                                496,500
                                                                
                                                                
                                                                
                                                                387,500
                                                                
                                                                
                                                                
                                                                49,300
                                                                
                                                                
                                                                
                                                                43,380
                                                                
                                                                
                                                                
                                                                976,680
                                                                
                                                                
                                                                
                                                                1,358,865
                                                                
                                                                
                                                                
                                                                80,330
                                                                
                                                                
                                                                
                                                                1,439,195Ciaran
      Murray,
                                                                  Chief
      Financial Officer
                                                                
                                                                2008
                                                                
                                                                
                                                                
                                                                300,000
                                                                
                                                                
                                                                
                                                                215,000
                                                                
                                                                
                                                                
                                                                26,400
                                                                
                                                                
                                                                
                                                                18,466
                                                                
                                                                
                                                                
                                                                559,866
                                                                
                                                                
                                                                
                                                                780,935
                                                                
                                                                
                                                                
                                                                175,135
                                                                
                                                                
                                                                
                                                                956,070John
      Climax,
                                                                  Chairman
                                                                
                                                                2008
                                                                
                                                                
                                                                
                                                                600,000
                                                                
                                                                
                                                                
                                                                405,000
                                                                
                                                                
                                                                
                                                                50,000
                                                                
                                                                
                                                                
                                                                62,280
                                                                
                                                                
                                                                
                                                                1,117,280
                                                                
                                                                
                                                                
                                                                1,558,240
                                                                
                                                                
                                                                
                                                                71,717
                                                                
                                                                
                                                                
                                                                1,629,957Total
                                                                
                                                                2008
                                                                
                                                                
                                                                €
                                                                1,396,500
                                                                
                                                                
                                                                €
                                                                1,007,500
                                                                
                                                                
                                                                €
                                                                125,700
                                                                
                                                                
                                                                €
                                                                124,126
                                                                
                                                                
                                                                €
                                                                2,653,826
                                                                
                                                                
                                                                $
                                                                3,698,040
                                                                
                                                                
                                                                $
                                                                327,182
                                                                
                                                                
                                                                $
                                                                4,025,222
  Summary
compensation table - Year ended December 31, 2007
 Name
      & principal position
                                                                  
                                                                  Year
                                                                  
                                                                  
                                                                  Salary
                                                                  
                                                                  
                                                                  Bonus
                                                                  
                                                                  
                                                                  Pension

                                                                    contribution
                                                                  
                                                                  
                                                                  All
      other

                                                                    compensation
                                                                  
                                                                  
                                                                  Subtotal
                                                                  
                                                                  
                                                                  Subtotal
                                                                  
                                                                  
                                                                  Share-based

                                                                    compensation
                                                                  
                                                                  
                                                                  Total

                                                                    compensationEuro
                                                                    (€)
                                                                  
                                                                  
                                                                  
                                                                  Euro
                                                                    (€)
                                                                  
                                                                  
                                                                  
                                                                  Euro
                                                                    (€)
                                                                  
                                                                  
                                                                  
                                                                  Euro
                                                                    (€)
                                                                  
                                                                  
                                                                  
                                                                  Euro
                                                                    (€)
                                                                  
                                                                  
                                                                  
                                                                  USD
                                                                    ($)
                                                                  
                                                                  
                                                                  
                                                                  USD
                                                                    ($)
                                                                  
                                                                  
                                                                  
                                                                  USD
                                                                    ($)Peter
      Gray,
                                                                    Chief
      Executive Officer
                                                                  
                                                                  2007
                                                                  
                                                                  
                                                                  
                                                                  400,000
                                                                  
                                                                  
                                                                  
                                                                  320,000
                                                                  
                                                                  
                                                                  
                                                                  40,600
                                                                  
                                                                  
                                                                  
                                                                  37,919
                                                                  
                                                                  
                                                                  
                                                                  798,519
                                                                  
                                                                  
                                                                  
                                                                  1,120,308
                                                                  
                                                                  
                                                                  
                                                                  61,381
                                                                  
                                                                  
                                                                  
                                                                  1,181,689Ciaran
      Murray,
                                                                    Chief
      Financial Officer
                                                                  
                                                                  2007
                                                                  
                                                                  
                                                                  
                                                                  240,000
                                                                  
                                                                  
                                                                  
                                                                  180,000
                                                                  
                                                                  
                                                                  
                                                                  23,999
                                                                  
                                                                  
                                                                  
                                                                  15,998
                                                                  
                                                                  
                                                                  
                                                                  459,997
                                                                  
                                                                  
                                                                  
                                                                  645,001
                                                                  
                                                                  
                                                                  
                                                                  142,560
                                                                  
                                                                  
                                                                  
                                                                  787,561John
      Climax,
                                                                    Chairman
                                                                  
                                                                  2007
                                                                  
                                                                  
                                                                  
                                                                  540,280
                                                                  
                                                                  
                                                                  
                                                                  378,000
                                                                  
                                                                  
                                                                  
                                                                  46,056
                                                                  
                                                                  
                                                                  
                                                                  55,097
                                                                  
                                                                  
                                                                  
                                                                  1,019,433
                                                                  
                                                                  
                                                                  
                                                                  1,430,381
                                                                  
                                                                  
                                                                  
                                                                  61,381
                                                                  
                                                                  
                                                                  
                                                                  1,491,762Total
                                                                  
                                                                  2007
                                                                  
                                                                  
                                                                  €
                                                                  1,180,280
                                                                  
                                                                  
                                                                  €
                                                                  878,000
                                                                  
                                                                  
                                                                  €
                                                                  110,655
                                                                  
                                                                  
                                                                  €
                                                                  109,014
                                                                  
                                                                  
                                                                  €
                                                                  2,277,949
                                                                  
                                                                  
                                                                  $
                                                                  3,195,690
                                                                  
                                                                  
                                                                  $
                                                                  265,322
                                                                  
                                                                  
                                                                  $
                                                                  3,461,012
  Grant
of Plan-Based Awards - Fiscal 2008
 With the
exception of the bonus element of compensation mentioned above, there were no
plan based awards for any of the named executive officers in fiscal
2008.
  38
  Director
Compensation
  Summary
compensation table - Year ended December 31, 2008
 Name
                            
                            Year
                            
                            
                            Salary
                            
                            
                            Company
                              pension
                              contribution
                            
                            
                            All
      other
                              compensation
                            
                            
                            Subtotal
                            
                            
                            Subtotal
                            
                            
                            Share-based
                              compensation
                            
                            
                            Director’sfees
                            
                            
                            Total
                              compensationEuro
                              (€)
                            
                            
                            Euro
                              (€)
                            
                            
                            Euro
                              (€)
                            
                            
                            Euro
                              (€)
                            
                            
                            USD
                              ($)
                            
                            
                            USD
                              ($)
                            
                            
                            USD
                              ($)
                            
                            
                            USD
                              ($)John
      Climax
                            
                            2008
                            
                            
                            
                            600,000
                            
                            
                            
                            50,000
                            
                            
                            
                            467,280
                            
                            
                            
                            1,117,280
                            
                            
                            
                            1,558,240
                            
                            
                            
                            71,717
                            
                            
                            
                            —
                            
                            
                            
                            1,629,957Peter
      Gray
                            
                            2008
                            
                            
                            
                            496,500
                            
                            
                            
                            49,300
                            
                            
                            
                            430,880
                            
                            
                            
                            976,680
                            
                            
                            
                            1,358,865
                            
                            
                            
                            80,330
                            
                            
                            
                            —
                            
                            
                            
                            1,439,195Ronan
      Lambe
                            
                            2008
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            80,000
                            
                            
                            
                            80,000
                            
                            
                            
                            118,150
                            
                            
                            
                            19,861
                            
                            
                            
                            40,000
                            
                            
                            
                            178,011Thomas
      Lynch
                            
                            2008
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            23,482
                            
                            
                            
                            55,000
                            
                            
                            
                            78,482Edward
      Roberts
                            
                            2008
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            23,503
                            
                            
                            
                            65,000
                            
                            
                            
                            88,503Shuji
      Higuchi
                            
                            2008
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            23,503
                            
                            
                            
                            40,000
                            
                            
                            
                            63,503Bruce
      Given
                            
                            2008
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            18,538
                            
                            
                            
                            45,000
                            
                            
                            
                            63,538Dermot
      Kelleher
                            
                            2008
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            10,779
                            
                            
                            
                            21,000
                            
                            
                            
                            31,779Total
                            
                            
                            
                            
                            €
                            1,096,500
                            
                            
                            €
                            99,300
                            
                            
                            €
                            978,160
                            
                            
                            €
                            2,173,960
                            
                            
                            $
                            3,035,255
                            
                            
                            $
                            271,713
                            
                            
                            $
                            266,000
                            
                            
                            $
                            3,572,968
  Summary
compensation table - Year ended December 31, 2007
 Name
                              
                              Year
                              
                              
                              Salary
                              
                              
                              Company
                                pension
                                contribution
                              
                              
                              All
      other
                                compensation
                              
                              
                              Subtotal
                              
                              
                              Subtotal
                              
                              
                              Share-based
                                compensation
                              
                              
                              Director’sfees
                              
                              
                              Total
                                compensationEuro
                                (€)
                              
                              
                              Euro
                                (€)
                              
                              
                              Euro
                                (€)
                              
                              
                              Euro
                                (€)
                              
                              
                              USD
                                ($)
                              
                              
                              USD
                                ($)
                              
                              
                              USD
                                ($)
                              
                              
                              USD
                                ($)John
      Climax
                              
                              2007
                              
                              
                              
                              540,280
                              
                              
                              
                              46,056
                              
                              
                              
                              433,097
                              
                              
                              
                              1,019,433
                              
                              
                              
                              1,430,381
                              
                              
                              
                              61,381
                              
                              
                              
                              —
                              
                              
                              
                              1,491,762Peter
      Gray
                              
                              2007
                              
                              
                              
                              400,000
                              
                              
                              
                              40,600
                              
                              
                              
                              357,919
                              
                              
                              
                              798,519
                              
                              
                              
                              1,120,308
                              
                              
                              
                              61,381
                              
                              
                              
                              —
                              
                              
                              
                              1,181,689Ronan
      Lambe
                              
                              2007
                              
                              
                              
                              104,394
                              
                              
                              
                              4,163
                              
                              
                              
                              3,903
                              
                              
                              
                              112,460
                              
                              
                              
                              148,402
                              
                              
                              
                              19,156
                              
                              
                              
                              —
                              
                              
                              
                              167,558Thomas
      Lynch
                              
                              2007
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              24,475
                              
                              
                              
                              55,000
                              
                              
                              
                              79,475Edward
      Roberts
                              
                              2007
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              22,495
                              
                              
                              
                              65,000
                              
                              
                              
                              87,495Shuji
      Higuchi
                              
                              2007
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              18,589
                              
                              
                              
                              40,000
                              
                              
                              
                              58,589Bruce
      Given
                              
                              2007
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              13,624
                              
                              
                              
                              45,000
                              
                              
                              
                              58,624Total
                              
                              
                              
                              
                              €
                              1,044,674
                              
                              
                              €
                              90,819
                              
                              
                              €
                              794,919
                              
                              
                              €
                              1,930,412
                              
                              
                              $
                              2,699,091
                              
                              
                              $
                              221,101
                              
                              
                              $
                              205,000
                              
                              
                              $
                              3,125,192
  39
  Outstanding
Equity Interests Received as Compensation
  Outstanding
Equity Awards Table
 The
following table sets forth information concerning stock options held by the
named Executive Officers at December 31, 2008:
 Name
                          
                          Option
      awardsNo.
      of securities
                            underlying
                            unexercised
                            options
      –
                            exercisable
                          
                          
                          No.
      of securities
                            underlying
                            unexercised
                            options
      –
                            unexercisable
                          
                          
                          Equity
      incentive
                            plan
      awards:
                            No.
      of securities
                            underlying
                            unexercised
                            unearned
                            options
                          
                          
                          Option
                            exercise
                            price
      ($)
                          
                          Option
                            expiration
      datePeter
      Gray
                          
                          
                          20,000
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          $
                          7.25
                          
                          Jan
      11, 201020,000
                          
                          
                          
                          
                          
                          
                          
                          —
                          
                          
                          $
                          7.00
                          
                          Jan
      21, 201116,000
                          
                          
                          
                          4,000
                          
                          
                          
                          —
                          
                          
                          $
                          8.88
                          
                          Feb
      4, 20124,800
                          
                          
                          
                          7,200
                          
                          
                          
                          —
                          
                          
                          $
                          11.00
                          
                          Feb
      3, 20142,400
                          
                          
                          
                          9,600
                          
                          
                          
                          —
                          
                          
                          $
                          21.25
                          
                          Feb
      16, 2015—
                          
                          
                          
                          14,000
                          
                          
                          
                          —
                          
                          
                          $
                          35.33
                          
                          Feb
      26, 2016Ciaran
      Murray
                          
                          
                          —
                          
                          
                          
                          60,000
                          
                          
                          
                          —
                          
                          
                          $
                          10.42
                          
                          Jan
      17, 20147,200
                          
                          
                          
                          10,800
                          
                          
                          
                          —
                          
                          
                          $
                          11.00
                          
                          Feb
      3, 20143,200
                          
                          
                          
                          12,800
                          
                          
                          
                          —
                          
                          
                          $
                          21.25
                          
                          Feb
      16, 2015—
                          
                          
                          
                          14,000
                          
                          
                          
                          —
                          
                          
                          $
                          35.33
                          
                          Feb
      26, 2016John
      Climax
                          
                          
                          20,000
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          $
                          7.25
                          
                          Jan
      11, 201020,000
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          $
                          7.00
                          
                          Jan
      21, 201116,000
                          
                          
                          
                          4,000
                          
                          
                          
                          —
                          
                          
                          $
                          8.88
                          
                          Feb
      4, 20124,800
                          
                          
                          
                          7,200
                          
                          
                          
                          —
                          
                          
                          $
                          11.00
                          
                          Feb
      3, 20142,400
                          
                          
                          
                          9,600
                          
                          
                          
                          —
                          
                          
                          $
                          21.25
                          
                          Feb
      16, 2015—
                          
                          
                          
                          10,000
                          
                          
                          
                          —
                          
                          
                          $
                          35.33
                          
                          Feb
      26,
2016
  All
information in this table relates to nonqualified stock options. The Company has
not granted any stock appreciation rights (“SARs”) in fiscal year 2008.
Substantially all options become exercisable in five equal installments each
year beginning on the first anniversary of the grant date.
  Options
Exercised Table
 There
were no options exercised during fiscal 2008 by any of the named executive
officers.
  Retirement
Plans & Other Post-Employment Payments & Benefits
  Pension
Plan
 All named
executive officers are eligible to participate in a defined contribution pension
plan (the “Plan”). The Company matches each participant’s contributions up to a
percentage of their annual compensation. Contributions to this plan are recorded
as an expense in the Consolidated Statement of Operations. Total company
contributions for the named executive officers for the year ended December 31,
2008, was €125,700 ($185,782).
  Information
regarding the Company’s retirement plans can be found in Note 9 to the
Consolidated Financial Statements “Employee Benefits”.
  Non-qualified
Defined Contribution and Deferred Compensation Plans
  None of
the named executive officers are involved in any non-qualified defined
contribution plan or receives any nonqualified deferred
compensation.
  40
  Disclosure
of Compensation Agreements
  Employment
Contracts, Termination of Employment and Change in Control
Arrangements
 The
Company does not have any Termination or Change of Control Agreements with its
named executive officers.
  Directors’
and Executive Officers’ service agreements and letters of
engagement
  Mr.
Peter Gray
 Mr. Peter
Gray has served as the Chief Executive Officer since November 2002. He served as
the Chief Operating Officer of the Company from June 2001 to November 2002 and
as an Executive Director of the Company since June 1997. The service agreement
with Mr. Gray is terminable on 12 months notice by either party. He is entitled
to receive a bonus to be agreed by the Committee. He is also entitled to receive
a pension contribution, company car and medical insurance cover for himself and
his dependants. He currently holds 98,000 ordinary share options at exercise
prices ranging from $7.00 to $35.33 per share. His service agreement requires
him to devote his full time and attention to his duties for the Company
excepting certain non-executive positions authorized by the Board. The agreement
includes certain post termination clauses including non-disclosure,
non-competition and non-solicitation provisions.
  Mr.
Ciaran Murray
 Mr.
Ciaran Murray has served as the Chief Financial Officer since October 2005. The
service agreement with Mr. Murray is terminable on 12 months notice by either
party. He is entitled to receive a bonus to be agreed by the Committee. He is
also entitled to receive a pension contribution, a company car and medical
insurance cover for himself and his dependants. He currently holds 108,000
ordinary share options at exercise prices ranging from $10.42 to $35.33 per
share. His service agreement requires him to devote his full time and attention
to his duties for the Company excepting certain non-executive positions
authorized by the Board. The agreement includes certain post-termination clauses
including non-disclosure, non-competition and non-solicitation
provisions.
  Dr.
John Climax
 Dr. John
Climax, one of the Company’s co-founders, has served as a Director since June
1990, and Chief Executive Officer from June 1990 to October 2002. He was
appointed Chairman of the Board in November 2002. The service agreement with Dr.
Climax is terminable on 12 months notice by either party. He is entitled to
receive a bonus to be agreed by the Committee. He is entitled to receive a
pension contribution, company car and medical insurance cover for himself and
his dependants. He currently holds 94,000 ordinary share options at exercise
prices ranging from $7.00 to $35.33 per share. His service agreement requires
him to devote his full time and attention to his duties for the Company
excepting certain non-executive positions authorized by the Board. The agreement
includes certain post-termination clauses including non-disclosure,
non-competition and non-solicitation provisions.
  Item 7.Major Shareholders and Related Party
Transactions.
  The
following table sets forth certain information regarding beneficial ownership of
ICON’s ordinary shares (including ADSs) as of February 19, 2009 (i) by each
person that beneficially owns more than 5% of the outstanding ordinary shares,
based upon publicly available information; and (ii) by all of our current
directors and executive officers as a group. Unless otherwise indicated below,
to our knowledge, all persons listed below have sole voting and investment power
with respect to their ordinary shares, except to the extent authority is shared
by spouses under applicable law.
 Name
      of Owner or Identity of Group
                  
                  No.
      of Shares (1)
                  
                  
                  Percent
      of ClassFidelity
      Group Companies (3)
                  
                  
                  5,422,202
                  
                  
                  
                  9.3%Dr.
      John Climax (2)
                  
                  
                  3,201,568
                  
                  
                  
                  5.5%Select
      Equity Group, Inc. (3)
                  
                  
                  2,927,223
                  
                  
                  
                  5.0%All
      directors and officers as a group (4)
                  
                  
                  4,700,644
                  
                  
                  
                  8.0%
  (1)
                  As
      used in this table, each person has the sole or shared power to vote or
      direct the voting of a security, or the sole or shared investment power
      with respect to a security (i.e., the power to dispose, or direct the
      disposition, of a security). A person is deemed as of any date to have
      “beneficial ownership” of any security if that such person has the right
      to acquire such security within 60 days after such date. Note that all
      figures have been amended to reflect the Bonus Issues which took place
      with an effective date of October 13, 2006 and August 8,
    2008.(2)
                  Includes
      3,107,568 ADSs held by Poplar Limited, a Jersey company controlled by Dr.
      Climax, and options to purchase 94,000 ADSs.(3)
                  Neither
      the Company nor any of its officers, directors or affiliates holds any
      voting power in this entity.(4)
                  Includes
      407,200 ordinary shares issuable upon the exercise of stock options
      granted by the
Company.
  41
  ICON plc,
is not directly or indirectly, owned or controlled by another corporation or by
any government.
  Given
that certain of the ordinary shares and American Depositary Shares (“ADRs”) are
held by brokers or other nominees, the number of holders of record or registered
holders in the United States is not representative of the number of beneficial
holders or of the residence of beneficial holders. Based on management’s review
of relevant filings with the Securities and Exchange Commission and other
publicly available information, the Company believes that the number of ordinary
shares (including ADSs) held by holders of record that are residents of the
United States is below 50% and may include Fidelity Group Companies and Select
Equity Group, Inc. The Company notes that of a total of 58,528,955 ordinary
shares (including ADSs) of the Company which were issued and outstanding at
February 19, 2008, 8,349,425 ordinary shares (including ADSs) were
held by holders of record in the United States.
  Related
Party Transactions
  As at
December 31, 2008, Amarin Investment Holding Limited (a company controlled by
Mr. Thomas Lynch), and Sunninghill Limited (a company controlled by Dr. John
Climax) held 1.1 million and 1.5 million shares respectively in Amarin. These
respective holdings equate to approximately 3.97% and 5.42% respectively, of
Amarin’s issued share capital. Thomas Lynch also serves as Chairman and Chief
Executive Officer of Amarin. Amarin is a neuroscience company focused on the
research, development and commercialization of drugs for the treatment of
central nervous system disorders. During the fiscal year ending May 31, 2005,
Amarin contracted ICON Clinical Research Limited (a wholly owned subsidiary of
ICON), to conduct a clinical trial on its behalf. The total potential value of
this study is $7 million. During the year ended December 31, 2008, the Company
recognized $0.2 million of revenue relating to the Amarin contract. At December
31, 2008, $0.3 million was outstanding to be received from Amarin on this
trial.
  As at
December 31, 2008, Dr. John Climax and Dr. Ronan Lambe held 3.05% and 2.94%
respectively of the issued share capital of NuPathe Inc. (“NuPathe”). NuPathe is
a specialty pharmaceutical company specializing in the acquisition and
development of therapeutic products in the area of neuroscience. Prior to July
2008 Dr. Climax also served as a non-executive director and chairman of the
compensation committee on the Board of NuPathe. During the year ending December
31, 2006, NuPathe engaged ICON Clinical Research Limited, a wholly owned
subsidiary of ICON plc, in consulting and clinical trial related activities.
During the year ended December 31, 2008, the Company recognized $0.1 million
relating to the NuPathe contract. There were no amounts outstanding as at
December 31, 2008.
  Mr Edward
Roberts has served as Chairman of Merz GmbH since 2003. Merz is an independent
German pharmaceutical company focused on the development of drugs for the
treatment of illnesses in the fields of neurology and psychiatry. ICON Clinical
Research Limited, a wholly owned subsidiary of ICON plc, has entered into a
number of contracts with Merz for the provision of consulting and clinical trial
related activities. The total potential value of these contracts is $44.1
million. During the prior year ended December 31, 2008, ICON recognized a total
of $7.6 million of revenue in relation to these activities. There were no
amounts outstanding as at December 31, 2008.
  Prior to
June 25, 2007, Dr. Bruce Given served as the President and Chief Executive
Officer of Encysive Pharmaceuticals Inc. (“Encysive”). Encysive is a
biopharmaceutical company specializing in the development and commercialization
of synthetic, small molecule compounds. As of December 31, 2007, Dr. Bruce
Given’s holdings in Encysive was less than 0.1% of the issued share capital.
During the year ending December 31, 2003, Encysive engaged ICON Clinical
Research Limited (a wholly owned subsidiary of ICON), in consulting and clinical
trial related activities. During the year ended December 31, 2007, ICON
recognized a total of $0.1 million of revenue in relation to these activities.
No revenue was earned from these activities during the year ended December 31,
2008.
  42
  As of
December 31, 2007, Dr. Ronan Lambe held 1.4 million shares in AGI Therapeutics
Limited (“AGI”), a specialty pharmaceutical company focused on developing drug
therapies for gastrointestinal diseases and disorders. In January 2006, Dr.
Ronan Lambe was appointed a non-executive director of AGI and took up the
position of non-executive Chairman from February 2006. During September 2004,
AGI engaged ICON Clinical Research Limited (a wholly owned subsidiary of ICON),
in consulting and clinical trial related activities. The total value of this
study was $2.8 million. No revenue was recognized during the years ended
December 31, 2007 and December 31, 2008. There were no amounts outstanding as at
December 31, 2007 and December 31, 2008.
  Item 8.Financial Information.
  Financial
Statements
  See Item
18.
  Legal
Proceedings
  ICON is
not party to any litigation or other legal proceedings that we believe could
reasonably be expected to have a material adverse effect on our business,
results of operations and financial condition.
  Dividends
  We have
not paid cash dividends on our ordinary shares and do not intend to pay cash
dividends on our ordinary shares in the foreseeable future.
  Item 9.The Offer and the Listing
  ICON’s
ADSs are traded on the NASDAQ National Market under the symbol “ICLR”. Our
Depository for the ADSs is The Bank of New York. ICON also has a secondary
listing on the Official List of the Irish Stock Exchange. No securities of ICON
are traded in any other market. The following table sets forth the trading price
for the dates indicated for ICON plc’s ADSs as reported by NASDAQ.
 Year
      Ending
                        
                        High
      Sales Price
                          During
      Period
                        
                        
                        Low
      Sales Price
                          During
      PeriodMay
      31, 2004
                        
                        $
                        11.52
                        
                        
                        $
                        6.47May
      31, 2005
                        
                        $
                        11.23
                        
                        
                        $
                        7.57December
      31, 2005 (7 month transition period)
                        
                        $
                        12.63
                        
                        
                        $
                        7.53December
      31, 2006
                        
                        $
                        20.18
                        
                        
                        $
                        10.25December
      31, 2007
                        
                        $
                        32.40
                        
                        
                        $
                        18.34December
      31, 2008
                        
                        $
                        44.78
                        
                        
                        $
                        15.64
  Quarter
      Ending
                          
                          High
      Sales Price
                            During
      Period
                          
                          
                          Low
      Sales Price
                            During
      PeriodMar
      31, 2007
                          
                          $
                          22.30
                          
                          
                          $
                          18.34June
      30, 2007
                          
                          $
                          24.83
                          
                          
                          $
                          20.83Sept
      30, 2007
                          
                          $
                          26.63
                          
                          
                          $
                          21.26Dec
      31, 2007
                          
                          $
                          32.40
                          
                          
                          $
                          25.36Mar
      31, 2008
                          
                          $
                          35.56
                          
                          
                          $
                          28.63June
      30, 2008
                          
                          $
                          39.12
                          
                          
                          $
                          29.52Sept
      30, 2008
                          
                          $
                          44.78
                          
                          
                          $
                          35.00Dec
      31, 2008
                          
                          $
                          39.66
                          
                          
                          $
                          15.64
  43
  Month
      Ending
                              
                              High
      Sales Price
                                During
      Period
                              
                              
                              Low
      Sales Price
                                During
      PeriodJuly
      31, 2008
                              
                              $
                              42.09
                              
                              
                              $
                              36.07Aug
      31, 2008
                              
                              $
                              44.78
                              
                              
                              $
                              40.00Sept
      30, 2008
                              
                              $
                              43.75
                              
                              
                              $
                              35.00Oct
      31, 2008
                              
                              $
                              39.66
                              
                              
                              $
                              18.67Nov
      30, 2008
                              
                              $
                              27.90
                              
                              
                              $
                              15.64Dec
      31, 2008
                              
                              $
                              24.37
                              
                              
                              $
                              17.27
  All
comparative figures above have been amended to reflect the Bonus Issues which
took place with an effective date of August 8, 2008 and October 13,
2006.
  Item 10. Additional Information
  Exchange
Controls and Other Limitations Affecting Security Holders
  Irish
exchange control regulations ceased to apply from and after December 31, 1992.
Except as indicated below, there are no restrictions on non-residents of Ireland
dealing in domestic securities, which includes shares or depository receipts of
Irish companies. Except as indicated below, dividends and redemption proceeds
also continue to be freely transferable to non-resident holders of such
securities.
  The
Financial Transfers Act, 1992 gives power to the Minister for Finance of Ireland
to make provision for the restriction of financial transfers between Ireland and
other countries and persons. Financial transfers are broadly defined, and
include all transfers which would be movements of capital or payments within the
meaning of the treaties governing the European Communities. The acquisition or
disposal of ADSs or ADRs representing shares issued by an Irish incorporated
company and associated payments may fall within this definition. In addition,
dividends or payments on redemption or purchase of shares and payments on a
liquidation of an Irish incorporated company would fall within this definition.
At present, the Financial Transfers Act, 1992 prohibits financial transfers
involving certain persons connected with the former regime in Iraq, certain
persons indicted by the International Criminal Tribunal for the former
Yugoslavia and certain associated persons, Zimbabwe, the Islamic Republic of
Iran, the Democratic Peoples Republic of Korea, the Republic of Lebanon, the
Taliban of Afghanistan, Osama bin Laden and Al-Qaeda, Liberia, Libya,
Burma/Myanmar, Uzbekistan, Sudan, Somalia, Cote D’Ivoire, the Democratic
Republic of Congo, President Lukashenko and certain other officials of Belarus,
and countries that harbor certain terrorist groups, without the prior permission
of the Central Bank of Ireland.
  Any
transfer of, or payment in respect of an ADS involving the government of any
country or any person which is currently the subject of United Nations
sanctions, any person or body controlled by any of the foregoing, or by any
person acting on behalf of the foregoing, may be subject to restrictions
pursuant to such sanctions as implemented into Irish law. The following
countries and persons are currently the subject of such sanctions: Somalia,
Sierra Leone, Sudan, Cote D’Ivoire, Democratic Republic of Congo, Liberia,
individuals designated by the international independent investigation Commission
or the Government of Lebanon, Democratic Peoples Republic of Korea, the Islamic
Republic of Iran, Iraq, the Taliban of Afghanistan, Osama bin Laden and
Al-Qaeda. There are no restrictions under the Company’s Articles of Association,
or under Irish Law that limit the right of non-residents or foreign owners to
hold or vote the Company’s ordinary shares or ADSs.
  Memorandum
and Articles of Association
  We hereby
incorporate by reference the description of our Memorandum and Articles of
Association located under the heading “Description of the Memorandum and
Articles of Association of the Company” in our Form 6-K filed with the
Securities Exchange Commission on December 5, 2008.
  44
    “That the
authorized share capital of the Company be increased from €2,400,000 divided
into 40,000,000 Ordinary Shares of €0.06 each, to €6,000,000 divided into
100,000,000 Ordinary Shares of €0.06 each.”
  On July
21, 2008, at ICON’s Annual General Meeting, the Articles of Association of ICON
plc were amended to authorise the chairman to have a casting vote. The following
amendments were made:
  “That
Article 101(a) of the Company’s existing Articles of Association be deleted and
replaced in its entirety with the following new Article 101(a):
  (a)
Questions arising at any meeting of Directors shall be decided by a majority of
votes. Where there is an equality of votes, the chairman of the meeting shall
have a second or casting vote.”
  Material
Contracts
  The
Company leases all but one of its facilities under operating leases. Certain of
these leases are considered to be material.
  Taxation
  General
  The
following discussion is based on existing Irish tax law, Irish court decisions
and the practice of the Revenue Commissioners of Ireland, and the convention
between the United States and Ireland for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to income and capital gains (the
“Treaty”). This discussion does not purport to deal with the tax consequences of
owning the ordinary shares for all categories of investors, some of which may be
subject to special rules. Prospective purchasers of ordinary shares are advised
to consult their own tax advisors concerning the overall tax consequences
arising in their own particular situations under Irish law. Each prospective
investor should understand that future legislative, administrative and judicial
changes could modify the tax consequences described below, possibly with
retroactive effect.
  As used
herein, the term “U.S. Holder” means a beneficial owner of ordinary shares that
(i) owns the ordinary shares as capital assets; (ii) is a U.S. citizen or
resident, a U.S. corporation, an estate the income of which is subject to U.S.
federal income taxation regardless of its source or a trust that meets the
following two tests: (A) a U.S. court is able to exercise primary supervision
over the administration of the trust, and (B) one or more U.S. persons have the
authority to control all substantial decisions of the trust; and for purposes of
the discussion under Irish Taxation of U.S. Holders (A) is not a resident of, or
ordinarily resident in, Ireland for the purposes of Irish tax; and (B) is not
engaged in trade or business in Ireland through a permanent
establishment.
  AS USED
HEREIN, REFERENCES TO THE ORDINARY SHARES SHALL INCLUDE ADSs REPRESENTING SUCH
ORDINARY SHARES AND ADRs EVIDENCING OWNERSHIP OF SUCH ADSs.
  Irish
Taxation
  Irish
corporation tax on income
 ICON is a
public limited company incorporated and resident for tax purposes in
Ireland.
  For Irish
tax purposes, the residence of a company is in the jurisdiction where the
central management and control of the company is located. Subject to certain
exceptions, all Irish incorporated companies are deemed to be Irish tax
resident. Companies which are resident in the Republic of Ireland are subject to
Irish corporation tax on their total profits (wherever arising and, generally,
whether or not remitted to the Republic of Ireland). The question of residence,
by virtue of management and control, is essentially one of fact. It is the
present intention of the Company’s management to continue to manage and control
the Company from the Republic of Ireland, so that the Company will continue to
be resident in the Republic of Ireland.
  45
  The
standard rate of Irish corporation tax on trading income (with certain
exceptions) is currently 12.5%.
  Patent
exemption is available to Irish resident companies whose income derives from
qualifying royalties or license fees paid in respect of qualifying patents. The
main requirement to qualify for the exemption is that the research, planning,
processing, experimentation, testing, devising, designing, developing or similar
activity leading to the invention which is the subject of the patent is carried
out in Ireland. Under Irish law, income from such qualifying patents is
disregarded for taxation purposes. From January 1, 2008, there is an annual
limit of 5 million Euro placed on qualifying patent income. To the extent that
income arises above this threshold, it will be subject to Irish corporation tax
at 25%.
  To the
extent that the company is involved in the “manufacture” of goods in Ireland,
income from this activity, in respect of its data processing operations carried
out in Ireland (which is deemed to be manufacturing for Irish tax purposes) ,
can qualify for a 10% rate of tax. This relief is available until December 31,
2010, and thereafter the income will be taxed at the standard rate applicable to
trading income which is currently 12.5%.
  Corporation
tax is charged at the rate of 25% on a company’s non-trading income and certain
types of trading income not eligible for the lower rates discussed
above.
  Capital
gains arising to an Irish resident company are liable to tax at 20% (22% for
disposals made on or after 14 October 2008). However, a capital gains tax
exemption has been introduced in Ireland in respect of disposals of certain
qualifying shareholdings.
  The
exemption from capital gains tax on the disposal of shares by an Irish resident
company will apply where certain conditions are met. These conditions
principally are:
 ●
                The
      company claiming the exemption must hold (directly or indirectly) at least
      5% of the ordinary share capital of the company in which the interest is
      being disposed of, for a period of at least one year, within the two year
      period prior to disposal.●
                The
      shares being disposed of must be in a company, which at the date of
      disposal, is resident in an EU Member State or in a state with which
      Ireland has signed a double tax agreement.●
                The
      shares must be in a company which is primarily a trading company or else
      the company making the disposal together with its “5% plus subsidiaries”
      should be primarily a trading group.●
                The
      shares must not derive the greater part of their value from land or
      mineral rights in the State.
  Taxation
of Dividends
 Unless
exempted, all dividends paid by ICON, other than dividends paid entirely out of
exempt patent income (subject to conditions), will be subject to Irish
withholding tax at the standard rate of income tax in force at the time the
dividend is paid, currently 20%. An individual shareholder who is neither
resident nor ordinarily resident for tax purposes in Ireland, but is resident in
a country with which Ireland has signed a double tax treaty, which includes the
United States, or in a member state of the European Union, other than Ireland
(together a “Relevant Territory”), will be exempt from withholding tax provided
he or she makes the requisite declaration. No dividend withholding tax will
apply on the payment of a dividend from an Irish resident company to its Irish
resident 51% parent company. Where the Irish company receiving the dividend does
not hold at least 51% of the shares of the paying company, the dividend will be
exempt if the Irish corporate shareholder makes the requisite
declaration.
  Non-Irish
resident corporate shareholders that:
 ●
                  are
      ultimately controlled by residents of a Relevant
  Territory;●
                  are
      resident in a Relevant Territory and are not controlled by Irish
      residents;●
                  have
      the principal class of their shares, or shares of a 75% parent,
      substantially and regularly traded on one or more recognized stock
      exchanges in a Relevant Territory or Territories;
  or
  46
  ●
                are
      wholly owned by two or more companies, each of whose principal class of
      shares is substantially and regularly traded on one or more recognized
      stock exchanges in a Relevant Territory or
  Territories;
  will be
exempt from withholding tax on the production of the appropriate certificates
and declarations.
  U.S.
Holders of ordinary shares (as opposed to ADSs: see below) should note, however,
that these documentation requirements may be burdensome. As described below,
these documentation requirements do not apply in the case of ADSs.
  Special
arrangements are available in the case of an interest in shares held in Irish
companies through American depositary banks using ADSs. The depositary bank will
be allowed to receive and pass on a dividend from the Irish company without any
deduction for withholding tax in the following circumstances:
 ●
                the
      depositary has been authorized by the Irish Revenue Commissioners as a
      qualifying intermediary and such authorization has not expired or been
      revoked; and either●
                the
      depositary bank’s ADS register shows that the beneficial owner has a U.S.
      address on the register; or●
                if
      there is a further intermediary between the depositary bank and the
      beneficial owner, where the depositary bank receives confirmation from the
      intermediary that the beneficial owner’s address in the intermediary’s
      records is in the U.S.
  Income
Tax
 Under
certain circumstances, non-Irish resident shareholders will be subject to Irish
income tax on dividend income. This liability is limited to tax at the standard
rate and therefore, where withholding tax has been deducted, this will satisfy
the tax liability.
  However,
a non-Irish resident shareholder will not have an Irish income tax liability on
dividends from the Company if the holder is neither resident nor ordinarily
resident in the Republic of Ireland and the holder is:
 ●
                an
      individual resident in the U.S. (or any other country with which Ireland
      has signed a double taxation treaty);●
                a
      corporation that is ultimately controlled by persons resident in the U.S.
      (or any other country with which Ireland has signed a double taxation
      treaty);●
                a
      corporation whose principal class of shares (or its 75% or greater
      parent’s principal class of shares) is substantially and regularly traded
      on a recognized stock exchange in an EU country or a country with which
      Ireland has signed a double taxation treaty;●
                a
      corporation resident in another EU member state or in a country with which
      Ireland has signed a double taxation treaty, which is not controlled
      directly or indirectly by Irish residents; or●
                a
      corporation that is wholly owned by two or more corporations each of whose
      principal class of shares is substantially and regularly traded on a
      recognized stock exchange in an EU country or a country with which Ireland
      has signed a double taxation
treaty.
  U.S.
Holders that do not fulfill the documentation requirements or otherwise do not
qualify for the withholding tax exemption may be able to claim treaty benefits
under the treaty. U.S. Holders that are entitled to benefits under the treaty
will be able to claim a partial refund of the 20% withholding tax from the Irish
Revenue Commissioners.
  47
  Taxation
of Capital Gains
  A person
who is not resident or ordinarily resident in Ireland, has not been an Irish
resident within the past five years and who does not carry on a trade in Ireland
through a branch or agency will not be subject to Irish capital gains tax on the
disposal of ordinary shares or ADSs, so long as the ordinary shares or ADSs, as
the case may be, are either quoted on a stock exchange or do not derive the
greater part of their value from Irish land or mineral rights. There are
provisions to subject a person who disposes of an interest in a company while
temporarily being non-Irish resident, to Irish capital gains tax. This treatment
will apply to Irish domiciled individuals -:
 ●
                    who
      cease to be Irish resident;●
                    who
      own the shares when they cease to be resident;●
                    if
      there are not more than 5 years of assessment between the last year of
      Irish tax residence prior to becoming temporarily non-resident and the tax
      year that he/she resumes Irish tax residency;●
                    who
      dispose of an interest in a company during this temporary non-residence;
      and●
                    the
      interest disposed of represents 5% or greater of the share capital of the
      company or is worth at least
€500,000.
  In these
circumstances the person will be deemed, for Irish capital gains tax purposes,
to have sold and immediately reacquired the interest in the company on the date
of his or her departure and will be subject to tax at 20% of the taxable
gain.
  Irish
Capital Acquisitions Tax
 Irish
capital acquisitions tax (referred to as CAT) applies to gifts and
inheritances.
  Where a
gift orinheritance is taken
under a disposition made after December 1, 1999, it will be within the charge to
CAT:
 ●
                        to
      the extent that the property of which the gift or inheritance consists is
      situated in the Republic of Ireland at the date of the gift or
      inheritance;●
                        where
      the person making the gift or inheritance is or was resident or ordinarily
      resident in the Republic of Ireland at the date of the disposition under
      which the gift or inheritance is taken;●
                        in
      the case of a gift taken under a discretionary trust where the person from
      whom the gift is taken was resident or ordinarily resident in the Republic
      of Ireland at the date he made the settlement, or at the date of the gift
      or, if he is dead at the date of the gift, at his death;
  or●
                        where the person
      receiving the gift or inheritance is resident or ordinarily
      resident in the Republic of Ireland at the date of the gift or
      inheritance.
  The
person who receives the gift or inheritance is primarily liable for CAT. A
person is secondarily liable if he is the donor, his personal representative or
an agent, trustee or other person in whose care the property constituting the
gift or inheritance or the income therefrom is placed. Taxable gifts or
inheritances received by an individual since December 5, 1991, from donors in
the same threshold class are aggregated and only the excess over a specified
tax-free threshold is taxed. The tax-free threshold
is dependent on the relationship between the donor and the donees and the
aggregation since December 5, 1991, of all previous gifts and inheritances,
within the same tax threshold.
  The
tax-free threshold amounts that apply during 2009 are:
 ●
                      €27,127
      (2008:
      €26,060) in the case of persons who are not related to one
      another;●
                      €54,254
      (2008:
      €52,151) in the case of gifts or inheritances received from inter
      alia a brother or sister or from a brother or sister of a parent or from a
      grandparent; and●
                      €542,544
      (2008:
      €521,208) in the case of gifts and inheritances received from a
      parent (or from a grandparent by a minor child of a deceased child) and
      specified inheritances received by a parent from a
  child.
  Gifts and
inheritances passing between spouses are exempt from CAT.
  A gift or
inheritance of ordinary shares or ADSs will be within the charge to Irish
capital acquisitions tax, notwithstanding that the person from whom or by whom
the gift or inheritance is received is domiciled or resident outside
Ireland.
  48
  The
Estate Tax Convention between Ireland and the United States generally provides
for Irish capital acquisitions tax paid on inheritances in Ireland to be
credited against U.S. federal estate tax payable in the United States and for
tax paid in the United States to be credited against tax payable in Ireland,
based on priority rules set forth in the Estate Tax Convention. The Estate Tax
Convention does not apply to Irish capital acquisitions tax paid on
gifts.
  Irish
Probate Tax
 Irish
probate tax was abolished under the Finance Act, 2001. No probate tax will arise
on any assets passing in respect of a death occurring on or after December 6,
2000.
  Irish
Stamp Duty - Ordinary Shares
 Irish
stamp duty, which is a tax on certain documents, is payable on all transfers of
the ordinary shares (other than between spouses) whenever a document of transfer
is executed. Where the transfer is attributable to a sale, stamp duty will be
charged at a rate of 1%, rounded to the nearest Euro. The stamp duty is
calculated on the amount or value of the consideration (i.e. purchase price) or,
if the transfer is by way of a gift (subject to certain exceptions) or for
consideration less than the market value, on the market value of the shares.
Where the consideration for the sale is expressed in a currency other than Euro,
the duty will be charged on the Euro equivalent calculated at the rate of
exchange prevailing on the date of the transfer.
  Transfers
of ordinary shares between associated companies (broadly, companies within a 90%
group relationship, and subject to the satisfaction of certain conditions) are
exempt from stamp duty in the Republic of Ireland. In the case of transfers of
ordinary shares where no beneficial interest passes (e.g. a transfer of shares
from a beneficial owner to his nominee), no stamp duty arises where the transfer
contains the appropriate certificate and, in the absence of such certificate, a
flat rate of €12.70 (the nominal rate) will apply.
  Irish
Stamp Duty - ADSs Representing Ordinary Shares
 A
transfer by a shareholder to the depositary or custodian of ordinary shares for
deposit under the deposit agreement in return for ADSs and a transfer of
ordinary shares from the depositary or the custodian upon surrender of ADSs for
the purposes of the withdrawal of the underlying ordinary shares in accordance
with the terms of the deposit agreement will be stampable at the ad valorem rate
if the transfer relates to a sale or contemplated sale or any other change in
the beneficial ownership of such ordinary shares. However, it is not certain
whether the mere withdrawal of ordinary shares in exchange for ADSs or ADSs for
ordinary shares would be deemed to be a transfer of or change in the beneficial
ownership which would be subject to stamp duty at the ad valorem rate. Where the
transfer merely relates to a transfer where no change in the beneficial
ownership in the underlying ordinary shares is effected or contemplated, no
stamp duty arises where the transfer contains the appropriate certificate and,
in the absence of such certificate, the nominal rate stamp duty of €12.70
applies.
  Transfers
of ADSs are exempt from Irish stamp duty as long as the ADSs are dealt in on the
NASDAQ National Market or any recognized stock exchange in the United States or
Canada.
  The
person accountable for payment of stamp duty is the transferee or, in the case
of a transfer by way of gift, or for a consideration less than the market value,
all parties to the transfer. A late or inadequate payment of stamp duty will
result in a liability to pay interest, penalties and fines.
  Documents
on Display
  We are
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, (the “Exchange Act”) and file reports and other information
with the SEC. You may read and copy any of our reports and other information at,
and obtain copies upon payment of prescribed fees from, the Public Reference
Room maintained by the SEC at 100F Street N.E., Washington, D.C. 20549. In
addition, the SEC maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC at http://www.sec.gov. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.
  We
“incorporate by reference” information that we file with the SEC, which means
that we can disclose important information to you by referring you to those
documents. The information incorporated by reference is an important part of
this report and more recent information automatically updates and supersedes
more dated information contained or incorporated by reference in this report.
Our SEC file number for Exchange Act reports is 333-8704.
  49
  As a
foreign private issuer, we are exempt from the rules under the Exchange Act,
prescribing the furnishing and content of proxy statements to
shareholders.
  We will
provide without charge to each person, including any beneficial owner, on the
written or oral request of such person, a copy of any or all documents referred
to above which have been or may be incorporated by reference in this report (not
including exhibits to such incorporated information that are not specifically
incorporated by reference into such information). Requests for such copies
should be directed to us at the following address: ICON plc, South County
Business Park, Leopardstown, Dublin 18, Ireland, Attention: Ciaran Murray,
telephone number: (353) 1 291 2000.
  Exemptions
From Corporate Governance Listing Requirements Under the NASDAQ Marketplace
Rules
  NASDAQ
may provide exemptions from the NASDAQ corporate governance standards to a
foreign private issuer when those standards are contrary to a law, rule or
regulation of any public authority exercising jurisdiction over such issuer or
contrary to generally accepted business practices in the issuer’s country of
domicile, except to the extent that such exemptions would be contrary to United
States federal securities laws. ICON, as a foreign private issuer, was granted
an exemption in 1998 from provisions set forth in NASDAQ Rule 4350(f), which
requires each issuer to provide for a quorum in its by-laws for any meeting of
the holders of common stock, which shall in no case be less than 33.33% of the
outstanding shares of the issuer’s outstanding voting stock. ICON’s Articles of
Association require that only 3 members be present at a shareholder meeting to
constitute a quorum. This quorum requirement is in accordance with Irish law and
generally accepted business practices in Ireland.
  Item
11.
Quantitative and Qualitative Disclosures about Market
Risk
  Qualitative
Disclosure of Market Risk.
The principal market risks (i.e. risk of loss arising from adverse changes in
market rates and prices) to which we are exposed are:
 ●
                Interest
      rate changes on short term investments (available for sale) in the form of
      floating rate notes and medium term minimum “AA” rated corporate
      securities, and●
                Interest
      rate risk on variable rate debt.●
                Foreign
      currency risk on non-U.S. dollar denominated cash and non-U.S. dollar
      denominated debt.
  We use
derivative financial instruments solely to hedge exposure to these market risks
and we do not enter into these instruments for trading or speculative purposes.
The Company had no interest rate instruments or derivatives as at December 31,
2008.
  Our
primary foreign currency exchange risk relates to movements in rates between the
U.S. dollar, Sterling and the Euro. At December 31, 2008, we had cash
denominated in non-U.S. dollar denominated currencies. In order to reduce the
foreign currency exchange risk, we may enter into certain derivative instruments
to reduce our exposure to adverse changes in exchange rates. At December 31,
2008, we held no foreign exchange forward contracts.
  Quantitative
disclosure of Market Risk.
The analysis below presents the sensitivity of the market value, or fair value
of our financial instruments to selected changes in market rates and prices. The
changes chosen represent our view of changes that are reasonable over a one year
period.
  The
hypothetical changes in fair value are estimated based on the same methodology
used by the third party financial institutions to calculate the fair value of
the original instruments, keeping all variables constant except the relevant
exchange rate, as the case may be, which has been adjusted to reflect the
hypothetical change. Fair value estimates by their nature are subjective and
involve uncertainties and matters of significant judgment and therefore cannot
be determined precisely.
  50
  Foreign
Currency Exchange Risk
  The
sensitivity analysis below represents the hypothetical change in fair value
based on an immediate 10% movement in the exchange rates.
 Fair
      value at
                                      December
      31, 2008
                                      (in
      thousands)
                                    
                                    
                                    Fair
      value Change +10%
                                      movement
      in foreignexchange rate
                                      (in
      thousands)
                                    
                                    
                                    Fair
      value
                                      Change
      -10%
                                      movement
      in
                                      foreignexchange
      rate
                                      (in
      thousands)Non-U.S.
      Dollar denominated cash$
                                    13,917
                                    
                                    
                                    $
                                    1,392
                                    
                                    
                                    ($
                                    1,392
                                    )Non-U.S.
      Dollar denominated short term debt
                                    
                                    $
                                    40,193
                                    
                                    
                                    $
                                    4,019
                                    
                                    
                                    ($
                                    4,019
                                    )
  Interest
Rate Risk
  The
sensitivity analysis below represents the hypothetical change in our interest
income/(expense) based on an immediate 1% movement in market interest
rates.
 Interest
                      Income/(Expense)
                      for
      the year
                      ended
                      December
      31,
                      2008
                      (in
      thousands)
                    
                    
                    Interest
                      Income/(Expense)
                      Change
      1%
                      increase
      in
                      market
                      interest
      rate
                      (in
      thousands)
                    
                    
                    Interest
                      Income/(Expense)
                      Change
      1%
                      decrease
      in
                      market
                      interest
      rate
                      (in
      thousands)Interest
      Income
                    
                    $
                    2,880
                    
                    
                    $
                    3,882
                    
                    
                    $
                    1,860Interest
      Expense
                    
                    ($
                    4,102
                    )
                    
                    ($
                    5,156
                    )
                    
                    ($
                    3,048
                    )
  Item
12.
Description of Securities Other than Equity
Securities
  Not
applicable.
  Part
II
  Item
13.
Defaults, Dividend Arrearages and
Delinquencies
  None.
  Item
14.Material Modifications to the Rights of Security Holders and Use of
Proceeds
  We hereby
incorporate by reference the description of the amendment to our Memorandum and
Articles of Association described under the heading “Memorandum and Articles of
Association” from Item 10 of this Form 20-F.
  51
  Item
15.Controls and Procedures
  (a)
Evaluation of disclosure controls and procedures
  An
evaluation was carried out under the supervision and with the participation of
the Company’s management, including the Chief Executive Officer (CEO) and the
Chief Financial Officer (CFO), of the effectiveness of our disclosure controls
and procedures as at December 31, 2008. Based on that evaluation, the CEO and
CFO have concluded that the Company’s disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.
  (b)
Management’s Annual Report
  Reference
is made to page 56 of this Form 20-F.
  (c)
Report of Independent Registered Public Accounting Firm
  Reference
is made to page 58 of this Form 20-F.
  (d)
Changes in internal controls
  There
were no changes in our internal controls over financial reporting that occurred
during the period covered by this Form 20-F that have materially affected or are
reasonably likely to materially affect our internal controls over financial
reporting.
  Item
16.Reserved.
  Item
16A. Audit Committee Financial Expert
  Mr.
Thomas Lynch acts as the Audit Committee financial expert serving on our Audit
Committee and Board of Directors. Mr. Lynch is an independent Board member and
serves as one of our non-executive directors.
  Item
16B. Code of Ethics
  Our Board
of Directors adopted its code of ethics in 2003, which applies to the Chief
Executive Officer, the Chief Financial Officer and any persons performing
similar functions, if any, of the Company.
  There are
no material modifications to, or waivers from, the provisions of such code,
which are required to be disclosed.
  This code
is available on our website at the following address:
  http://www.iconplc.com
  52
  Item
16C. Principal Accountant Fees and Services
  Our
principal accountants for the years ended December 31, 2008 and December 31,
2007, were KPMG.
  The table
below summarizes the fees for professional services rendered by KPMG for the
audit of our annual financial statements for the years ended December 31, 2008,
and December 31, 2007, and fees billed for other services rendered by
KPMG.
 12
      month period ending
                                                                                            December
      31, 2007
                                                                                          
                                                                                          12
      month period ending
                                                                                            December
      31, 2008(in
      thousands)
                                                                                          
                                                                                          (in
      thousands)Audit
      fees (1)
                                                                                          
                                                                                          $
                                                                                          2,075
                                                                                          
                                                                                          
                                                                                          
                                                                                          71%
                                                                                          
                                                                                          
                                                                                          $
                                                                                          1,835
                                                                                          
                                                                                          
                                                                                          
                                                                                          54%Audit
      related fees (2)
                                                                                          
                                                                                          
                                                                                          418
                                                                                          
                                                                                          
                                                                                          
                                                                                          14%
                                                                                          
                                                                                          
                                                                                          
                                                                                          403
                                                                                          
                                                                                          
                                                                                          
                                                                                          12%Tax
      fees (3)
                                                                                          
                                                                                          
                                                                                          429
                                                                                          
                                                                                          
                                                                                          
                                                                                          15%
                                                                                          
                                                                                          
                                                                                          
                                                                                          1,171
                                                                                          
                                                                                          
                                                                                          
                                                                                          34%Total
                                                                                          
                                                                                          $
                                                                                          2,922
                                                                                          
                                                                                          
                                                                                          
                                                                                          100%
                                                                                          
                                                                                          
                                                                                          $
                                                                                          3,409
                                                                                          
                                                                                          
                                                                                          
                                                                                          100%
  (1) Audit
fees include annual audit fees for ICON plc and its subsidiaries.
  (2) Audit
related fees principally consisted of fees for financial due diligence services
and fees for audit of financial statements of employee benefit
plans.
  (3) Tax
fees are fees for tax compliance and tax consultation services.
  The Audit
Committee pre-approves on an annual basis the audit and non-audit services
provided to ICON plc by its auditors.
  Such
annual pre-approval is given with respect to particular services. The Audit
Committee, on a case-by-case basis, may approve additional services not covered
by the annual pre-approval, as the need for such services arises.
  Item
16D. Exemptions from the Listing Standards for Audit Committees
  Not
applicable.
  Item
16E. Purchases of Equity Securities by the Issuer and Affiliated
Purchasers
  Not
applicable.
  Part
III
  Item
17.Financial Statements
  See item
18.
  Item
18.
Financial Statements
  Reference
is made to pages 57 to 97 of this Form 20-F.
  53
  Item
19.Financial Statements and Exhibits
 Financial
      statements of ICON plc and subsidiariesManagement’s
      Report on Internal Control over Financial ReportingReport
      of Independent Registered Public Accounting Firm.Consolidated
      Balance Sheets as at December 31, 2007 and 2008Consolidated
      Statements of Operations for the years ended December 31, 2006, December
      31, 2007 and December 31, 2008.Consolidated
      Statements of Shareholders’ Equity and Comprehensive Income for the years
      ended December 31, 2006, December 31, 2007 and December 31,
      2008Consolidated
      Statements of Cash Flows for the years ended December 31, 2006, December
      31, 2007 and December 31, 2008.Notes
      to the Consolidated Financial Statements.Exhibits
      of ICON plc and subsidiariesAmended
      Memorandum and Articles of Association (incorporated by reference to
      Exhibits 3.1 and 3.2 to the Form 6-k (File No. 333-08704) filed on
      December 5, 2008).ICON
      plc Share Option Plan 2003, as updated on October 26, 2006, for the 2006
      bonus issue, further updated on February 5, 2007 and updated on July 21,
      2008, for the 2008 bonus issue (incorporated by reference to Exhibit 4.1
      to the Form S-8 (File No. 333-152802) filed on August 6,
      2008).ICON
      plc Consultants Share Option Plan 2008 (incorporated by reference to
      Exhibit 4.2 to the Form S-8 (File No. 333-152802) filed on August 6,
      2008).ICON
      plc Employee Share Option Plan 2008 (incorporated by reference to Exhibit
      4.3 to the Form S-8 (File No. 333-152802) filed on August 6,
      2008).ICON
      plc Employees Restricted Share Unit Plan (incorporated by reference to
      Exhibit 4.4 to the Form S-8 (File No. 333-152802) filed on August 6,
      2008).Significant
      subsidiaries (Incorporated by reference in Item 4).Office
      Space Lease, dated September 25, 1998, between ICON Clinical Research,
      Inc. and O’Neill Lansdale Properties, L.P.Amended
      and Restated Office Space Lease, dated January 1, 2001, between ICON
      Clinical Research and 212 Church Associates,
  L.P.
  Amendment
      Number 1 to the Amended and Restated Office Space Lease, between ICON
      Clinical Research , Inc. and 212 C Associates, L.P.Amendment
      Number 2 to the Amended and Restated Office Space Lease, dated January 11,
      2005, between ICON Clinical Research , Inc. and 212 C Associates,
      L.P.
     54
 Agreement
      of Lease, dated August 13, 2001, between ICON Clinical Research (UK)
      Limited, ICON plc and Capital Business Parks Globeside
      Limited.Agreement
      of Lease, dated November 29, 2002, between ICON Laboratories, Inc. and MSM
      Reality Co. LLC, Davrick, LLC and Sholom Blau Co. LLC (together, the
      “Landlord”).Highwoods
      Properties Office Lease, dated February 17, 2003, between ICON Clinical
      Research, Inc. and Highwoods Realty Limited
Partnership.Section
      302 certifications.Section
      906 certifications.Consent
      of KPMG, Independent Registered Public Accounting
Firm
  
 55
  Management’s
Report on Internal Control over Financial Reporting
  Management
is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the
Securities Exchange Act of 1934.
  The
Company’s internal control over financial reporting is a process designed by, or
under the supervision of, the Company’s executive and financial officers and
effected by the Company’s board of directors, management and other personnel, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external reporting purposes in
accordance with generally accepted accounting principles.
  A
company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorization
of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on
the financial statements.
  Because
of the inherent limitation due to, for example, the potential for human error or
circumvention of control, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
  Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2008. In making this assessment, we used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control – Integrated Framework. Based upon the
assessment performed, we determined that, as of December 31, 2008, the Company’s
internal control over financial reporting was effective. In addition, there have
been no changes in the Company’s internal control over financial reporting
during 2008 that have materially affected, or are reasonably likely to affect
materially, the Group’s internal control over financial reporting
  KPMG,
which has audited the consolidated financial statements of the Company for the
year ended December 31, 2008, has also audited the effectiveness of the
Company’s internal control over financial reporting under Auditing Standard No.
5 of the Public Company Accounting Oversight Board (United
States).
  56
  REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the
Directors and Shareholders of ICON plc
  We have
audited the accompanying consolidated balance sheets of ICON plc and
subsidiaries (“the Company”) as of December 31, 2008 and 2007 and the related
consolidated statements of operations, shareholders’ equity and comprehensive
income, and cash flows for each of the years in the three-year period ended
December 31, 2008. These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of ICON plc and subsidiaries as
of December 31, 2008 and December 31, 2007 and the results of their operations
and their cash flows for each of the years in the three-year period ended
December 31, 2008, in conformity with U.S. generally accepted accounting
principles.
  As
described in Note 2 to the consolidated financial statements, the Company
adopted the provisions of FASB Interpretation No. 48 Accounting
for Uncertain Income Taxes, as of January 1, 2007. As described in Note 2
to the consolidated financial statements, effective January 1, 2006, the Company
changed its method of accounting for share-based compensation upon adoption of
Statement of Accounting Standard No. 123R Share
Based Payments.
  We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), ICON plc’s internal control over financial
reporting as of December 31, 2008, based on criteria established in Internal
Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) and our report dated February
19, 2009, expressed an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.
  KPMG
  Dublin,
Ireland
 February
19, 2009
  57
  REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the
Directors and Shareholders of ICON plc
  We have
audited ICON plc’s internal control over financial reporting as of December 31,
2008, based on criteria established in Internal Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). ICON plc’s management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying report.
Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit.
  We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audit also included performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
  A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
  In our
opinion, ICON plc maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2008, based on criteria
established in Internal Control - Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
  We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of ICON plc as
of December 31, 2008 and 2007 and the related consolidated statements of
operations, shareholders’ equity and comprehensive income, and cash flows for
each of the years in the three-year period ended December 31, 2008 and our
report dated February 19, 2009 expressed an unqualified opinion on those
consolidated financial statements.
  KPMG
  Dublin,
Ireland
 February
19, 2009
  58
   ICON
      plcCONSOLIDATED
      BALANCE SHEETS
 December
      31,
                                                                        2007
                                                                      
                                                                      
                                                                      December
      31,
                                                                        2008(in
      thousands)ASSETSCurrent
      Assets:Cash
      and cash equivalents
                                                                      
                                                                      $
                                                                      76,881
                                                                      
                                                                      
                                                                      $
                                                                      58,378Short
      term investments - available for sale (Note 3)
                                                                      
                                                                      
                                                                      41,752
                                                                      
                                                                      
                                                                      
                                                                      42,726Accounts
      receivable
                                                                      
                                                                      
                                                                      129,865
                                                                      
                                                                      
                                                                      
                                                                      210,535Unbilled
      revenue
                                                                      
                                                                      
                                                                      144,661
                                                                      
                                                                      
                                                                      
                                                                      141,727Other
      receivables
                                                                      
                                                                      
                                                                      6,171
                                                                      
                                                                      
                                                                      
                                                                      11,196Deferred
      tax asset (Note 13)
                                                                      
                                                                      
                                                                      4,919
                                                                      
                                                                      
                                                                      
                                                                      5,609Prepayments
      and other current assets
                                                                      
                                                                      
                                                                      16,449
                                                                      
                                                                      
                                                                      
                                                                      24,332Income
      taxes receivable (Note 13)
                                                                      
                                                                      
                                                                      2,448
                                                                      
                                                                      
                                                                      
                                                                      5,776Total
      current assets
                                                                      
                                                                      
                                                                      423,146
                                                                      
                                                                      
                                                                      
                                                                      500,279Other
      Assets:Property,
      plant and equipment, net (Note 6)
                                                                      
                                                                      
                                                                      133,426
                                                                      
                                                                      
                                                                      
                                                                      171,748Goodwill
      (Note 4)
                                                                      
                                                                      
                                                                      123,879
                                                                      
                                                                      
                                                                      
                                                                      169,344Non-current
      other assets
                                                                      
                                                                      
                                                                      2,140
                                                                      
                                                                      
                                                                      
                                                                      2,179Non-current
      income taxes receivable (Note 13)
                                                                      
                                                                      
                                                                      3,049
                                                                      
                                                                      
                                                                      
                                                                      4,840Non-current
      deferred tax asset (Note 13)
                                                                      
                                                                      
                                                                      5,703
                                                                      
                                                                      
                                                                      
                                                                      8,271Intangible
      assets (Note 5)
                                                                      
                                                                      
                                                                      1,795
                                                                      
                                                                      
                                                                      
                                                                      10,624Total
      Assets
                                                                      
                                                                      $
                                                                      693,138
                                                                      
                                                                      
                                                                      $
                                                                      867,285LIABILITIES
      AND SHAREHOLDERS’ EQUITYCurrent
      Liabilities:Accounts
      payable
                                                                      
                                                                      $
                                                                      13,459
                                                                      
                                                                      
                                                                      $
                                                                      17,505Payments
      on account
                                                                      
                                                                      
                                                                      96,553
                                                                      
                                                                      
                                                                      
                                                                      121,935Other
      liabilities (Note 7)
                                                                      
                                                                      
                                                                      70,743
                                                                      
                                                                      
                                                                      
                                                                      130,223Deferred
      tax liability (Note 13)
                                                                      
                                                                      
                                                                      398
                                                                      
                                                                      
                                                                      
                                                                      1,356Bank
      credit lines and loan facilities (Note 8)
                                                                      
                                                                      
                                                                      43,767
                                                                      
                                                                      
                                                                      
                                                                      40,193Income
      taxes payable (Note 13)
                                                                      
                                                                      
                                                                      4,955
                                                                      
                                                                      
                                                                      
                                                                      3,110Total
      current liabilities
                                                                      
                                                                      
                                                                      229,875
                                                                      
                                                                      
                                                                      
                                                                      314,322Other
      Liabilities:Long
      term government grants (Note 11)
                                                                      
                                                                      
                                                                      1,179
                                                                      
                                                                      
                                                                      
                                                                      1,386Long
      term finance leases
                                                                      
                                                                      
                                                                      49
                                                                      
                                                                      
                                                                      
                                                                      470Non-current
      income taxes payable (Note 13)
                                                                      
                                                                      
                                                                      13,906
                                                                      
                                                                      
                                                                      
                                                                      15,949Non-current
      deferred tax liability (Note 13)
                                                                      
                                                                      
                                                                      5,966
                                                                      
                                                                      
                                                                      
                                                                      12,196Non-current
      other liabilities
                                                                      
                                                                      
                                                                      1,394
                                                                      
                                                                      
                                                                      
                                                                      1,410Non-current
      bank credit lines and facilities (Note 8)
                                                                      
                                                                      
                                                                      51,062
                                                                      
                                                                      
                                                                      
                                                                      65,186Minority
      interest (Note 4)
                                                                      
                                                                      
                                                                      1,307
                                                                      
                                                                      
                                                                      
                                                                      —Shareholders’
      Equity:Ordinary
      shares, par value 6 euro cents per share;100,000,000 shares
      authorized, (Note 12)57,670,488
      shares issued and outstanding at December 31, 2007 and58,518,195
      shares issued and outstanding at December 31, 2008*.
                                                                      
                                                                      
                                                                      4,843
                                                                      
                                                                      
                                                                      
                                                                      4,921Additional
      paid-in capital
                                                                      
                                                                      
                                                                      143,639
                                                                      
                                                                      
                                                                      
                                                                      162,057Accumulated
      other comprehensive income
                                                                      
                                                                      
                                                                      31,828
                                                                      
                                                                      
                                                                      
                                                                      3,178Retained
      earnings
                                                                      
                                                                      
                                                                      208,090
                                                                      
                                                                      
                                                                      
                                                                      286,210Total
      Shareholders’ Equity
                                                                      
                                                                      
                                                                      388,400
                                                                      
                                                                      
                                                                      
                                                                      456,366Total
      Liabilities and Shareholders’ Equity
                                                                      
                                                                      $
                                                                      693,138
                                                                      
                                                                      
                                                                      $
                                                                      867,285
  *Comparative
figures have been amended to reflect the Bonus Issues (Stock Splits) which took
place with an effective date of October 13, 2006 and August 8,
2008
  59
  ICON
      plcCONSOLIDATED
      STATEMENTS OF OPERATIONS
 Year
      EndedDecember
      31,2006
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                2007
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                2008(in
      thousands, except share and per share data)Revenue:Gross
      revenue
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                649,826
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                867,473
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                1,209,451Reimbursable
      expenses
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (194,229
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (236,751
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (344,203
                                                                                                                                                )Net
      revenue
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                455,597
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                630,722
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                865,248Costs
      and expenses:Direct
      costs
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                256,263
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                354,479
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                489,238Selling,
      general and administrative
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                136,569
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                187,993
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                248,778Depreciation
      and amortization
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                14,949
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                19,008
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                27,728Total
      costs and expenses
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                407,781
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                561,480
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                765,744Income
      from operations
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                47,816
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                69,242
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                99,504Interest
      income
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                3,765
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                4,141
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                2,881Interest
      expense
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (125
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (1,403
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (4,105
                                                                                                                                                )Income
      before provision for income taxes
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                51,456
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                71,980
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                98,280Provision
      for income taxes (Note 13)
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (12,924
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (15,830
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (19,967
                                                                                                                                                )Minority
      interest
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (228
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (187
                                                                                                                                                )
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                (193
                                                                                                                                                )Net
      income
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                38,304
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                55,963
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                78,120Net
      income per ordinary share:Basic
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                0.68
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                0.97
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                1.34Diluted
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                0.66
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                0.94
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                $
                                                                                                                                                1.30Weighted
      average number of ordinary shares outstanding*:Basic
      (Note 2)
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                56,629,970
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                57,410,544
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                58,245,240Diluted
      (Note 2)
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                57,726,668
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                59,495,928
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                60,221,587
  The
accompanying notes are an integral part of these consolidated financial
statements.
  *Comparative
figures have been amended to reflect the Bonus Issues (Stock Splits) which took
place with an effective date of October 13, 2006 and August 8,
2008
  60
  ICON
      plcCONSOLIDATED
      STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE
  INCOME(in
      thousands, except share and per share
  data)
 Shares
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  Amount
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  Additional
                                                                                                                                                                                                                    Paid-in
                                                                                                                                                                                                                    Capital
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  Accumulated
                                                                                                                                                                                                                    Other
                                                                                                                                                                                                                    Comprehensive
                                                                                                                                                                                                                    Income
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  Retained
                                                                                                                                                                                                                    Earnings
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  TotalBalance
      at December 31, 2005*
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  56,072,368
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  4,715
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  119,611
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  3,409
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  113,823
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  241,558Comprehensive
      Income:Net
      income
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  38,304
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  38,304Currency
      translation adjustment
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  11,482
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  11,482Actuarial
      loss on defined benefit pension plan (net of nil tax)
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  (376
                                                                                                                                                                                                                  )
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  (376
                                                                                                                                                                                                                  )Total
      comprehensive income
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  49,410Exercise
      of share options
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  963,336
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  74
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  6,605
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  6,679Share
      based compensation expense
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  4,066
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  4,066Share
      issue costs
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  (84
                                                                                                                                                                                                                  )
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  (84
                                                                                                                                                                                                                  )Tax
      benefit on exercise of options
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  1,109
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  1,109Balance
      at December 31, 2006*
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  57,035,704
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  4,789
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  131,307
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  14,515
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  152,127
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  302,738Comprehensive
      Income:Net
      income
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  55,963
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  55,963Currency
      translation adjustment (net of tax)
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  11,893
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  11,893Actuarial
      gain on defined benefit pension plan (net of nil taxation)
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  5,420
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  5,420Total
      comprehensive income
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  73,276Exercise
      of share options
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  634,784
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  54
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  5,244
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  5,298Share
      based compensation expense
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  5,748
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  5,748Share
      issue costs
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  (126
                                                                                                                                                                                                                  )
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  (126
                                                                                                                                                                                                                  )Tax
      benefit on exercise of options
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  1,466
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  —
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  1,466Balance
      at December 31, 2007*
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  57,670,488
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  4,843
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  143,639
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  31,828
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  208,090
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  $
                                                                                                                                                                                                                  388,400
  61
  ICON
      plcCONSOLIDATED
      STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE
  INCOME(in
      thousands, except share and per share
  data)
 Shares
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          Amount
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          Additional
                                                                                                                                                                                                                            Paid-in
                                                                                                                                                                                                                            Capital
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          Accumulated
                                                                                                                                                                                                                            Other
                                                                                                                                                                                                                            Comprehensive
                                                                                                                                                                                                                            Income
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          Retained
                                                                                                                                                                                                                            Earnings
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          TotalBalance
      at December 31, 2007*
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          57,670,488
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          $
                                                                                                                                                                                                                          4,843
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          $
                                                                                                                                                                                                                          143,639
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          $
                                                                                                                                                                                                                          31,828
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          $
                                                                                                                                                                                                                          208,090
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          $
                                                                                                                                                                                                                          388,400Comprehensive
      Income:Net
      income
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          78,120
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          78,120Currency
      translation adjustment (net of tax)
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          (27,606
                                                                                                                                                                                                                          )
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          (27,606
                                                                                                                                                                                                                          )Actuarial
      gain on defined benefit pension plan (net of nil taxation)
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          (1,044
                                                                                                                                                                                                                          )
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          (1,044
                                                                                                                                                                                                                          )Total
      comprehensive income
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          49,470Exercise
      of share options
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          847,707
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          78
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          8,438
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          8,516Share
      based compensation expense
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          6,058
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          6,058Share
      issue costs
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          (138
                                                                                                                                                                                                                          )
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          (138
                                                                                                                                                                                                                          )Tax
      benefit on exercise of options
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          4,060
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          —
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          4,060Balance
      at December 31, 2008*
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          58,518,195
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          $
                                                                                                                                                                                                                          4,921
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          $
                                                                                                                                                                                                                          162,057
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          $
                                                                                                                                                                                                                          3,178
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          $
                                                                                                                                                                                                                          286,210
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          
                                                                                                                                                                                                                          $
                                                                                                                                                                                                                          456,366
  *Comparative
figures have been amended to reflect the Bonus Issues (Stock Splits) which took
place with an effective date of October 13, 2006 and August 8, 2008
  The
accompanying notes are an integral part of these consolidated financial
statements.
  62
  ICON
plc
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 Year
      Ended
                                                                                December
      31,
                                                                                2006
                                                                              
                                                                              
                                                                              Year
      Ended
                                                                                December
      31,
                                                                                2007
                                                                              
                                                                              
                                                                              Year
      Ended
                                                                                December
      31
                                                                                2008Cash
      flows from operating activities:Net
      income
                                                                              
                                                                              $
                                                                              38,304
                                                                              
                                                                              
                                                                              $
                                                                              55,963
                                                                              
                                                                              
                                                                              $
                                                                              78,120Adjustments
      to reconcile net income to net cash provided by operating
      activities:Loss
      on disposal of property, plant and equipment
                                                                              
                                                                              
                                                                              186
                                                                              
                                                                              
                                                                              
                                                                              396
                                                                              
                                                                              
                                                                              
                                                                              254Depreciation
      and amortization
                                                                              
                                                                              
                                                                              14,949
                                                                              
                                                                              
                                                                              
                                                                              19,008
                                                                              
                                                                              
                                                                              
                                                                              27,728Amortization
      of government grants
                                                                              
                                                                              
                                                                              (114
                                                                              )
                                                                              
                                                                              
                                                                              (117
                                                                              )
                                                                              
                                                                              
                                                                              (126
                                                                              )Stock
      compensation expense
                                                                              
                                                                              
                                                                              4,066
                                                                              
                                                                              
                                                                              
                                                                              5,748
                                                                              
                                                                              
                                                                              
                                                                              6,058Deferred
      taxes
                                                                              
                                                                              
                                                                              (1,887
                                                                              )
                                                                              
                                                                              
                                                                              (1,177
                                                                              )
                                                                              
                                                                              
                                                                              2,909Minority
      interest
                                                                              
                                                                              
                                                                              228
                                                                              
                                                                              
                                                                              
                                                                              187
                                                                              
                                                                              
                                                                              
                                                                              193Changes
      in assets and liabilities:Increase
      in accounts receivable
                                                                              
                                                                              
                                                                              (32,893
                                                                              )
                                                                              
                                                                              
                                                                              (11,390
                                                                              )
                                                                              
                                                                              
                                                                              (83,816
                                                                              )(Increase)/decrease
      in unbilled revenue
                                                                              
                                                                              
                                                                              (24,178
                                                                              )
                                                                              
                                                                              
                                                                              (52,231
                                                                              )
                                                                              
                                                                              
                                                                              2,168Decrease/(increase)
      in other receivables
                                                                              
                                                                              
                                                                              5,089
                                                                              
                                                                              
                                                                              
                                                                              2,275
                                                                              
                                                                              
                                                                              
                                                                              (10,175
                                                                              )(Increase)/decrease
      in prepayments and other current assets
                                                                              
                                                                              
                                                                              (2,477
                                                                              )
                                                                              
                                                                              
                                                                              502
                                                                              
                                                                              
                                                                              
                                                                              (9,444
                                                                              )Increase
      in other non current assets
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              
                                                                              (2,140
                                                                              )
                                                                              
                                                                              
                                                                              (39
                                                                              )Increase
      in payments on account
                                                                              
                                                                              
                                                                              35,605
                                                                              
                                                                              
                                                                              
                                                                              4,220
                                                                              
                                                                              
                                                                              
                                                                              26,404Increase
      in other current liabilities
                                                                              
                                                                              
                                                                              10,699
                                                                              
                                                                              
                                                                              
                                                                              14,403
                                                                              
                                                                              
                                                                              
                                                                              41,849Increase
      in other non current liabilities
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              
                                                                              1,394
                                                                              
                                                                              
                                                                              
                                                                              17Increase/(decrease)
      in income taxes payable
                                                                              
                                                                              
                                                                              1,532
                                                                              
                                                                              
                                                                              
                                                                              3,582
                                                                              
                                                                              
                                                                              
                                                                              (3,968
                                                                              )Increase
      in accounts payable
                                                                              
                                                                              
                                                                              1,343
                                                                              
                                                                              
                                                                              
                                                                              2,343
                                                                              
                                                                              
                                                                              
                                                                              3,150Net
      cash provided by operating activities
                                                                              
                                                                              
                                                                              50,452
                                                                              
                                                                              
                                                                              
                                                                              42,966
                                                                              
                                                                              
                                                                              
                                                                              81,282Cash
      flows from investing activities:Purchase
      of property, plant and equipment
                                                                              
                                                                              
                                                                              (31,516
                                                                              )
                                                                              
                                                                              
                                                                              (75,391
                                                                              )
                                                                              
                                                                              
                                                                              (67,882
                                                                              )Purchase
      of subsidiary undertakings and acquisition costs
                                                                              
                                                                              
                                                                              (7,017
                                                                              )
                                                                              
                                                                              
                                                                              (41,150
                                                                              )
                                                                              
                                                                              
                                                                              (49,540
                                                                              )Deferred
      payments in respect of historical acquisitions
                                                                              
                                                                              
                                                                              (96
                                                                              )
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              
                                                                              —Cash
      acquired with subsidiary undertaking
                                                                              
                                                                              
                                                                              341
                                                                              
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              
                                                                              549Grant
      received
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              
                                                                              400Sale
      of short term investments
                                                                              
                                                                              
                                                                              3,008
                                                                              
                                                                              
                                                                              
                                                                              14,824
                                                                              
                                                                              
                                                                              
                                                                              14,026Purchase
      of short term investments
                                                                              
                                                                              
                                                                              (20,021
                                                                              )
                                                                              
                                                                              
                                                                              (16,753
                                                                              )
                                                                              
                                                                              
                                                                              (15,000
                                                                              )Net
      cash used in investing activities
                                                                              
                                                                              
                                                                              (55,301
                                                                              )
                                                                              
                                                                              
                                                                              (118,470
                                                                              )
                                                                              
                                                                              
                                                                              (117,447
                                                                              )Cash
      flows from financing activities:Drawdown
      of credit lines and facilities
                                                                              
                                                                              
                                                                              112
                                                                              
                                                                              
                                                                              
                                                                              94,829
                                                                              
                                                                              
                                                                              
                                                                              58,925Repayment
      of credit lines and facilities
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              
                                                                              (5,000
                                                                              )
                                                                              
                                                                              
                                                                              (48,927
                                                                              )Proceeds
      from the exercise of share options
                                                                              
                                                                              
                                                                              6,679
                                                                              
                                                                              
                                                                              
                                                                              5,298
                                                                              
                                                                              
                                                                              
                                                                              8,516Share
      issuance costs
                                                                              
                                                                              
                                                                              (84
                                                                              )
                                                                              
                                                                              
                                                                              (126
                                                                              )
                                                                              
                                                                              
                                                                              (138
                                                                              )Tax
      benefit from the exercise of share options
                                                                              
                                                                              
                                                                              1,109
                                                                              
                                                                              
                                                                              
                                                                              1,466
                                                                              
                                                                              
                                                                              
                                                                              4,060Bank
      overdraft acquired with subsidiary undertakings
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              
                                                                              (2,400
                                                                              )
                                                                              
                                                                              
                                                                              —Repayment
      of other liabilities and finance lease obligations
                                                                              
                                                                              
                                                                              (114
                                                                              )
                                                                              
                                                                              
                                                                              (109
                                                                              )
                                                                              
                                                                              
                                                                              (99
                                                                              )Net
      cash provided by financing activities
                                                                              
                                                                              
                                                                              7,702
                                                                              
                                                                              
                                                                              
                                                                              93,958
                                                                              
                                                                              
                                                                              
                                                                              22,337Effect
      of exchange rate movements on cash
                                                                              
                                                                              
                                                                              677
                                                                              
                                                                              
                                                                              
                                                                              (4,612
                                                                              )
                                                                              
                                                                              
                                                                              (4,675
                                                                              )Net
      increase/(decrease) in cash and cash equivalents
                                                                              
                                                                              
                                                                              3,530
                                                                              
                                                                              
                                                                              
                                                                              13,842
                                                                              
                                                                              
                                                                              
                                                                              (18,503
                                                                              )Cash
      and cash equivalents at beginning of year
                                                                              
                                                                              
                                                                              59,509
                                                                              
                                                                              
                                                                              
                                                                              63,039
                                                                              
                                                                              
                                                                              
                                                                              76,881Cash
      and cash equivalents at end of year
                                                                              
                                                                              $
                                                                              63,039
                                                                              
                                                                              
                                                                              $
                                                                              76,881
                                                                              
                                                                              
                                                                              $
                                                                              58,378
  63
  ICON
plc NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
  1.
Description of business
  ICON plc
and its subsidiaries (“the Company” or “ICON”) is a contract research
organization (“CRO”), providing outsourced development services on a global
basis to the pharmaceutical, biotechnology and medical device industries. The
Company specializes in the strategic development, management and analysis of
programs that support Clinical Development - from compound selection to Phase
I-IV clinical studies.
  The
Company’s primary approach is to use dedicated teams to achieve optimum results,
but the Company can implement a range of resourcing models to suit client
requirements.
  In a
highly fragmented industry, we are one of a select group of companies with the
capability and expertise to conduct clinical trials in all major therapeutic
areas on a global basis. At December 31, 2008, the Company had 6,975 employees,
in 71 locations, in 38 countries, providing Phase I - IV Clinical Trial
Management, Drug Development Support Services, Data Management and Biostatistics
and Central Laboratory and Imaging Services. The Company has the operational
flexibility to provide development services on a stand-alone basis or as part of
an integrated “full service” solution.
  Headquartered
in Dublin, Ireland, we began operations in 1990 and have expanded our business
through internal growth and strategic acquisitions. For the year ended December
31, 2008, we derived approximately 43.8%, 47.8% and 8.4% of our net revenue in
the United States, Europe and Rest of World, respectively.
  On July
21, 2008, the Company’s shareholders approved a bonus issue of ordinary shares
(the “Bonus Issue”) to shareholders of record as of the close of business on
August 8, 2008 (the “Record Date”). The Bonus Issue provided for each
shareholder to receive one bonus ordinary share for each ordinary share held as
of the Record Date, effecting the equivalent of a 2-for-1 stock split. The Bonus
shares were issued on August 11, 2008, to Ordinary Shareholders and on August
12, 2008, to holders of American Depositary Shares (“ADSs”). The trading price
of ICON’s ADSs was adjusted on NASDAQ to effect the Bonus Issue prior to the
opening of trading on August 13, 2008. All outstanding ordinary share amounts
referenced in the consolidated financial statements and the notes thereto have
been retrospectively restated to give effect to the Bonus Issue as if it had
occurred as of the date referenced.
  On
September 29, 2006, ICON’s shareholders approved a bonus issue of ordinary
shares (the “Bonus Issue”) to shareholders of record as of the close of business
on October 13, 2006 (the “Record Date”). The Bonus Issue provided for each
shareholder to receive one bonus ordinary share for each ordinary share held as
of the Record Date, effecting the equivalent of a 2-for-1 stock split. The Bonus
shares were issued on October 16, 2006, to Ordinary Shareholders and on October
23, 2006, to holders of American Depositary Shares (“ADSs”). The trading price
of ICON’s ADSs was adjusted on NASDAQ to effect the Bonus Issue prior to the
opening of trading on October 24, 2006. All outstanding ordinary share amounts
referenced in the consolidated financial statements and the notes thereto have
been retrospectively restated to give effect to the Bonus Issue as if it had
occurred as of the date referenced.
  2.
Significant Accounting Policies
  The
accounting policies noted below were applied in the preparation of the
accompanying financial statements of the Company and are in conformity with
accounting principles generally accepted in the United States.
 (a)
                Basis
      of consolidation
  The
consolidated financial statements include the financial statements of the
Company and all of its subsidiaries. All significant intercompany profits,
transactions and account balances have been eliminated. The results of
subsidiary undertakings acquired in the period are included in the consolidated
statement of operations from the date of acquisition.
  64
  (b)
                Use
      of estimates
  The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions 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 reported
period. Actual results could differ from those estimates.
 (c)
                Revenue
      recognition
  The
Company primarily earns revenues by providing a number of different services to
its customers. These services include clinical trials management, biometric
activities, consulting, imaging and laboratory services. Contracts range in
duration from a number of months to several years.
  Revenue
for services, as rendered, is recognized only after persuasive evidence of an
arrangement exists, the sales price is fixed or determinable and collectibility
is reasonably assured.
  Clinical
trials management revenue is recognized on a proportional performance method
based on the relationship between hours incurred and the total estimated hours
of the trial. The input (effort expended) method has been used to measure
progress towards completion as there is a direct relationship between input and
productivity. Contract costs equate to the product of labor hours incurred and
compensation rates. Contract revenue is the product of the aggregated labor
hours required to complete the specified contract tasks at the agreed contract
rates. The Company regularly reviews the estimate of total contract time to
ensure such estimates remain appropriate taking into account actual contract
stage of completion, remaining time to complete and any identified changes to
the contract scope. Remaining time to complete depends on the specific contract
tasks and the complexity of the contract and can include geographical site
selection and initiation, patient enrolment, patient testing and level of
results analysis required. While the Company may routinely adjust time
estimates, the Company’s estimates and assumptions historically have been
accurate in all material respects in the aggregate.
  Biometrics
revenue is recognised on a fee-for-service method as each unit of data is
prepared on the basis of the number of units completed in a period as a
percentage of the total number of contracted units. Imaging revenue is
recognised on a fee-for-service basis recognizing revenue for each image
completed. Consulting revenue is recognised on a fee-for-service basis as each
hour of the related service is performed. Laboratory service revenue is
recognised on a fee-for-service basis. The Company accounts for laboratory
service contracts as multiple element arrangements, with contractual elements
comprising laboratory kits and laboratory testing, each of which can be sold
separately. Fair values for contractual elements are determined by reference to
objective and reliable evidence of their fair values. Revenues for contractual
elements are recognised on the basis of the number of deliverable units
completed in the period.
  Contracts
generally contain provisions for renegotiation in the event of changes in the
scope, nature, duration, or volume of services of the contract. Renegotiated
amounts are recognised as revenue by revision to the total contract value
arising as a result of an authorised customer change order.
  The
difference between the amount of revenue recognised and the amount billed on a
particular contract is included in the balance sheet as unbilled revenue.
Normally, amounts become billable upon the achievement of certain milestones,
for example, target patient enrolment rates, clinical testing sites initiated or
case report forms completed. Once the milestone target is reached, amounts
become billable in accordance with pre-agreed payment schedules included in the
contract or on submission of appropriate billing detail. Such cash payments are
not representative of revenue earned on the contract as revenues are recognised
over the period in which the specified contractual obligations are fulfilled.
Amounts included in unbilled revenue are expected to be collected within one
year and are included within current assets. Advance billings to customers, for
which revenue has not been recognised, are recognised as payments on account
within current liabilities.
  In the
event of contract termination, if the value of work performed and recognised as
revenue is greater than aggregate milestone billings at the date of termination,
cancellation clauses ensure that the Company is paid for all work performed to
the termination date.
  65
  (d)
                Reimbursable
      expenses
  Reimbursable
expenses comprise investigator payments and certain other costs which are
reimbursed by clients under terms specific to each contract and are deducted
from gross revenue in arriving at net revenue. Investigator payments are accrued
based on patient enrollment over the life of the contract. Investigator payments
are made based on predetermined contractual arrangements, which may differ from
the accrual of the expense. Payments to investigators in excess of the accrued
expense are classified as prepaid expenses and accrued expense in excess of
amounts paid are classified as accounts payable.
 (e)
                  Direct
      costs
  Direct
costs consist of compensation and associated employee benefits for
project-related employees, other direct project-related costs and share based
compensation.
 (f)
                Advertising
      costs
  All costs
associated with advertising and promotion are expensed as incurred. The
advertising and promotion expense was U.S.$2,687,000 and US$3,612,000 for the
years ended December 31, 2006 and 2007 respectively. For the year ended December
31, 2008, these costs amounted to U.S.$3,467,000.
 (g)
                Foreign
      currencies and translation of
subsidiaries
  The
Company’s financial statements are prepared in United States dollars.
Transactions in currencies other than United States dollars are recorded at the
rate ruling at the date of the transactions. Monetary assets and liabilities
denominated in currencies other than United States dollars are translated into
United States dollars at exchange rates prevailing at the balance sheet date.
Adjustments resulting from these translations are charged or credited to income.
For the years ended December 31, 2006 and 2007 the amounts charged to income
amounted to, U.S.$ 1,538,000 and U.S. $6,266,000 respectively. For the year
ended December 31, 2008, amounts credited to income amounted to U.S.
$2,255,000.
  The
financial statements of subsidiaries with other functional currencies are
translated at period end rates for the balance sheet and average rates for the
income statement. Translation gains and losses arising are reported as a
movement on accumulated other comprehensive income.
 (h)
                Disclosure
      about fair value of financial
instruments
  The
following methods and assumptions were used to estimate the fair value of each
material class of financial instrument:
  Cash,
cash equivalents, unbilled revenue, other receivables, short term investments,
prepayments and other current assets, accounts receivable, accounts payable,
investigator payments, payments received on account, accrued liabilities,
accrued bonuses, bank overdraft and taxes payable have carrying amounts that
approximate fair value due to the short term maturities of these
instruments.
  Long-term
debt and other liabilities carrying amounts approximate fair value based on net
present value of estimated future cash flows.
 (i)
                Leased
      Assets
  Costs in
respect of operating leases are charged to the statement of operations on a
straight line basis over the lease term.
  Assets
acquired under capital finance leases are included in the balance sheet at the
present value of the future minimum lease payments and are depreciated over the
shorter of the lease term and their remaining useful lives. The corresponding
liabilities are recorded in the balance sheet and the interest element of the
capital lease rental is charged to interest expense.
  66
  (j)
                Goodwill
      and Impairment
  Goodwill
represents the excess of the cost of acquired entities over the net amounts
assigned to assets acquired and liabilities assumed. Goodwill primarily
comprises acquired workforce in place which does not qualify for recognition as
an asset apart from goodwill. Goodwill is stated net of any provision for
impairment. The Company tests goodwill annually for any impairments or whenever
events occur which may indicate impairment. The first step is to compare the
carrying amount of the reporting unit’s assets to the fair value of the
reporting unit. If the carrying amount exceeds the fair value then a second step
is completed which involves the fair value of the reporting unit being allocated
to each asset and liability with the excess being implied goodwill. The
impairment loss is the amount by which the recorded goodwill exceeds the implied
goodwill. No impairment was recognized as a result of the impairment testing
carried out as at December 31, 2006, December 31, 2007 and December 31,
2008.
 (k)
                Intangible
      assets
  Intangible
assets are amortized on a straight line basis over their estimated useful
life.
 (l)
                Cash
      and cash equivalents
  Cash and
cash equivalents include cash and highly liquid investments with initial
maturities of three months or less and are stated at cost, which approximates
market value.
 (m)
                Short
      term investments - available for
sale
  The
Company has classified short-term investments as available for sale in
accordance with the terms of FASB Statement No. 115 Accounting
for Certain Investments in Debt and Equity Securities (“SFAS No. 115”).
Realized gains and losses are determined using specific identification. The
investments are reported at fair value, with unrealized gains or losses reported
in a separate component of shareholders’ equity. Any differences between the
cost and fair value of the investments are represented by accrued
interest.
 (n)
                Inventory
  Inventory
is valued at the lower of cost and net market value and after provisions for
obsolescence. Cost of raw materials comprises the purchase price and
attributable costs, less trade discounts. As at the year ended December 31,
2008, the carrying value of inventory, included within prepayments and other
current assets on the balance sheet, was U.S.$3.4 million (2007: U.S.$2.6
million).
 (o)
                Property,
      plant and equipment
  Property,
plant and equipment are stated at cost less accumulated depreciation.
Depreciation of property, plant and equipment is computed using the straight
line method based on the estimated useful lives of the assets as listed
below:
 YearsBuilding
                  
                  40Office
      furniture and fixtures
                  
                  8Laboratory
      equipment
                  
                  5Motor
      vehicles
                  
                  5Computer
      equipment and software
                  
                  4-8
  Leasehold
improvements are amortized using the straight-line method over the estimated
useful life of the asset or the lease term, whichever is
shorter.
  67
  (p)
                Income
      taxes
  The
Company applies FASB Statement No. 109, Accounting
for Income Taxes(“SFAS No.109”),
which requires the asset and liability method of accounting for income taxes.
Under the asset and liability method of SFAS No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective 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
these 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. The Company adopted
Financial Interpretation Note No. 48 Accounting
for uncertainty in Income taxes(FIN 48”) with effect from January 1,
2007. FIN 48 requires that the Company recognizes the largest amount of tax
benefit that is greater than 50% likely of being realized upon ultimate
settlement when considering uncertain tax positions.
 (q)
                Government
      grants
  Government
grants received relating to capital expenditure are shown as deferred income and
credited to income on a basis consistent with the depreciation policy of the
relevant assets.
  Grants
relating to categories of operating expenditures are credited to income in the
period in which the expenditure to which they relate is charged.
  Under the
grant agreements amounts received may become repayable in full should certain
circumstances specified within the grant agreements occur, including downsizing
by the Company, disposing of the related assets, ceasing to carry on its
business or the appointment of a receiver over any of its assets.
  The
Company has not recognized any loss contingency having assessed as remote the
likelihood of these events arising.
 (r)
                Pension
      costs
  The
Company contributes to defined contribution plans covering all eligible
employees. The Company contributes to these plans based upon various fixed
percentages of employee compensation and such contributions are expensed as
incurred.
  The
Company operates, through a subsidiary, a defined benefit plan for certain of
its United Kingdom employees. The Company accounts for the costs of this plan
using actuarial models required by FASB Statement No. 87, Employers
Accounting for Pensions (“SFAS No. 87) and the plan is presented in
accordance with the requirements of FASB Statement No. 158 Employers’
Accounting for Defined Benefit Pensions and Other Post-retirement Plans
(“SFAS No. 158”).
 (s)
                Net
      income per ordinary share
  Basic net
income per ordinary share has been computed by dividing net income available to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period. Diluted net income per ordinary share is computed
by adjusting the weighted average number of ordinary shares outstanding during
the period for all potentially dilutive ordinary shares outstanding during the
period and adjusting net income for any changes in income or loss that would
result from the conversion of such potential ordinary shares.
  68
  There is
no difference in net income used for basic and diluted net income per ordinary
share. The reconciliation of the number of shares used in the computation of
basic and diluted net income per ordinary share is as follows:
 Year
      Ended December 31,2006
                      
                      
                      2007
                      
                      
                      2008Weighted
      average number of ordinary shares outstanding for basic net income per
      ordinary share
                      
                      
                      56,629,970
                      
                      
                      
                      57,410,544
                      
                      
                      
                      58,245,240Effect
      of dilutive share options outstanding
                      
                      
                      1,096,698
                      
                      
                      
                      2,085,384
                      
                      
                      
                      1,976,347Weighted
      average number of ordinary shares outstanding for diluted net income per
      ordinary share
                      
                      
                      57,726,668
                      
                      
                      
                      59,495,928
                      
                      
                      
                      60,221,587
  (t)
                Share-based
      compensation
  The
Company accounts for its share options in accordance with the provisions of FASB
Statement No. 123R Share
Based Payment(“SFAS 123R”). SFAS 123R requires that all share based
payments to employees, including stock options granted, be recognized in the
financial statements based on their grant date fair values over the requisite
service period. The Company adopted SFAS 123R with effect from January 1, 2006,
with the Black-Scholes method of valuation being used to calculate the fair
value of options granted. The Company adopted SFAS 123R using the
modified-prospective transition method. Under that transition method
compensation cost includes; (a) compensation cost for all share-based payments
granted prior to, but not yet vested as of, January 1, 2006, based on grant date
fair value estimated in accordance with the original provisions of SFAS 123 and
(b) compensation cost for all share based payments granted subsequent to January
1, 2006, based on grant date fair values estimated in accordance with the
provisions of SFAS 123R and the estimated number of awards that are expected to
vest. Results for periods prior to the adoption of SFAS 123R have not been
restated.
 (u)
                Impairment
      of long-lived assets
  Long
lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future undiscounted net cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
selling costs.
 (v)
                Reclassifications
  Certain
amounts in the consolidated financial statements have been reclassified where
necessary to conform to the current year presentation.
  3.
Short term investments - available for sale
  The
Company has classified its entire investment portfolio comprising floating rate
and medium term minimum “AA” rated corporate securities, as available for sale.
The investments are reported at fair value, with unrealized gains or losses
reported in a separate component of shareholders’ equity. In the years ended
December 31, 2006, December 31, 2007 and December 31, 2008, no unrealized gains
or losses arose. Any differences between the cost and fair value of the
investments are represented by accrued interest.
  69
  4.
Goodwill
 December
      31,
                                  2007
                                
                                December
      31,
                                  2008(in
      thousands)Opening
      Goodwill
                                
                                $
                                78,717
                                
                                
                                $
                                123,879Arising
      during the year
                                
                                
                                42,081
                                
                                
                                
                                55,674Foreign
      exchange movement
                                
                                
                                3,081
                                
                                
                                
                                (10,209
                                )Closing
      Goodwill
                                
                                $
                                123,879
                                
                                
                                $
                                169,344
  The
distribution of goodwill by business segment was as follows:
 December
      31,
                                  2007
                                
                                December
      31,
                                  2008(in
      thousands)Central
      laboratory
                                
                                $
                                —
                                
                                
                                $
                                —Clinical
      research
                                
                                
                                123,879
                                
                                
                                
                                169,344Total
                                
                                $
                                123,879
                                
                                
                                $
                                169,344
  (a)
Acquisition of Healthcare Discoveries Inc.
  On
February 11, 2008, the Company acquired 100% of the common stock of Healthcare
Discoveries Inc., for an initial cash consideration of $10.9 million, excluding
costs of acquisition. Healthcare Discoveries, located in San Antonio, Texas, is
engaged in the provision of Phase I clinical trial management services. Certain
performance milestones were built into the acquisition agreement requiring
payment of additional consideration of up to $10.0 million if these milestones
were achieved during the year ended December 31, 2008. No amounts have been
accrued at December 31, 2008, as the milestones have not been
achieved.
  The
acquisition of Healthcare Discoveries has been accounted for as a business
combination in accordance with FASB Statement No. 141 Business
Combinations(“SFAS 141”). The following table summarises the fair values
of the assets acquired and the liabilities assumed at the date of
acquisition.
 February,
      11
                                    2008(in
      thousands)Property,
      plant and equipment
                                  
                                  $
                                  327Intangible
      assets
                                  
                                  
                                  2,890Goodwill
                                  
                                  
                                  9,995Cash
                                  
                                  
                                  5Other
      current assets
                                  
                                  
                                  575Current
      liabilities
                                  
                                  
                                  (1,951
                                  )Purchase
      price
                                  
                                  $
                                  11,841
  Goodwill
represents the acquisition of an established workforce with experience in the
provision of Phase I clinical trial management services to pharmaceutical and
biotechnology companies.
  70
  The
proforma effect of the Healthcare Discoveries acquisition if completed on
January 1, 2007, would have resulted in net revenue, net income and earnings per
share for the fiscal years ended December 31, 2007 and 2008 as
follows:
 Year
      EndedDecember
      31,2007
                                                      
                                                      
                                                      2008(in
      thousands)Net
      revenue
                                                      
                                                      $
                                                      638,706
                                                      
                                                      
                                                      $
                                                      865,723Net
      income
                                                      
                                                      $
                                                      55,375
                                                      
                                                      
                                                      $
                                                      77,508Basic
      earnings per share
                                                      
                                                      $
                                                      0.96
                                                      
                                                      
                                                      $
                                                      1.33Diluted
      earnings per share
                                                      
                                                      $
                                                      0.93
                                                      
                                                      
                                                      $
                                                      1.29
  (b)
Acquisition of Prevalere Life Sciences Inc.
  On
November 14, 2008, the Company acquired 100% of the common stock of Prevalere
Life Sciences Inc. (“Prevalere”), for an initial cash consideration of $36.8
million, excluding costs of acquisition. Prevalere, located in Whitesboro, New
York, is a leading provider of bioanalytical and immunoassay services to
pharmaceutical and biotechnology companies. Certain performance milestones were
built into the acquisition agreement requiring potential additional
consideration of up to $8.2 million if these milestones are achieved during the
years ended December 31, 2008 and 2009. Additional consideration of $5.0 million
has been accrued at December 31, 2008, in respect of the milestones for the year
ended December 31, 2008. No amounts have been accrued for additional
consideration potentially payable in respect of the milestones for the year
ended December 31, 2009.
  The
acquisition of Prevalere has been accounted for as a business combination in
accordance with FASB Statement No. 141 Business
Combinations(“SFAS 141”). The following table summarises the fair values
of the assets acquired and the liabilities assumed at the date of
acquisition.
 November
      14,
                              2008
                              (in
      thousands)Property,
      plant and equipment
                            
                            $
                            2,614Intangible
      assets
                            
                            
                            7,375Goodwill
                            
                            
                            29,086Cash
                            
                            
                            544Other
      current assets
                            
                            
                            5,833Current
      liabilities
                            
                            
                            (2,827
                            )Purchase
      price
                            
                            $
                            42,625
  Goodwill
represents the acquisition of an established workforce with experience in the
provision of bioanalytical and immunoassay services to pharmaceutical and
biotechnology companies and allows ICON to participate in a growing market for
these services.
  The
proforma effect of the Prevalere acquisition if completed on January 1, 2007,
would have resulted in net revenue, net income and earnings per share for the
fiscal years ended December 31, 2007 and 2008 as follows:
 Year
      EndedDecember
      31,2007
                                              
                                              
                                              2008(in
      thousands)Net
      revenue
                                              
                                              $
                                              641,116
                                              
                                              
                                              $
                                              879,940Net
      income
                                              
                                              $
                                              57,894
                                              
                                              
                                              $
                                              83,919Basic
      earnings per share
                                              
                                              $
                                              1.01
                                              
                                              
                                              $
                                              1.44Diluted
      earnings per share
                                              
                                              $
                                              0.97
                                              
                                              
                                              $
                                              1.39
  71
  (c)
Acquisition of remaining 30% interest in Beacon Biosciences Inc.
  On July
1, 2004, the Company acquired 70% of the common stock of Beacon Biosciences Inc.
(“Beacon”), a leading specialist CRO, which provides a range of medical imaging
services to the pharmaceutical, biotechnology and medical device industries, for
an initial cash consideration of $9.9 million, excluding costs of acquisition.
On December 31, 2008, the remaining 30% of the common stock was acquired by the
Company for $17.4 million, excluding costs of acquisition. Certain performance
milestones were built into the acquisition agreement for the remaining 30% of
Beacon requiring potential additional consideration of up to $3.0 million if
these milestones are achieved during the year ended December 31, 2009. At
December 31, 2008, no amounts have been accrued in respect of the additional
consideration payable.
  The
acquisition of Beacon has been accounted for as a business combination in
accordance with FASB Statement No. 141 Business
Combinations(“SFAS 141”). The excess of consideration paid of $17.8
million, including costs of acquisition, over the carrying value of minority
interest of $1.5 million, has been recorded as goodwill of $16.3 million.,
pending the Company’s finalization of the allocation of total consideration paid
to acquired net tangible and intangible assets. This allocation will be
completed in 2009. Goodwill represents the acquisition of the minority
interest in the net assets of Beacon.
  The
proforma effect of the Beacon acquisition, if completed on January 1, 2007,
would have had no impact on net revenue. The profoma effect on net income and
earnings per share for the fiscal years ended December 31, 2007 and 2008 would
have been as follows:
 Year
      EndedDecember
      31,2007
                                      
                                      
                                      2008(in
      thousands)Net
      income
                                      
                                      $
                                      56,150
                                      
                                      
                                      $
                                      78,313Basic
      earnings per share
                                      
                                      $
                                      0.98
                                      
                                      
                                      $
                                      1.34Diluted
      earnings per share
                                      
                                      $
                                      0.94
                                      
                                      
                                      $
                                      1.30
  (d)
Acquisition of DOCS International
  On July
12, 2007, the Company acquired 100% of the common stock of DOCS International
(“DOCS”), a European based clinical research staffing organization, for a cash
consideration of $40.6 million (€29.5 million), excluding costs of
acquisition.
  The
acquisition of DOCS has been accounted for as a business combination in
accordance with FASB Statement No. 141 Business
Combinations(“SFAS 141”). The following table summarizes the fair values
of the assets acquired and the liabilities assumed at the date of
acquisition.
 (in
      thousands)Property,
      plant and equipment
                            
                            $
                            984Intangible
      asset
                            
                            
                            2,035Goodwill
                            
                            
                            42,395Bank
      overdraft
                            
                            
                            (2,400
                            )Other
      current assets
                            
                            
                            7,646Current
      liabilities
                            
                            
                            (9,510
                            )Purchase
      price
                            
                            $
                            41,150
  Goodwill
represents the geographical presence afforded to the Company in the European
staffing market and the acquisition of an established workforce in the eight
countries in which DOCS International operates.
  72
   The
proforma effect of the DOCS acquisition if completed on January 1, 2006, would
have resulted in net revenue, net income and earnings per share for the fiscal
years ended December 31, 2006 and 2007 as follows:
 Year
      EndedDecember
      31,2006
                                          
                                          
                                          2007(in
      thousands)Net
      revenue
                                          
                                          $
                                          478,622
                                          
                                          
                                          $
                                          645,527Net
      income
                                          
                                          $
                                          37,747
                                          
                                          
                                          $
                                          56,245Basic
      earnings per share
                                          
                                          $
                                          0.66
                                          
                                          
                                          $
                                          0.98Diluted
      earnings per share
                                          
                                          $
                                          0.65
                                          
                                          
                                          $
                                          0.94
  5.
Intangible Assets
 December
      31,
                                    2007
                                  
                                  
                                  December
      31,
                                    2008(in
      thousands)CostCustomer
      relationships acquired
                                  
                                  $
                                  2,035
                                  
                                  
                                  $
                                  11,095Volunteer
      List acquired
                                  
                                  
                                  —
                                  
                                  
                                  
                                  1,325Foreign
      exchange movement
                                  
                                  
                                  120
                                  
                                  
                                  
                                  (90
                                  )2,155
                                  
                                  
                                  
                                  12,330Accumulated
      amortization
                                  
                                  
                                  (345
                                  )
                                  
                                  
                                  (1,770
                                  )Foreign
      exchange movement
                                  
                                  
                                  (15
                                  )
                                  
                                  
                                  64Net
      book value
                                  
                                  $
                                  1,795
                                  
                                  
                                  $
                                  10,624
  On
February 11, 2008, the Company acquired 100% of the common stock of Healthcare
Discoveries, a US based organization engaged in the provision of Phase I
clinical trial management activities. The value of certain client relationships
identified of U.S.$1.6 million are being amortised over periods ranging from
approximately 2 to 9 years, the estimated periods of benefit. The value of
certain volunteer lists identified of U.S.$1.3 million are being amortised over
approximately 6 years, the estimated period of benefit. U.S. $498,000 has been
amortised in the period since the date of acquisition.
  On
November 14, 2008, the Company acquired 100% of the common stock of Prevalere
Life Sciences, a US based organization engaged in the provision of bioanalytical
and immunoassay services to pharmaceutical and biotechnology companies. The
value of certain customer relationships identified of U.S.$7.4 million are being
amortised over periods ranging from approximately 7 to 11 years, the estimated
period of the benefit. U.S. $87,000 has been amortised in the period since the
date of acquisition
  On July
12, 2007, the Company acquired 100% of the common stock of DOCS International
(“DOCS”), a European based clinical research staffing organization. The value of
certain customer relationships identified is being amortised over approximately
3 years, the estimated period of the benefit. U.S.$1,121,000 has been amortised
in the period since the date of acquisition.
  73
  Future
intangible asset amortization expense for the years ended December 31, 2009 to
December 31, 2013 is as follows:
 Year
      ended
                                  December
      31
                                  (in
      thousands)2009
                                
                                $
                                2,0742010
                                
                                
                                1,4842011
                                
                                
                                1,1402012
                                
                                
                                1,1402013
                                
                                
                                1,140$
                                6,978
  6.
Property, Plant and Equipment, net
 December
      31,
                                2007
                              
                              
                              December
      31,
                                2008(in
      thousands)CostLand
                              
                              $
                              4,102
                              
                              
                              $
                              3,963Building
                              
                              
                              70,260
                              
                              
                              
                              85,099Computer
      equipment and software
                              
                              
                              95,689
                              
                              
                              
                              117,278Office
      furniture and fixtures
                              
                              
                              41,140
                              
                              
                              
                              53,775Laboratory
      equipment
                              
                              
                              11,180
                              
                              
                              
                              24,822Leasehold
      improvements
                              
                              
                              5,753
                              
                              
                              
                              5,983Motor
      vehicles
                              
                              
                              78
                              
                              
                              
                              75228,202
                              
                              
                              
                              290,995Less
      accumulated depreciation and asset write off
                              
                              
                              (94,776
                              )
                              
                              
                              (119,247
                              )Property,
      plant and equipment (net)
                              
                              $
                              133,426
                              
                              
                              $
                              171,748
  Total
cost at December 31, 2008, includes U.S.$1,054,000 (2007: U.S.$1,043,000), which
relates to assets held under capital finance leases. Related accumulated
depreciation amounted to U.S. $303,000 (2007: U.S.$869,000). The cost of assets
under construction as at December 31, 2008, amounted to $nil million (2007:
US$23.0 million).
  7.
Other Liabilities
 December
      31,
                            2007
                          
                          
                          December
      31,
                            2008(in
      thousands)Accrued
      liabilities
                          
                          $
                          27,938
                          
                          
                          $
                          44,440Accrued
      salary and bonuses
                          
                          
                          36,341
                          
                          
                          
                          51,647Accrued
      social welfare costs
                          
                          
                          3,961
                          
                          
                          
                          8,757Lease
      accruals
                          
                          
                          2,257
                          
                          
                          
                          2,508Short term government
      grants
                          
                          
                          125
                          
                          
                          
                          144Short
      term finance leases (Note 15)
                          
                          
                          121
                          
                          
                          
                          327Acquisition
      consideration payable
                          
                          
                          —
                          
                          
                          
                          22,400$
                          70,743
                          
                          
                          $
                          130,223
  74
  8.
Bank Credit Lines and Loan Facilities
 December
      31,
                                        2007
                                      
                                      
                                      December
      31,
                                        2008(in
      thousands)Current
      maturities
                                      
                                      $
                                      43,767
                                      
                                      
                                      $
                                      40,193Non-
      current maturities
                                      
                                      
                                      51,062
                                      
                                      
                                      
                                      65,186$
                                      94,829
                                      
                                      
                                      $
                                      105,379
  On July
9, 2007, ICON plc entered into a five year committed multi-currency facility
agreement for €35 million ($48.9 million) with The Governor and Company of the
Bank of Ireland. Our obligations under the facility are secured by certain
composite guarantees and indemnities and pledges in favor of the bank. The
facility bears interest at an annual rate equal to the EURIBOR plus a margin. On
July 10, 2007, the Company drew down €29.5 million ($41.2 million) of the
facility to fund the acquisition of DOCS International. On October 15, 2007, the
remaining €5.5 million ($7.7 million) of the facility was drawn down to fund
expenditure on the expansion of the Company’s facility in Dublin, Republic of
Ireland.
  On
January 2, 2009, an additional four year committed credit facility was
negotiated with The Governor and Company of the Bank of Ireland for $25 million.
The facility bears interest at LIBOR plus a margin and is secured by certain
composite guarantees, indemnities and pledges in favour of the
bank.
  On
October 17, 2007, an uncommitted credit facility was negotiated with Allied
Irish Bank plc, for €30 million ($41.9 million). Interest is calculated at the
EUR interbank rate plus a margin. The facility is secured by the same composite
guarantees and indemnities in place for the Bank of Ireland committed facility.
The funds were used to refinance overdraft facilities in place to fund
expenditure on the expansion of the Dublin facility. On January 8, 2008, the
facility with Allied Irish Banks plc was increased to €50 million ($69.9
million).
  On
December 22, 2008, committed credit facilities were negotiated with Allied Irish
Bank plc for $75 million. The facilities comprise a one year Euro facility of
approximately €20 million ($28.0 million), with the balance comprising a three
year US dollar facility. The Euro facility bears interest at EURIBOR plus a
margin and the US dollar facility bears interest at LIBOR plus a margin. Both
facilities are secured by certain composite guarantees and pledges in favour of
the bank. These facilities replace the uncommitted facilities negotiated on
January 8, 2008. $28.4 million of these facilities were used to fund the
acquisition of Prevalere with the remaining balance used to refinance the
previous drawn uncommitted facilities.
  On
February 4, 2008, an uncommitted credit facility was negotiated with Citibank
N.A, for $30 million. Interest is calculated at the London Interbank Market rate
plus a margin. $12.0 million of this facility was drawn down in February 2008 to
fund the acquisition of Healthcare Discoveries. On September 30, 2008, the $12.0
million previously drawn was repaid in full. At December 31, 2008, this facility
remained un-drawn and available to the Company.
  The
average margin payable on the above mentioned facilities is 1.70 per
cent.
  The drawn
facilities above are repayable as follows:
 Year
      ended
                                        December
      31
                                        (in
      thousands)2009
                                      
                                      $
                                      40,1932010
                                      
                                      
                                      —2011
                                      
                                      
                                      52,9542012
                                      
                                      
                                      —2013
                                      
                                      
                                      12,232$
                                      105,379
  75
  9.
Employee Benefits
  Certain
Company employees are eligible to participate in a defined contribution plan
(the “Plan”). Participants in the Plan may elect to defer a portion of their
pre-tax earnings into a pension plan, which is run by an independent party. The
Company matches participant’s contributions typically at 6% of the participant’s
annual compensation. Contributions to this plan are recorded, as an expense in
the Consolidated Statement of Operations. Contributions for the years ended
December 31, 2006, December 31, 2007 and December 31, 2008, were U.S.$4,837,000,
U.S.$7,306,000 and U.S.$10,372,000 respectively.
  The
Company’s United States operations maintain a retirement plan (the “U.S. Plan”)
that qualifies as a deferred salary arrangement under Section 401(k) of the
Internal Revenue Code. Participants in the U.S. Plan may elect to defer a
portion of their pre-tax earnings, up to the Internal Revenue Service annual
contribution limit. The Company matches 50% of each participant’s contributions,
each participant can contribute up to 6% of their annual compensation.
Contributions to this U.S. Plan are recorded, in the year contributed, as an
expense in the Consolidated Statement of Operations. Contributions for the years
ended December 31, 2006, December 31, 2007 and December 31, 2008, were
U.S.$3,428,000, U.S.$4,488,000 and U.S.$4,499,000 respectively.
  One of
the Company’s subsidiaries which was acquired during the 2003 fiscal year,
Medeval Group Limited, operates a defined benefit pension plan in the United
Kingdom for its employees. The plan is managed externally and the related
pension costs and liabilities are assessed in accordance with the advice of a
professionally qualified actuary. Plan assets at December 31, 2006, December 31,
2007 and December 31, 2008, consist of units held in independently administered
funds. The pension costs of this plan are presented in the following tables in
accordance with the requirements of SFAS No.158, Employers’
Accounting for Defined Pension and Other Postretirement Plans. The plan
is no longer open to new entrants.
 Change
      in benefit obligation
                                                                
                                                                December
      31,
                                                                  2007
                                                                
                                                                
                                                                December
      31,
                                                                  2008(in
      thousands)Benefit
      obligation at beginning of year
                                                                
                                                                $
                                                                17,816
                                                                
                                                                
                                                                $
                                                                15,216Service
      cost
                                                                
                                                                
                                                                766
                                                                
                                                                
                                                                
                                                                437Interest
      cost
                                                                
                                                                
                                                                930
                                                                
                                                                
                                                                
                                                                854Plan
      participants’ contributions
                                                                
                                                                
                                                                227
                                                                
                                                                
                                                                
                                                                207Benefits
      paid
                                                                
                                                                
                                                                (50
                                                                )
                                                                
                                                                
                                                                (75
                                                                )Actuarial
      gain
                                                                
                                                                
                                                                (4,722
                                                                )
                                                                
                                                                
                                                                (1,968
                                                                )Plan
      curtailments
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                
                                                                (871
                                                                )Foreign
      currency exchange rate changes
                                                                
                                                                
                                                                249
                                                                
                                                                
                                                                
                                                                (3,686
                                                                )Benefit
      obligation at end of year
                                                                
                                                                $
                                                                15,216
                                                                
                                                                
                                                                $
                                                                10,114Change
      in plan assets
                                                                
                                                                December
      31,
                                                                  2007
                                                                
                                                                
                                                                December
      31,
                                                                  2008(in
      thousands)Fair
      value of plan assets at beginning of year
                                                                
                                                                $
                                                                13,092
                                                                
                                                                
                                                                $
                                                                15,470Actual
      return on plan assets
                                                                
                                                                
                                                                1,582
                                                                
                                                                
                                                                
                                                                (1,858
                                                                )Employer
      contributions
                                                                
                                                                
                                                                457
                                                                
                                                                
                                                                
                                                                428Plan
      participants’ contributions
                                                                
                                                                
                                                                227
                                                                
                                                                
                                                                
                                                                207Benefits
      paid
                                                                
                                                                
                                                                (50
                                                                )
                                                                
                                                                
                                                                (75
                                                                )Foreign
      currency exchange rate changes
                                                                
                                                                
                                                                162
                                                                
                                                                
                                                                
                                                                (3,780
                                                                )Fair
      value of plan assets at end of year
                                                                
                                                                $
                                                                15,470
                                                                
                                                                
                                                                $
                                                                10,392
  None of
the fair values of the assets above include any of the Company’s own financial
instruments, or any property occupied by, or other assets used by, the
Company.
  76
  Funded
      status
                              
                              December
      31, 2007
                              
                              
                              December
      31,2008(in
      thousands)Projected
      benefit obligation
                              
                              ($
                              15,216
                              )
                              
                              ($
                              10,114
                              )Fair
      value of plan assets
                              
                              
                              15,470
                              
                              
                              
                              10,392Funded
      status
                              
                              $
                              254
                              
                              
                              $
                              278Unrecognized
      net loss
                              
                              
                              —
                              
                              
                              
                              —Current
      asset
                              
                              
                              254
                              
                              
                              
                              278Non-current
      asset
                              
                              
                              —
                              
                              
                              
                              —
 Components
      of net periodic benefit
                                      cost/(credit)
                                    
                                    December
      31,
                                      2006
                                    
                                    
                                    December
      31,
                                      2007
                                    
                                    
                                    December
      31,
                                      2008(in
      thousands)Service
      cost
                                    
                                    $
                                    685
                                    
                                    
                                    $
                                    766
                                    
                                    
                                    $
                                    437Interest
      cost
                                    
                                    
                                    730
                                    
                                    
                                    
                                    930
                                    
                                    
                                    
                                    854Expected
      return on plan assets
                                    
                                    
                                    (593
                                    )
                                    
                                    
                                    (928
                                    )
                                    
                                    
                                    (1,063
                                    )Plan
      curtailments
                                    
                                    
                                    —
                                    
                                    
                                    
                                    —
                                    
                                    
                                    
                                    (871
                                    )Amortization
      of net loss/(gain)
                                    
                                    
                                    15
                                    
                                    
                                    
                                    44
                                    
                                    
                                    
                                    (89
                                    )Net
      periodic benefit cost/(credit)
                                    
                                    $
                                    837
                                    
                                    
                                    $
                                    812
                                    
                                    
                                    ($
                                    732
                                    )
  The
estimated net gain and prior service cost for the defined benefit pension plan
that will be amortized from accumulated other comprehensive income into net
periodic benefit cost over the next year are U.S.$0.02 million and U.S.$nil
respectively.
 Amounts
      included in other comprehensive
                                              income
      consist of:
                                            
                                            December
      31,
                                              2006
                                            
                                            
                                            December
      31,
                                              2007
                                            
                                            
                                            December
      31,
                                              2008(in
      thousands)Actuarial
      loss/(gain)
                                            
                                            $
                                            391
                                            
                                            
                                            ($
                                            5,376
                                            )
                                            
                                            $
                                            955Less
      actuarial loss /(gain) recognized in net periodic benefit
    cost
                                            
                                            
                                            (15
                                            )
                                            
                                            
                                            (44
                                            )
                                            
                                            
                                            89Amounts
      recognized in other comprehensive income
                                            
                                            $
                                            376
                                            
                                            
                                            ($
                                            5,420
                                            )
                                            
                                            $
                                            1,044
  Amounts
      recognized in accumulated other
                                            comprehensive
      income that have not yet been
                                            recognized
      as components of net periodic
                                            benefit/cost
                                          
                                          December
      31,
                                            2006
                                          
                                          
                                          December
      31,
                                            2007
                                          
                                          
                                          December
      31,
                                            2008(in
      thousands)Net
      actuarial loss/(gain)
                                          
                                          $
                                          2,220
                                          
                                          
                                          ($
                                          3,200
                                          )
                                          
                                          ($
                                          2,156
                                          )Total
      amount in accumulated other comprehensive income
                                          
                                          $
                                          2,220
                                          
                                          
                                          ($
                                          3,200
                                          )
                                          
                                          ($
                                          2,156
                                          )
  77
  Accumulated
      other comprehensive income expected
                      to
      be recognized as periodic benefit cost over the
                      next
      financial year
                    
                    December
      31,
                      2009(in
      thousands)Net
      gain
                    
                    $
                    22$
                    22
 Weighted
      average assumptions to determine
                      benefit
      obligation
                    
                    December
      31,
                      2007
                    
                    December
      31,
                      2008Discount
      rate
                    
                    5.8%
                    
                    6.4%Rate
      of compensation increase
                    
                    4.5%
                    
                    4.2%Expected
      rate of return on plan assets
                    
                    7.1%
                    
                    6.8%
  The
assets of the scheme are invested in a global equity fixed index fund. The
expected long-term rate of return on assets of 6.8% was calculated as the value
of the fund after application of a market value reduction factor. The underlying
asset split of the fund is shown below.
 Asset
      Category
                              
                              December
      31,
                                2007
                              
                              
                              December
      31,
                                2008Equity
                              
                              63%
                              
                              
                              90%Bonds
                              
                              20%
                              
                              
                              10%Property
                              
                              12%
                              
                              
                              —%Cash/other
                              
                              5%
                              
                              
                              —%100%
                              
                              
                              100%
  The
assets of the scheme are invested in the Legal and General Global Equity Fixed
Index Fund. The aim of this fund is to capture the returns on UK and overseas
equity markets with a more even investment in UK and overseas equities than
would be provided by reference to market capitalization or consensus weights.
Although market fluctuations of investment return are smoothed through the
declaration of annual bonuses, the investment objective is to provide payments
which reflect the actual investment returns achieved by the scheme over the long
run.
  The
accumulated benefit obligation for the defined pension plans was $10.1 million
at December 31, 2008 (December 31, 2007: $15.2 million; December 31, 2006: $17.8
million). With effect from July 1, 2003, the scheme was closed to new entrants.
The Company expects to contribute $0.4 million to its pension fund in the year
ending December 31, 2009.
  The
following annual benefit payments, which reflect expected future service, as
appropriate, are expected to be paid.
 Estimated
      future benefit payments
                                      
                                      (in
      thousands)2009
                                      
                                      $
                                      152010
                                      
                                      
                                      442011
                                      
                                      
                                      442012
                                      
                                      
                                      732013
                                      
                                      
                                      73Years
      2014 - 2018
                                      
                                      $
                                      386
  78
  The
expected cash flows are estimated figures based on the members expected to
retire over the next 10 years assuming no early retirements plus an additional
amount in respect of recent average withdrawal experience. At the present time
it is not clear whether annuities will be purchased when members reach
retirement or whether pensions will be paid each month out of scheme assets. The
cash flows above have been estimated on the assumption that pensions will be
paid monthly out of scheme assets. If annuities are purchased, then the expected
benefit payments will be significantly different from those shown
above.
  Overall
Rate of Return
  At
December 31, 2008, UK gilts were yielding around 3.9% per annum. This is often
referred to as the risk free rate of return as UK gilts have a negligible risk
of default and the income payments and capital on redemption are guaranteed by
the UK Government.
  The
long-term expected return on equities and property has been determined by
setting appropriate risk premiums above the yield on UK gilts. A long term
equity “risk-premium” of 3.1% per annum has been assumed, this being the
expected long-term out-performance of equities over UK gilts. A long term
property “risk-premium” of 2.6% per annum has been assumed, this being the
expected long-term out-performance of property over UK gilts. The long-term
expected return on bonds is determined by reference to UK long dated government
and corporate bond yields at the balance sheet date. This represents the iboxx
AA 15 year plus return. The long term expected return on cash is determined by
reference to bank base rates at the balance sheet date.
  Applying
the above expected long term rates of return to the asset distribution at
December 31, 2008, gives rise to an expected overall rate of return of scheme
assets of approximately 6.8% per annum.
  The
expected long term rates of return on different asset classes over the long term
are as follows:
 Asset
      Category
                              
                              Expected
      long-term
                                return
      per annumEquities
                              
                              7.0%Bonds
                              
                              4.8%Property
                              
                              6.5%Cash
                              
                              2.0%
  10.
Share Options and Stock Compensation Charges
  The
Company accounts for its share options in accordance with the provisions of SFAS
No. 123R, Share
Based Payment. SFAS 123R requires that all share based payments to
employees, including stock options granted, be recognized in the financial
statements based on their grant date fair values. The Company adopted SFAS 123R
with effect from January 1, 2006, with the Black-Scholes method of valuation
being used to calculate the fair value of options granted. The Company adopted
SFAS 123R using the modified-prospective transition method. Under that
transition method compensation cost includes; (a) compensation cost for all
share-based payments granted prior to, but not yet vested as of, January 1,
2006, based on grant date fair value estimated in accordance with the original
provisions of SFAS 123 and (b) compensation cost for all share based payments
granted subsequent to January 1, 2006, based on grant date fair values estimated
in accordance with the provisions of SFAS 123R. Results for periods prior to the
adoption of SFAS 123R were not restated.
  On July
21, 2008, the Company adopted the Employee Share Option Plan 2008 (the “2008
Employee Plan”) pursuant to which the Compensation Committee of the Company’s
Board of Directors may grant options to any employee, or any director holding a
salaried office or employment with the Company or a Subsidiary for the purchase
of ordinary shares. On the same date, the Company also adopted the Consultants
Share Option Plan 2008 (the “2008 Consultants Plan”), pursuant to which the
Compensation Committee of the Company’s Board of Directors may grant options to
any consultant, adviser or non-executive director retained by the Company or any
Subsidiary for the purchase of ordinary shares.
  79
  Each
option granted under the 2008 Employees Plan or the 2008 Consultants Plan
(together the “2008 Option plans”) will be an employee stock option, or NSO, as
described in Section 422 or 423 of the Code. Each grant of an option under the
2008 Options Plans will be evidenced by a Stock Option Agreement between the
optionee and the Company. The exercise price will be specified in each Stock
Option Agreement, however option prices will not be less than 100% of the fair
market value of an ordinary share on the date the option is
granted.
  An
aggregate of 6.0 million ordinary shares have been reserved under the 2008
Employee Plan as reduced by any shares issued or to be issued pursuant to
options granted under the 2008 Consultants Plan under which a limit of 400,000
shares applies. Further, the maximum number of ordinary shares with respect to
which options may be granted under the 2008 Employee Option Plan during any
calendar year to any employee shall be 400,000 ordinary shares. There is no
individual limit under the 2008 Consultants Option Plan. No options may be
granted under the plans after July 21, 2018.
  On July
21, 2008, the Company adopted the the 2008 Employees Restricted Share Unit Plan
(the “2008 RSU Plan”) pursuant to which the Compensation Committee of the
Company’s Board of Directors may select any employee, or any director holding a
salaried office or employment with the Company or a Subsidiary to receive an
award under the plan. An aggregate of 1.0 million ordinary shares have been
reserved for issuance under the 2008 RSU Plan. Awards under the 2008 RSU may be
settled in cash or shares.
  On
January 17, 2003, the Company adopted the Share Option Plan 2003 (the “2003
Plan”) pursuant to which the Compensation Committee of the Board may grant
options to officers and other employees of the Company or its subsidiaries for
the purchase of ordinary shares. Each grant of an option under the 2003 Plan
will be evidenced by a Stock Option Agreement between the employee and the
Company. The exercise price will be specified in each Stock Option
Agreement.
  An
aggregate of 6.0 million ordinary shares have been reserved under the 2003 Plan;
and, in no event will the number of ordinary shares that may be issued pursuant
to options awarded under the 2003 Plan exceed 10% of the outstanding shares, as
defined in the 2003 Plan, at the time of the grant, unless the Board expressly
determines otherwise. Further, the maximum number of ordinary shares with
respect to which options may be granted under the 2003 Plan during any calendar
year to any employee shall be 400,000 ordinary shares. Share option awards are
granted with an exercise price equal to the market price of the Company’s shares
at date of grant. Share options typically vest over a period of five years from
date of grant and expire eight years from date of grant. The maximum contractual
term of options outstanding at December 31, 2008, is eight years. No options can
be granted after January 17, 2013.
  80
  The
following table summarizes the transactions for the Company’s share option plans
for the years ended December 31, 2006, December 31, 2007 and December 31,
2008:
 Options
                                                                                                                                                                                          Granted
                                                                                                                                                                                          Prior
      to
                                                                                                                                                                                          Jan
      15,
                                                                                                                                                                                          1998
      *
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        Options
      Granted
                                                                                                                                                                                          Under
      Plans *
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        Number
      of
                                                                                                                                                                                          Shares
      *
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        Weighted
                                                                                                                                                                                          Average
                                                                                                                                                                                          Exercise
                                                                                                                                                                                          Price
      *
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        Weighted
                                                                                                                                                                                          Average
      Grant
                                                                                                                                                                                          Date
      Fair
                                                                                                                                                                                          Value
      *Outstanding
      at December 31, 2005
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        28,280
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        4,500,304
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        4,528,584
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        7.88
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        3.65Granted
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        —
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        1,637,004
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        1,637,004
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        11.58
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        5.20Exercised
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (28,280
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (935,056
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (963,336
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        6.94
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        3.56Cancelled
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        —
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (558,548
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (558,548
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        8.32
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        3.88Outstanding
      at December 31, 2006
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        —
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        4,643,704
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        4,643,704
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        9.31
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        4.23Granted
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        1,251,430
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        1,251,430
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        21.26
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        8.89Exercised
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (634,784
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (634,784
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        8.35
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        3.82Cancelled
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (284,224
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (284,224
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        12.27
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        5.32Outstanding
      at December 31, 2007
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        —
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        4,976,126
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        4,976,126
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        12.27
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        5.35Granted
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        1,282,190
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        1,282,190
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        35.25
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        12.85Exercised
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (847,707
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (847,707
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        10.05
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        4.45Cancelled
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (188,346
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        (188,346
                                                                                                                                                                                        )
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        20.45
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        8.13Outstanding
      at December 31, 2008
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        —
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        5,222,263
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        5,222,263
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        17.98
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        7.24Vested
      and exercisable at December 31, 2008
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        —
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        1,461,513
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        1,461,513
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        11.00
                                                                                                                                                                                        
                                                                                                                                                                                        
                                                                                                                                                                                        $
                                                                                                                                                                                        4.73
  *
Comparative figures have been amended to reflect the Bonus Issues, (Stock
Splits) which took place with an effective date of October 13, 2006 and August
8, 2008.
  Non
vested shares outstanding as at December 31, 2008, are as follows:
 Options
                                                                  Outstanding
                                                                  Number
      of Shares
                                                                
                                                                
                                                                Weighted
      Average
                                                                  Exercise
      Price
                                                                
                                                                
                                                                Weighted
      Average
                                                                  Fair
      ValueNon
      vested outstanding at December 31, 2007
                                                                
                                                                3,617,898
                                                                
                                                                
                                                                $
                                                                13.24
                                                                
                                                                
                                                                $
                                                                5.81Granted
                                                                
                                                                1,282,190
                                                                
                                                                
                                                                
                                                                35.25
                                                                
                                                                
                                                                
                                                                12.85Vested
                                                                
                                                                (963,598
                                                                )
                                                                
                                                                
                                                                12.07
                                                                
                                                                
                                                                
                                                                5.35Forfeited
                                                                
                                                                (175,740
                                                                )
                                                                
                                                                
                                                                20.86
                                                                
                                                                
                                                                
                                                                8.32Non
      vested outstanding at December 31, 2008
                                                                
                                                                3,760,750
                                                                
                                                                
                                                                $
                                                                20.69
                                                                
                                                                
                                                                $
                                                                8.21
  The
weighted average fair value of options granted during the year was U.S.$12.85.
The weighted average remaining contractual life of options outstanding and
options exercisable at December 31, 2008, was 5.23 years and 3.95 years
respectively. 1,059,356 options are expected to vest during the year ended
December 31, 2009.
  There
were 963,598 options vested during the year and the weighted average fair value
of these options was U.S.$5.35. There were 188,346 options cancelled during the
year and the weighted average fair value of these options was
U.S.$8.13.
  The
intrinsic value of options exercised during the year was U.S.$8,177,598. The
Company calculated the intrinsic value at the market value of options as at
December 31, 2008, as per SFAS 123R. The aggregate intrinsic value of options
outstanding and options exercisable as at December 31, 2008, was U.S.$8,955,965
and U.S.$12,700,713 respectively.
  81
  The total
tax benefit recognized in additional paid in capital related to the compensation
charge during the year was U.S.$4.1 million (2007: U.S.$1.5
million).
  The total
compensation cost not yet recognized at December 31, 2008, was U.S.$17.5 million
and the weighted average period over which this is expected to be recognized is
2.26 years.
  Outstanding
and exercisable share options:
  The
following table summarizes information concerning outstanding and exercisable
share options as of December 31, 2008:
 Options
      Outstanding
                                                                              
                                                                              
                                                                              Options
      ExercisableRange
                                                                                Exercise
                                                                                Price
                                                                              
                                                                              
                                                                              Number
      of
                                                                                Shares
                                                                              
                                                                              
                                                                              Weighted
                                                                                Average
                                                                                Remaining
                                                                                Contractual
      Life
                                                                              
                                                                              
                                                                              Weighted
                                                                                Average
                                                                                Exercise
      Price
                                                                              
                                                                              
                                                                              Number
      of
                                                                                Shares
                                                                              
                                                                              
                                                                              Weighted
                                                                                Average
                                                                                Exercise
      Price$
                                                                              5.32
                                                                              
                                                                              
                                                                              
                                                                              3,840
                                                                              
                                                                              
                                                                              
                                                                              0.08
                                                                              
                                                                              
                                                                              $
                                                                              5.32
                                                                              
                                                                              
                                                                              
                                                                              3,840
                                                                              
                                                                              
                                                                              $
                                                                              5.32$
                                                                              7.00
                                                                              
                                                                              
                                                                              
                                                                              238,470
                                                                              
                                                                              
                                                                              
                                                                              2.08
                                                                              
                                                                              
                                                                              $
                                                                              7.00
                                                                              
                                                                              
                                                                              
                                                                              238,470
                                                                              
                                                                              
                                                                              $
                                                                              7.00$
                                                                              7.25
                                                                              
                                                                              
                                                                              
                                                                              101,780
                                                                              
                                                                              
                                                                              
                                                                              1.08
                                                                              
                                                                              
                                                                              $
                                                                              7.25
                                                                              
                                                                              
                                                                              
                                                                              101,780
                                                                              
                                                                              
                                                                              $
                                                                              7.25$
                                                                              8.60
                                                                              
                                                                              
                                                                              
                                                                              1,030,910
                                                                              
                                                                              
                                                                              
                                                                              4.17
                                                                              
                                                                              
                                                                              $
                                                                              8.60
                                                                              
                                                                              
                                                                              
                                                                              245,262
                                                                              
                                                                              
                                                                              $
                                                                              8.60$
                                                                              8.88
                                                                              
                                                                              
                                                                              
                                                                              483,873
                                                                              
                                                                              
                                                                              
                                                                              3.17
                                                                              
                                                                              
                                                                              $
                                                                              8.88
                                                                              
                                                                              
                                                                              
                                                                              297,121
                                                                              
                                                                              
                                                                              $
                                                                              8.88$
                                                                              10.42
                                                                              
                                                                              
                                                                              
                                                                              60,000
                                                                              
                                                                              
                                                                              
                                                                              5.08
                                                                              
                                                                              
                                                                              $
                                                                              10.42
                                                                              
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              $
                                                                              10.42$
                                                                              11.00
                                                                              
                                                                              
                                                                              
                                                                              907,155
                                                                              
                                                                              
                                                                              
                                                                              5.17
                                                                              
                                                                              
                                                                              $
                                                                              11.00
                                                                              
                                                                              
                                                                              
                                                                              309,183
                                                                              
                                                                              
                                                                              $
                                                                              11.00$
                                                                              17.30
                                                                              
                                                                              
                                                                              
                                                                              24,000
                                                                              
                                                                              
                                                                              
                                                                              5.67
                                                                              
                                                                              
                                                                              $
                                                                              17.30
                                                                              
                                                                              
                                                                              
                                                                              9,600
                                                                              
                                                                              
                                                                              $
                                                                              17.30$
                                                                              18.00
                                                                              
                                                                              
                                                                              
                                                                              106,000
                                                                              
                                                                              
                                                                              
                                                                              5.08
                                                                              
                                                                              
                                                                              $
                                                                              18.00
                                                                              
                                                                              
                                                                              
                                                                              34,000
                                                                              
                                                                              
                                                                              $
                                                                              18.00$
                                                                              18.98
                                                                              
                                                                              
                                                                              
                                                                              9,000
                                                                              
                                                                              
                                                                              
                                                                              7.92
                                                                              
                                                                              
                                                                              $
                                                                              18.98
                                                                              
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              $
                                                                              18.98$
                                                                              21.25
                                                                              
                                                                              
                                                                              
                                                                              1,033,615
                                                                              
                                                                              
                                                                              
                                                                              6.17
                                                                              
                                                                              
                                                                              $
                                                                              21.25
                                                                              
                                                                              
                                                                              
                                                                              221,367
                                                                              
                                                                              
                                                                              $
                                                                              21.25$
                                                                              21.76
                                                                              
                                                                              
                                                                              
                                                                              2,450
                                                                              
                                                                              
                                                                              
                                                                              6.33
                                                                              
                                                                              
                                                                              $
                                                                              21.76
                                                                              
                                                                              
                                                                              
                                                                              490
                                                                              
                                                                              
                                                                              $
                                                                              21.76$
                                                                              22.60
                                                                              
                                                                              
                                                                              
                                                                              2,000
                                                                              
                                                                              
                                                                              
                                                                              6.67
                                                                              
                                                                              
                                                                              $
                                                                              22.60
                                                                              
                                                                              
                                                                              
                                                                              400
                                                                              
                                                                              
                                                                              $
                                                                              22.60$
                                                                              26.27
                                                                              
                                                                              
                                                                              
                                                                              8,000
                                                                              
                                                                              
                                                                              
                                                                              7.83
                                                                              
                                                                              
                                                                              $
                                                                              26.27
                                                                              
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              $
                                                                              26.27$
                                                                              35.33
                                                                              
                                                                              
                                                                              
                                                                              1,182,170
                                                                              
                                                                              
                                                                              
                                                                              7.17
                                                                              
                                                                              
                                                                              $
                                                                              35.33
                                                                              
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              $
                                                                              35.33$
                                                                              36.05
                                                                              
                                                                              
                                                                              
                                                                              6,000
                                                                              
                                                                              
                                                                              
                                                                              7.42
                                                                              
                                                                              
                                                                              $
                                                                              36.05
                                                                              
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              $
                                                                              36.05$
                                                                              36.20
                                                                              
                                                                              
                                                                              
                                                                              2,000
                                                                              
                                                                              
                                                                              
                                                                              7.33
                                                                              
                                                                              
                                                                              $
                                                                              36.20
                                                                              
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              $
                                                                              36.20$
                                                                              40.81
                                                                              
                                                                              
                                                                              
                                                                              20,000
                                                                              
                                                                              
                                                                              
                                                                              7.58
                                                                              
                                                                              
                                                                              $
                                                                              40.81
                                                                              
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              $
                                                                              40.81$
                                                                              41.25
                                                                              
                                                                              
                                                                              
                                                                              1,000
                                                                              
                                                                              
                                                                              
                                                                              7.67
                                                                              
                                                                              
                                                                              $
                                                                              41.25
                                                                              
                                                                              
                                                                              
                                                                              —
                                                                              
                                                                              
                                                                              $
                                                                              41.25$
                                                                              5.32
      - $41.25
                                                                              
                                                                              
                                                                              
                                                                              5,222,263
                                                                              
                                                                              
                                                                              
                                                                              5.23
                                                                              
                                                                              
                                                                              $
                                                                              17.98
                                                                              
                                                                              
                                                                              
                                                                              1,461,513
                                                                              
                                                                              
                                                                              $
                                                                              11.00
  Options
granted at exercise prices from $5.32 to $7.25 have fully vested at December 31,
2008. Substantially all of the options vest over a five year period from the
date of grant.
  Fair
value of Stock Options Assumptions
  Expected
volatility is based on the historical volatility of our common stock over a
period equal to the expected term of the options; the expected life represents
the weighted average period of time that options granted are expected to be
outstanding given consideration to vesting schedules, and our historical
experience of past vesting and termination patterns. The risk-free rate is based
on the U.S. government zero-coupon bonds yield curve in effect at time of the
grant for periods corresponding with the expected life of the
option.
  The
weighted average fair value of stock options granted during the year ended
December 31, 2006, calculated using the Black-Scholes option pricing model, was
$5.20 using the following assumptions; expected dividend yield - 0%, risk free
interest rate – 4.68%, expected volatility - 45% and expected life – 4.8
years.
  82
  The
weighted average fair value of stock options granted during the year ended
December 31, 2007, calculated using the Black-Scholes option pricing model, was
$8.89 using the following assumptions; expected dividend yield - 0%, risk free
interest rate – 4.7%, expected volatility - 40% and expected life – 5.11
years.
  The
weighted average fair value of stock options granted during the year ended
December 31, 2008, calculated using the Black-Scholes option pricing model, was
$12.85 using the following assumptions; expected dividend yield - 0%, risk free
interest rate – 3.2%, expected volatility - 35% and expected life – 5.11
years.
  On August
7, 2008, the Company issued 6,280 restricted share units to certain employees of
the Group. These shares are exercisable over periods ranging from February 26,
2009, to February 26, 2011. The market value of the Company’s shares on date of
issue was $41.95.
  Total
compensation cost recognized in income:
  Income
from operations for the year ended December 31, 2008, is stated after charging
$6.1 million in respect of non-cash stock compensation expense. Non-cash stock
compensation expense for the year ended December 31, 2008, has been allocated to
direct costs and
selling, general and administrative expenses as follows:
 Year
      ended December
      31,2006
                                                        
                                                        2007
                                                        
                                                        
                                                        2008(in
      thousands)Direct
      costs
                                                        
                                                        $
                                                        2,240
                                                        
                                                        
                                                        $
                                                        3,167
                                                        
                                                        
                                                        $
                                                        3,338Selling,
      general and administrative
                                                        
                                                        $
                                                        1,826
                                                        
                                                        
                                                        $
                                                        2,581
                                                        
                                                        
                                                        $
                                                        2,720Total
      compensation costs
                                                        
                                                        $
                                                        4,066
                                                        
                                                        
                                                        $
                                                        5,748
                                                        
                                                        
                                                        $
                                                        6,058
  11.
Government Grants
 December
      31,
                          2007
                        
                        
                        December
      31,
                          2008(in
      thousands)Received
                        
                        $
                        2,225
                        
                        
                        $
                        2,625Less
      accumulated amortization
                        
                        
                        (1,384
                        )
                        
                        
                        (1,510
                        )Foreign
      exchange translation adjustment
                        
                        
                        463
                        
                        
                        
                        4151,304
                        
                        
                        
                        1,530Less
      current portion
                        
                        
                        (125
                        )
                        
                        
                        (144
                        )$
                        1,179
                        
                        
                        $
                        1,386
  Capital
grants received may be refundable in full if certain events occur. Such events,
as set out in the related grant agreements, include sale of the related asset,
liquidation of the Company or failure to comply with other conditions of the
grant agreements. No loss contingency has been recognized as the likelihood of
such events arising has been assessed as remote.
  Government
grants amortized to the profit and loss account amounted to U.S.$117,000 and
U.S.$126,000 for the years ended December 31, 2007 and December 31, 2008
respectively. As of December 31, 2008, the Company had U.S.$1,351,000 in
restricted retained earnings, pursuant to the terms of the grant
agreements.
  83
  12.
Share Capital
  Holders
of ordinary shares will be entitled to receive such dividends as may be
recommended by the board of directors of the Company and approved by the
shareholders and/or such interim dividends as the board of directors of the
Company may decide. On liquidation or a winding up of the Company, the par value
of the ordinary shares will be repaid out of the assets available for
distribution among the holders of the Company’s ADSs and ordinary shares not
otherwise represented by ADRs. Holders of ordinary shares have no conversion or
redemption rights. On a show of hands, every holder of an ordinary share present
in person at a general meeting of shareholders, and every proxy, shall have one
vote, for each ordinary share held with no individual having more than one
vote.
  During
the year ended December 31, 2006, 963,336 options were exercised by employees at
an average exercise price of U.S.$6.94 per share for total proceeds of U.S.$6.7
million.
  During
the year ended December 31, 2007, 634,784 options were exercised by employees at
an average exercise price of U.S.$8.35 per share for total proceeds of U.S.$5.3
million.
  During
the year ended December 31, 2008, 847,707 options were exercised by employees at
an average exercise price of U.S.$10.05 per share for total proceeds of U.S.$8.5
million.
  On July
21, 2008, the Company’s shareholders approved a bonus issue of ordinary shares
(the “Bonus Issue”) to shareholders of record as of the close of business on
August 8, 2008 (the “Record Date”). The Bonus Issue provided for each
shareholder to receive one bonus ordinary share for each ordinary share held as
of the Record Date, effecting the equivalent of a 2-for-1 stock split. The Bonus
shares were issued on August 11, 2008, to Ordinary Shareholders and on August
12, 2008, to holders of American Depositary Shares (“ADSs”). The trading price
of ICON’s ADSs were adjusted on NASDAQ to effect the Bonus Issue prior to the
opening of trading on August 13, 2008. All outstanding ordinary share amounts
referenced in the consolidated financial statements and the notes thereto have
been retrospectively restated to give effect to the Bonus Issue as if it had
occurred as of the date referenced.
  On
September 29, 2006, ICON’s shareholders approved a bonus issue of ordinary
shares (the “Bonus Issue”) to shareholders of record as of the close of business
on October 13, 2006 (the “Record Date”). The Bonus Issue provided for each
shareholder to receive one bonus ordinary share for each ordinary share held as
of the Record Date, effecting the equivalent of a 2-for-1 stock split. The Bonus
shares were issued on October 16, 2006, to Ordinary Shareholders and on October
23, 2006, to holders of American Depositary Shares (“ADSs”). The trading price
of ICON’s ADSs were adjusted on NASDAQ to effect the Bonus Issue prior to the
opening of trading on October 24, 2006. All outstanding ordinary share amounts
referenced in the consolidated financial statements and the notes thereto have
been retrospectively restated to give effect to the Bonus Issue as if it had
occurred as of the date referenced.
  13.
Income Taxes
  The U.S.
based and Irish based subsidiaries file tax returns in the United States and
Ireland, respectively. The other foreign subsidiaries are taxed separately under
the laws of their respective countries.
  The
components of income before provision for income tax expense are as
follows:
 Year
      ended
                                                December
      31,
                                                (in
      thousands)2006
                                              
                                              
                                              2007
                                              
                                              
                                              2008Ireland
                                              
                                              $
                                              31,212
                                              
                                              
                                              $
                                              39,063
                                              
                                              
                                              $
                                              59,720United
      States
                                              
                                              
                                              12,169
                                              
                                              
                                              
                                              16,818
                                              
                                              
                                              
                                              23,305Other
                                              
                                              
                                              8,075
                                              
                                              
                                              
                                              16,099
                                              
                                              
                                              
                                              15,255Income
      before provision for income taxes
                                              
                                              $
                                              51,456
                                              
                                              
                                              $
                                              71,980
                                              
                                              
                                              $
                                              98,280
  84
  The
components of total income tax expense are as follows:
 Year
      ended
                                                                                              December
      31,2006
                                                                                            
                                                                                            
                                                                                            2007
                                                                                            
                                                                                            
                                                                                            2008(in
      thousands)Provision
      for income taxesCurrent:Ireland
                                                                                            
                                                                                            $
                                                                                            4,291
                                                                                            
                                                                                            
                                                                                            $
                                                                                            4,073
                                                                                            
                                                                                            
                                                                                            $
                                                                                            6,508United
      States
                                                                                            
                                                                                            
                                                                                            8,855
                                                                                            
                                                                                            
                                                                                            
                                                                                            6,909
                                                                                            
                                                                                            
                                                                                            
                                                                                            6,674Other
                                                                                            
                                                                                            
                                                                                            4,389
                                                                                            
                                                                                            
                                                                                            
                                                                                            6,171
                                                                                            
                                                                                            
                                                                                            
                                                                                            4,021Total
      current tax
                                                                                            
                                                                                            
                                                                                            17,535
                                                                                            
                                                                                            
                                                                                            
                                                                                            17,153
                                                                                            
                                                                                            
                                                                                            
                                                                                            17,203Deferred
      expenses/(benefit):Ireland
                                                                                            
                                                                                            
                                                                                            (330
                                                                                            )
                                                                                            
                                                                                            
                                                                                            (908
                                                                                            )
                                                                                            
                                                                                            
                                                                                            569United
      States
                                                                                            
                                                                                            
                                                                                            (4,445
                                                                                            )
                                                                                            
                                                                                            
                                                                                            (154
                                                                                            )
                                                                                            
                                                                                            
                                                                                            2,549Other
                                                                                            
                                                                                            
                                                                                            164
                                                                                            
                                                                                            
                                                                                            
                                                                                            (261
                                                                                            )
                                                                                            
                                                                                            
                                                                                            (354
                                                                                            )Total
      deferred (benefit) /tax
                                                                                            
                                                                                            
                                                                                            (4,611
                                                                                            )
                                                                                            
                                                                                            
                                                                                            (1,323
                                                                                            )
                                                                                            
                                                                                            
                                                                                            2,764Provision
      for income taxes
                                                                                            
                                                                                            
                                                                                            12,924
                                                                                            
                                                                                            
                                                                                            
                                                                                            15,830
                                                                                            
                                                                                            
                                                                                            
                                                                                            19,967Impact
      on shareholders equity of the tax consequence of :Stock
      compensation expense
                                                                                            
                                                                                            
                                                                                            (1,109
                                                                                            )
                                                                                            
                                                                                            
                                                                                            (1,466
                                                                                            )
                                                                                            
                                                                                            
                                                                                            (4,062
                                                                                            )Currency
      impact of long term funding
                                                                                            
                                                                                            
                                                                                            —
                                                                                            
                                                                                            
                                                                                            
                                                                                            (1,954
                                                                                            )
                                                                                            
                                                                                            
                                                                                            (632
                                                                                            )Total
                                                                                            
                                                                                            $
                                                                                            11,815
                                                                                            
                                                                                            
                                                                                            $
                                                                                            12,410
                                                                                            
                                                                                            
                                                                                            $
                                                                                            15,273
  Ireland’s statutory income
tax rate is 12.5%. The Company’s consolidated effective tax rate differed
from the statutory rate as set forth below;
 Year
      ended
                                                  December
      31,2006
                                                
                                                
                                                2007
                                                
                                                
                                                2008(in
      thousands)Taxes
      at Irish statutory rate of 12.5% (2007:12.5%; 2005: 12.5%)
                                                
                                                $
                                                6,430
                                                
                                                
                                                $
                                                8,998
                                                
                                                
                                                $
                                                12,285Foreign
      and other income taxed at (reduced)/higher rates
                                                
                                                
                                                10,575
                                                
                                                
                                                
                                                6,496
                                                
                                                
                                                
                                                5,249Movement
      in valuation allowance
                                                
                                                
                                                (6,113
                                                )
                                                
                                                
                                                82
                                                
                                                
                                                
                                                1,494Prior
      year under/(over) provision in respect of foreign taxes
                                                
                                                
                                                1,438
                                                
                                                
                                                
                                                (166
                                                )
                                                
                                                
                                                (88
                                                )Effects
      of non deductible expenses
                                                
                                                
                                                538
                                                
                                                
                                                
                                                344
                                                
                                                
                                                
                                                520Other
                                                
                                                
                                                56
                                                
                                                
                                                
                                                76
                                                
                                                
                                                
                                                507$
                                                12,924
                                                
                                                
                                                $
                                                15,830
                                                
                                                
                                                $
                                                19,967
  85
  The tax
effects of temporary differences that give rise to significant portions of
deferred tax assets and deferred tax liabilities are presented
below:
 Year
      ended
                                                                                                    December
      31,2006
                                                                                                  
                                                                                                  
                                                                                                  2007
                                                                                                  
                                                                                                  
                                                                                                  2008(in
      thousands)Deferred
      tax liabilities:Property,
      plant and equipment
                                                                                                  
                                                                                                  $
                                                                                                  1,188
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  1,253
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  5,764Goodwill
      and related assets
                                                                                                  
                                                                                                  
                                                                                                  2,742
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  4,274
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  5,112Other
      intangible assets
                                                                                                  
                                                                                                  
                                                                                                  0
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  439
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,219Accruals
                                                                                                  
                                                                                                  
                                                                                                  684
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  352
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  546Other
                                                                                                  
                                                                                                  
                                                                                                  41
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  46
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,008Total
      deferred tax liabilities recognized
                                                                                                  
                                                                                                  
                                                                                                  4,655
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  6,364
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  13,649Deferred
      tax assets:Net
      operating loss carry forwards
                                                                                                  
                                                                                                  
                                                                                                  5,971
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  6,931
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  9,690Property,
      plant and equipment
                                                                                                  
                                                                                                  
                                                                                                  486
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  614
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  260Accrued
      expenses and payments on account
                                                                                                  
                                                                                                  
                                                                                                  4,520
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  6,007
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  6,746Stock
      options exercised
                                                                                                  
                                                                                                  
                                                                                                  467
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,556
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  2,426Deferred
      compensation expense
                                                                                                  
                                                                                                  
                                                                                                  370
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  471
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  737Other
                                                                                                  
                                                                                                  
                                                                                                  115
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  0
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  21Total
      deferred tax assets
                                                                                                  
                                                                                                  
                                                                                                  11,929
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  15,579
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  19,880Valuation
      allowance for deferred tax assets
                                                                                                  
                                                                                                  
                                                                                                  (3,839
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (4,957
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (5,903
                                                                                                  )Deferred
      tax assets recognized
                                                                                                  
                                                                                                  $
                                                                                                  8,090
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  10,622
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  13,977Net
      deferred tax (liability) /asset
                                                                                                  
                                                                                                  $
                                                                                                  3,435
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  4,258
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  328
  $8.3
million of the deferred tax asset of $14.0 million above is non-current. $12.1
million of the deferred tax liability of U.S.$13.7 million is
non-current.
  At
December 31, 2008, non-US subsidiaries had operating loss carry forwards for
income tax purposes that may be carried forward indefinitely, available to
offset against future taxable income, if any, of approximately U.S$ 21.5
million.
  At
December 31, 2008, ICON Central Laboratories Inc., a U.S. subsidiary, had U.S.
Federal and State net operating loss carry forwards of approximately U.S. $8.6
million and U.S. $6.9 million, respectively. These net operating losses are
available for offset against future taxable income and expire between 2009 and
2028.
  Of the
U.S. $8.6 million U.S. Federal and U.S $6.9 million State net operating losses,
approximately U.S $7.2 million and U.S.$5.4 million is currently available
for offset against future U.S. Federal and State taxable income, respectively.
The subsidiary’s ability to use the remaining U.S. Federal and State net
operating loss (“NOL”) carry forwards of U.S. $1.4 million and $1.5 million,
respectively, is limited to U.S.$113,000 per year due to the subsidiary
experiencing a change of ownership in 2000, as defined by Section 382 of the
Internal Revenue Code of 1986, as amended.
  86
  The
expected expiry dates of these losses are as
follows:
 Federal
                                  NOL’s
                                
                                
                                State
                                  NOL’s(in
      thousands)2009-
      2011
                                
                                $
                                452
                                
                                
                                $
                                3392012-
      2016
                                
                                
                                226
                                
                                
                                
                                2262017-
      2028
                                
                                
                                7,877
                                
                                
                                
                                6,360$
                                8,555
                                
                                
                                $
                                6,925
  In
addition, ICON Central Laboratories Inc has alternative minimum tax credit carry
forwards of approximately US$0.2 million that are available to reduce future U.S
federal regular income taxes, over an indefinite period.
  At December 31, 2008, ICON
Clinical Research Inc. and its U.S. subsidiaries had combined U.S. State
net operating loss carry forwards of approximately U.S.$4.9M. These net
operating losses are available for offset against future, or in some cases
prior, taxable income in the relevant state and generally expire between 2009
and 2028.
  The
expected expiry dates of these losses are as follows:
 Federal
                            NOL’s
                          
                          
                          State
                            NOL’s(in
      thousands)2009-
      2011
                          
                          $
                          —
                          
                          
                          $
                          —2012-
      2016
                          
                          
                          —2017-
      2028
                          
                          
                          —
                          
                          
                          
                          4,935$
                          —
                          
                          
                          $
                          4,935
  In
addition, ICON Clinical Research Inc has tax credit carry forwards of
approximately US$ 0.4 million that are available to reduce future state income
taxes, if any. These begin to expire in 2012.
  The
valuation allowance for deferred tax assets as of December 31, 2007, and
December 31, 2006 was US$5.0 million and US$3.8 million, respectively. The
valuation allowance at December 31, 2008, was approximately US$ 5.9 million. The
net change in the total valuation allowance was an increase of US$0.9 million in
2008 and an increase of US$1.2 million during 2007.
  The
valuation allowance at December 31, 2007, and December 31, 2006, was primarily
related to tax losses carried forward that, in the judgment of management, are
not more likely than not to be realized. In assessing the realizability of
deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences
become deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning strategies in
making this assessment.
  The
Company has not recognized a deferred tax liability for the undistributed
earnings of foreign subsidiaries that arose in 2008 and prior years as the
Company considers these earnings to be indefinitely reinvested.
  87
  The
Company adopted the provisions of FIN 48 on January 1, 2007. This did not result
in any change to the opening liability for unrecognized tax benefits. A
reconciliation of the beginning and ending amount of total unrecognized tax
benefits is as follows:
 (in
      thousands)Gross
      amount of unrecognized tax benefits at January 1, 2008
                    
                    $
                    12,878Increase
      related to prior year tax positions
                    
                    
                    —Decrease
      related to prior year tax positions
                    
                    
                    (1,343
                    )Increase
      related to current year tax positions
                    
                    
                    2,760Settlements
                    
                    
                    (529
                    )Lapse
      of statute of limitations
                    
                    
                    (123
                    )Gross
      amount of unrecognized tax benefits at December 31, 2008
                    
                    $
                    13,643
  The
Company does not anticipate that the amount of unrecognized tax benefits at
December 31, 2008, will significantly change in the coming year.
  Included
in the balance of total unrecognized tax benefits at December 31, 2008, are net
potential benefits of US$8.8 million, which if recognized, would affect the
effective rate on income tax from continuing operations.
  Interest
and penalties recognized as an expense during the year ended December 31, 2008,
amounted to US$1.3 million (2007: US$1.3 million) and are included within the
provision for income taxes. Total accrued interest and penalties as of December
31, 2008 and January 1, 2008, were US$2.3 million and US$2.1 million
respectively and are included in the closing income tax liabilities at those
dates.
  Our major
tax jurisdictions are the United States and Ireland. We may potentially be
subjected to tax audits in our major jurisdictions. In the United States tax
periods open to audit include the years ended May 31, 2005, the seven month
transition period ended December 31, 2005, and the years ended December 31,
2006, December 31, 2007 and December 31, 2008. In Ireland tax periods open to
audit include the years ended May 31, 2004 and May 31, 2005, the seven month
transition period ended December 31, 2005, and the years ended December 31,
2006, December 31, 2007 and December 31 2008. During such audits, local tax
authorities may challenge the position taken by us.
  14.
Significant Concentrations
  The
Company does business with most major international pharmaceutical companies. As
at December 31, 2008, the balance for doubtful debts was $7.5 million (2007:
$0.32 million). During the year ended December 31, 2008, an additional reserve
for doubtful debts of $7.4 million was created and $0.2 million was used. During
the year ended December 31, 2007, an additional reserve for doubtful debts of
$0.75 million was created and $0.67 million was used.
  15.
Commitments and Contingencies
  The
Company is not party to any litigation or other legal proceedings that the
Company believes could reasonably be expected to have a material adverse effect
on the Company’s business, results of operations and financial
condition.
  The
Company has several non-cancelable operating leases, primarily for facilities,
that expire over the next 10 years. These leases generally contain renewal
options and require the Company to pay all executory costs such as maintenance
and insurance. The Company recognized U.S.$28,450,000, U.S.$35,760,000 and
U.S.$45,638,000 in rental expense for the fiscal years ended December 31, 2006,
December 31, 2007, and December 31, 2008. Future minimum rental commitments for
operating leases with non-cancelable terms in excess of one year are as
follows:
  88
  Minimum
      rental payments
                    (in
      thousands)2009
                  
                  $
                  38,2272010
                  
                  
                  33,9282011
                  
                  
                  26,6172012
                  
                  
                  21,9952013
                  
                  
                  18,216Thereafter
                  
                  
                  29,657Total
                  
                  $
                  168,640
  The
Company has a number of capital leases, primarily over furniture and equipment,
which expire over the next five years. Future commitments are as
follows:
 Lease
      payments
                    (in
      thousands)2009
                  
                  $
                  2922010
                  
                  
                  3272011
                  
                  
                  1602012
                  
                  
                  —2013
                  
                  
                  —Thereafter
                  
                  
                  —Less
      future finance charges
                  
                  
                  (46
                  )Total
                  
                  $
                  733
  On
November 14, 2008, the Company acquired 100% of the common stock of Prevalere
Life Sciences Inc. (“Prevalere”), for an initial cash consideration of $36.8
million, excluding costs of acquisition. Prevalere, located in Whitesboro, New
York, is a leading provider of bioanalytical and immunoassay services to
pharmaceutical and biotechnology companies. Certain performance milestones were
built into the acquisition agreement requiring potential additional
consideration of up to $8.2 million if these milestones are achieved during the
years ended December 31, 2008 and 2009. Additional consideration of $5.0 million
has been accrued at December 31, 2008, in respect of the milestones for the year
ended December 31, 2008. No amounts have been accrued for additional
consideration potentially payable in respect of the milestones for the year
ended December 31, 2009.
  On July
1, 2004, the Company acquired 70% of the common stock of Beacon Biosciences Inc.
(“Beacon”), a leading specialist CRO, which provides a range of medical imaging
services to the pharmaceutical, biotechnology and medical device industries, for
an initial cash consideration of $9.9 million, excluding costs of acquisition.
On December 31, 2008, the remaining 30% of the common stock was acquired by the
Company for $17.4 million, excluding costs of acquisition. Certain performance
milestones were built into the acquisition agreement for the remaining 30% of
Beacon requiring potential additional consideration of up $3.0 million if these
milestones are achieved during the year ended December 31, 2009. At December 31,
2008, no amounts have been accrued in respect of the potential additional
consideration.
  16.
Business Segment Information
  The
Company operates predominantly in the contract clinical research industry
providing a broad range of clinical research and integrated product development
services on a global basis for the pharmaceutical and biotechnology industries.
The Company also has a central laboratory segment primarily based in New York,
USA. This, together with laboratory services based in Dublin, India and
Singapore form the central laboratory segment information disclosed
below.
  89
  The
Company’s areas of operation outside of Ireland principally include the United
Kingdom, United States, Germany, Australia, Argentina, France, Italy, Japan,
Israel, Singapore, Canada, Sweden, The Netherlands, Latvia, Russia, Lithuania,
Poland, South Africa, India, Hong Kong, Taiwan, Mexico, Brazil, Hungary, Spain,
Thailand, South Korea, China, Chile, New Zealand, Denmark, Finland, Peru, Czech
Republic, Ukraine, Romania and Colombia. Segment information as at December 31,
2008 and December 31, 2007 and for the years ended December 31, 2006, December
31, 2007 and December 31, 2008, is as follows:
  a) The
distribution of net revenue by geographical area was as follows:
 Year
      ended
                                        December
      31,
                                        (in
      thousands)2006
                                      
                                      
                                      2007
                                      
                                      
                                      2008Ireland
                                      
                                      $
                                      66,028
                                      
                                      
                                      $
                                      134,268
                                      
                                      
                                      $
                                      158,958Rest
      of Europe
                                      
                                      
                                      96,868
                                      
                                      
                                      
                                      144,586
                                      
                                      
                                      
                                      254,706U.S.
                                      
                                      
                                      266,175
                                      
                                      
                                      
                                      316,049
                                      
                                      
                                      
                                      379,140Other
                                      
                                      
                                      26,526
                                      
                                      
                                      
                                      35,819
                                      
                                      
                                      
                                      72,444Total
                                      
                                      $
                                      455,597
                                      
                                      
                                      $
                                      630,722
                                      
                                      
                                      $
                                      865,248
  b) The
distribution of net revenue by business segment was as follows:
 Year
      endedDecember
      31, (in
      thousands)2006
                                
                                
                                2007
                                
                                
                                2008Central
      laboratory
                                
                                $
                                47,230
                                
                                
                                $
                                53,512
                                
                                
                                $
                                71,115Clinical
      research
                                
                                
                                408,367
                                
                                
                                
                                577,210
                                
                                
                                
                                794,133Total
                                
                                $
                                455,597
                                
                                
                                $
                                630,722
                                
                                
                                $
                                865,248
  c) The
distribution of income from operations by geographical area was as
follows:
 Year
      ended
                                          December
      31,
                                          (in
      thousands)2006
                                        
                                        
                                        2007
                                        
                                        
                                        2008Ireland
                                        
                                        $
                                        28,375
                                        
                                        
                                        $
                                        40,592
                                        
                                        
                                        $
                                        67,264Rest
      of Europe
                                        
                                        
                                        2,681
                                        
                                        
                                        
                                        7,234
                                        
                                        
                                        
                                        7,960U.S.
                                        
                                        
                                        15,216
                                        
                                        
                                        
                                        19,166
                                        
                                        
                                        
                                        20,547Other
                                        
                                        
                                        1,544
                                        
                                        
                                        
                                        2,250
                                        
                                        
                                        
                                        3,733Total
                                        
                                        $
                                        47,816
                                        
                                        
                                        $
                                        69,242
                                        
                                        
                                        $
                                        99,504
  90
  d) The
distribution of income from operations by business segment was as
follows:
 Year
      ended December
      31, (in
      thousands)2006
                            
                            
                            2007
                            
                            
                            2008Central
      laboratory
                            
                            $
                            2,297
                            
                            
                            $
                            3,717
                            
                            
                            $
                            5,564Clinical
      research
                            
                            
                            45,519
                            
                            
                            
                            65,525
                            
                            
                            
                            93,940Total
                            
                            $
                            47,816
                            
                            
                            $
                            69,242
                            
                            
                            $
                            99,504
  e) The
distribution of property, plant and equipment, net, by geographical area was as
follows:
 December
      31,
                                  2007
                                
                                
                                December
      31,
                                  2008(in
      thousands)Ireland
                                
                                $
                                82,127
                                
                                
                                $
                                101,715Rest
      of Europe
                                
                                
                                15,547
                                
                                
                                
                                18,071U.S.
                                
                                
                                29,072
                                
                                
                                
                                43,976Other
                                
                                
                                6,680
                                
                                
                                
                                7,986Total
                                
                                $
                                133,426
                                
                                
                                $
                                171,748
  f) The
distribution of property, plant and equipment, net, by business segment was as
follows:
 December
      31,
                                            2007
                                          
                                          
                                          December
      31,
                                            2008(in
      thousands)Central
      laboratory
                                          
                                          $
                                          7,048
                                          
                                          
                                          $
                                          12,681Clinical
      research
                                          
                                          
                                          126,378
                                          
                                          
                                          
                                          159,067Total
                                          
                                          $
                                          133,426
                                          
                                          
                                          $
                                          171,748
  g) The distribution of
depreciation and amortization by geographical area was as
follows:
 Year
      endedDecember
      31, (in
      thousands)2006
                                    
                                    
                                    2007
                                    
                                    
                                    2008Ireland
                                    
                                    $
                                    5,099
                                    
                                    
                                    $
                                    5,972
                                    
                                    
                                    $
                                    8,684Rest
      of Europe
                                    
                                    
                                    2,489
                                    
                                    
                                    
                                    3,738
                                    
                                    
                                    
                                    6,162U.S.
                                    
                                    
                                    6,521
                                    
                                    
                                    
                                    7,761
                                    
                                    
                                    
                                    10,393Other
                                    
                                    
                                    840
                                    
                                    
                                    
                                    1,537
                                    
                                    
                                    
                                    2,489Total
                                    
                                    $
                                    14,949
                                    
                                    
                                    $
                                    19,008
                                    
                                    
                                    $
                                    27,728
  91
  h) The
distribution of depreciation and amortization by business segment was as follows:
 Year
      endedDecember
      31,
                                            (in
      thousands)2006
                                          
                                          
                                          2007
                                          
                                          
                                          2008Central
      laboratory
                                          
                                          $
                                          1,340
                                          
                                          
                                          $
                                          1,814
                                          
                                          
                                          $
                                          2,247Clinical
      research
                                          
                                          
                                          13,609
                                          
                                          
                                          
                                          17,194
                                          
                                          
                                          
                                          25,481Total
                                          
                                          $
                                          14,949
                                          
                                          
                                          $
                                          19,008
                                          
                                          
                                          $
                                          27,728
  i) The distribution of
total assets by geographical area was as follows:
 December
      31,
                                      2007
                                    
                                    
                                    December
      31,
                                      2008(in
      thousands)Ireland
                                    
                                    $
                                    202,293
                                    
                                    
                                    $
                                    234,159Rest
      of Europe
                                    
                                    
                                    161,746
                                    
                                    
                                    
                                    165,624U.S.
                                    
                                    
                                    301,183
                                    
                                    
                                    
                                    442,351Other
                                    
                                    
                                    27,916
                                    
                                    
                                    
                                    25,151Total
                                    
                                    $
                                    693,138
                                    
                                    
                                    $
                                    867,285
  j) The
distribution of total assets by business segment was as
follows:
 December
      31,
                                          2007
                                        
                                        
                                        December
      31,
                                          2008(in
      thousands)Central
      laboratory
                                        
                                        $
                                        40,562
                                        
                                        
                                        $
                                        62,031Clinical
      research
                                        
                                        
                                        652,576
                                        
                                        
                                        
                                        805,254Total
                                        
                                        $
                                        693,138
                                        
                                        
                                        $
                                        867,285
  k) The distribution of
capital expenditures by geographical area was as follows:
 Year
      endedDecember
      31,(in
      thousands)2006
                                    
                                    
                                    2007
                                    
                                    
                                    2008Ireland
                                    
                                    $
                                    13,854
                                    
                                    
                                    $
                                    46,765
                                    
                                    
                                    $
                                    34,429Rest
      of Europe
                                    
                                    
                                    4,073
                                    
                                    
                                    
                                    8,346
                                    
                                    
                                    
                                    10,736U.S.
                                    
                                    
                                    10,905
                                    
                                    
                                    
                                    15,727
                                    
                                    
                                    
                                    21,774Other
                                    
                                    
                                    2,881
                                    
                                    
                                    
                                    4,812
                                    
                                    
                                    
                                    5,185Total
                                    
                                    $
                                    31,713
                                    
                                    
                                    $
                                    75,650
                                    
                                    
                                    $
                                    72,124
  92
  l) The
distribution of capital expenditures by business segment was as
follows:
 Year
      endedDecember
      31, (in
      thousands)2006
                                          
                                          
                                          2007
                                          
                                          
                                          2008Central
      laboratory
                                          
                                          $
                                          2,538
                                          
                                          
                                          $
                                          3,874
                                          
                                          
                                          $
                                          8,607Clinical
      research
                                          
                                          
                                          29,175
                                          
                                          
                                          
                                          71,776
                                          
                                          
                                          
                                          63,517Total
                                          
                                          $
                                          31,713
                                          
                                          
                                          $
                                          75,650
                                          
                                          
                                          $
                                          72,124
  m) The
following table sets forth the clients which represented 10% or more of the
Company’s net revenue in each of the periods set out below.
 Year
      endedDecember
      31, (in
      thousands)2006
                                                
                                                
                                                2007
                                                
                                                2008Client
      A
                                                *
                                                
                                                
                                                *
                                                
                                                *
  *
                  Net
      revenue did not exceed
10%.
  n) The
distribution of interest income by geographical area was as
follows:
 Year
      ended
                                            December
      31,
                                            (in
      thousands)2006
                                          
                                          
                                          2007
                                          
                                          
                                          2008Ireland
                                          
                                          $
                                          162
                                          
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          221Rest
      of Europe
                                          
                                          
                                          2,737
                                          
                                          
                                          
                                          2,819
                                          
                                          
                                          
                                          1,637U.S.
                                          
                                          
                                          822
                                          
                                          
                                          
                                          1,232
                                          
                                          
                                          
                                          988Other
                                          
                                          
                                          44
                                          
                                          
                                          
                                          90
                                          
                                          
                                          
                                          35Total
                                          
                                          $
                                          3,765
                                          
                                          
                                          $
                                          4,141
                                          
                                          
                                          $
                                          2,881
  o) The
distribution of interest income by business segment was as
follows:
 Year
      ended December
      31, (in
      thousands)2006
                            
                            
                            2007
                            
                            
                            2008Central
      laboratory
                            
                            $
                            97
                            
                            
                            $
                            182
                            
                            
                            $
                            108Clinical
      research
                            
                            
                            3,668
                            
                            
                            
                            3,959
                            
                            
                            
                            2,773Total
                            
                            $
                            3,765
                            
                            
                            $
                            4,141
                            
                            
                            $
                            2,881
  93
  p) The
distribution of the tax charge by geographical area was as follows:
 Year
      ended
                                          December
      31,
                                          (in
      thousands)2006
                                        
                                        
                                        2007
                                        
                                        
                                        2008Ireland
                                        
                                        $
                                        3,961
                                        
                                        
                                        $
                                        3,165
                                        
                                        
                                        $
                                        7,078Rest
      of Europe
                                        
                                        
                                        2,034
                                        
                                        
                                        
                                        4,512
                                        
                                        
                                        
                                        1,722U.S.
                                        
                                        
                                        4,411
                                        
                                        
                                        
                                        6,755
                                        
                                        
                                        
                                        9,224Other
                                        
                                        
                                        2,518
                                        
                                        
                                        
                                        1,398
                                        
                                        
                                        
                                        1,943Total
                                        
                                        $
                                        12,924
                                        
                                        
                                        $
                                        15,830
                                        
                                        
                                        $
                                        19,967
  q) The
distribution of the tax charge by business segment was as follows:
 Year
      ended
                                        December
      31,
                                        (in
      thousands)2006
                                      
                                      
                                      2007
                                      
                                      
                                      2008Central
      laboratory
                                      
                                      ($
                                      2,877
                                      )
                                      
                                      $
                                      679
                                      
                                      
                                      ($
                                      397
                                      )Clinical
      research
                                      
                                      
                                      15,801
                                      
                                      
                                      
                                      15,151
                                      
                                      
                                      
                                      20,363Total
                                      
                                      $
                                      12,924
                                      
                                      
                                      $
                                      15,830
                                      
                                      
                                      $
                                      19,967
  17.
Supplemental Disclosure of Cash Flow Information
 Year
      ended
                                                  December
      31,
                                                  (in
      thousands)2006
                                                
                                                
                                                2007
                                                
                                                
                                                2008Cash
      paid for interest
                                                
                                                $
                                                54
                                                
                                                
                                                $
                                                1,491
                                                
                                                
                                                $
                                                4,963Cash
      paid for income taxes
                                                
                                                $
                                                11,632
                                                
                                                
                                                $
                                                13,632
                                                
                                                
                                                $
                                                19,543
  18.
New Accounting Pronouncements
  In
October 2008, the FASB issued FSP 157-3, Determining
the Fair Value of a Financial Asset When the Market for That Asset Is Not
Active”(FSP 157-3). FSP 157-3 clarifies the application of SFAS No. 157
in a market that is not active and addresses application issues such as the use
of internal assumptions when relevant observable data does not exist, the use of
observable information when the market is not active and the use of market
quotes when assessing the relevance of observable and unobservable data. FSP
157-3 is effective for all periods presented in accordance with SFAS No. 157.
The Company does not expect the adoption of FSP 157-3 to have a material impact
on the financial statements.
  94
  In April
2008, the FASB issued FSP 142-3 Determination
of the Useful Life of Intangible Assets (FSP 142-3). FSP 142-3 amends the
factors an entity should consider in developing renewal or extension assumptions
used in determining the useful life of recognized intangible assets under FASB
Statement No. 142 Goodwill
and Other Intangible Assets(SFAS No. 142). FSP 142-3 applies
prospectively to intangible assets that are acquired individually or with a
group of other assets in a business combination or asset acquisition. The
Company does not expect the adoption of FSP 142-3 to have a material impact on
the financial statements.
  In
December 2007, the FASB issued FASB Statement No. 141R, Business
Combinations (SFAS No. 141R) and FASB Statement No. 160, Noncontrolling
Interests in Consolidated Financial Statements– an amendment to ARB No.
51 (SFAS No. 160). SFAS No. 141R and SFAS No. 160 require most
identifiable assets, liabilities, noncontrolling interests, and goodwill
acquired in a business combination to be recorded at “full fair value” and
require noncontrolling interests (previously referred to as minority interests)
to be reported as a component of equity, which changes the accounting for
transactions with noncontrolling interest holders. Both Statements are effective
for periods beginning on or after December 15, 2008, and earlier adoption is
prohibited. SFAS No. 141R will be applied to business combinations occurring
after the effective date. SFAS No. 160 will be applied prospectively to all
noncontrolling interests, including any that arose before the effective date.
The Company does not expect the adoption of SFAS No. 141R and SFAS No. 160 to
have a material impact on the financial statements.
  In
September 2006, the FASB issued FASB Statement No. 157, Fair
Value Measurement(SFAS No. 157). Statement 157 defines fair value,
establishes a framework for the measurement of fair value, and enhances
disclosures about fair value measurements. The Statement does not require any
new fair value measures. The Statement is effective for fair value measures
already required or permitted by other standards for fiscal years beginning
after November 15, 2007. The Company was required to adopt SFAS No. 157
beginning on January 1, 2008. SFAS No. 157 is required to be applied
prospectively, except for certain financial instruments. Any transition
adjustment will be recognized as an adjustment to opening retained earnings in
the year of adoption. In November 2007, the FASB proposed a one-year deferral of
SFAS No. 157’s fair-value measurement requirements for nonfinancial assets and
liabilities that are not required or permitted to be measured at fair value on a
recurring basis. The adoption of SFAS No. 157 has not had a material impact on
the financial statements.
  19.
Related Parties
  As at
December 31, 2008, Amarin Investment Holding Limited (a company controlled by
Mr. Thomas Lynch), and Sunninghill Limited (a company controlled by Dr. John
Climax) held 1.1 million and 1.5 million shares respectively in Amarin. These
respective holdings equate to approximately 3.97% and 5.42% respectively, of
Amarin’s issued share capital. Thomas Lynch also serves as Chairman and Chief
Executive Officer of Amarin. Amarin is a neuroscience company focused on the
research, development and commercialization of drugs for the treatment of
central nervous system disorders. During the fiscal year ending May 31, 2005,
Amarin contracted ICON Clinical Research Limited (a wholly owned subsidiary of
ICON), to conduct a clinical trial on its behalf. The total potential value of
this study is $7 million. During the year ended December 31, 2008, the Company
recognized $0.2 million of revenue relating to the Amarin contract. At December
31, 2008, $0.3 million was outstanding to be received from Amarin on this
trial.
  As at
December 31, 2008, Dr. John Climax and Dr. Ronan Lambe held 3.05% and 2.94%
respectively of the issued share capital of NuPathe Inc. (“NuPathe”). NuPathe is
a specialty pharmaceutical company specializing in the acquisition and
development of therapeutic products in the area of neuroscience. Prior to July
2008 Dr. Climax also served as a non-executive director and chairman of the
compensation committee on the Board of NuPathe. During the year ending December
31, 2006, NuPathe engaged ICON Clinical Research Limited, a wholly owned
subsidiary of ICON plc, in consulting and clinical trial related activities.
During the year ended December 31, 2008, the Company recognized $0.1 million
relating to the NuPathe contract. There were no amounts outstanding as at
December 31, 2008.
  Mr Edward
Roberts has served as Chairman of Merz GmbH since 2003. Merz is an independent
German pharmaceutical company focused on the development of drugs for the
treatment of illnesses in the fields of neurology and psychiatry. ICON Clinical
Research Limited, a wholly owned subsidiary of ICON plc, has entered into a
number of contracts with Merz, for the provision of consulting and clinical
trial related activities. The total potential value of these contracts is $44.1
million. During the prior year ended December 31, 2008, ICON recognized a total
of $7.6 million of revenue in relation to these activities. There were no
amounts outstanding as at December 31, 2008.
  95
  Prior to
June 25, 2007, Dr. Bruce Given served as the President and Chief Executive
Officer of Encysive Pharmaceuticals Inc. (“Encysive”). Encysive is a
biopharmaceutical company specializing in the development and commercialization
of synthetic, small molecule compounds. As of December 31, 2007, Dr. Bruce
Given’s holdings in Encysive was less than 0.1% of the issued share capital.
During the year ending December 31, 2003, Encysive engaged ICON Clinical
Research Limited (a wholly owned subsidiary of ICON), in consulting and clinical
trial related activities. During the prior year ending December 31, 2007, ICON
recognized a total of $0.1 million of revenue in relation to these activities.
No revenue was earned from these activities during the year ended December 31,
2008.
  As of
December 31, 2007, Dr. Ronan Lambe held 1.4 million shares in AGI Therapeutics
Limited (“AGI”), a specialty pharmaceutical company focused on developing drug
therapies for gastrointestinal diseases and disorders. In January 2006, Dr.
Ronan Lambe was appointed a non-executive director of AGI and took up the
position of non-executive Chairman from February 2006. During September 2004,
AGI engaged ICON Clinical Research Limited (a wholly owned subsidiary of ICON),
in consulting and clinical trial related activities. The total value of this
study was $2.8 million. No revenue was recognized during the years ended
December 31, 2007 and December 31, 2008. There were no amounts outstanding as at
December 31, 2007 and December 31, 2008.
  96
  SIGNATURES
  The
Registrant certifies that it meets all of the US requirements for filing on Form
20-F and has duly caused and authorized this annual report to be signed on its
behalf.
 ICON
      plc/s/
      Ciaran MurrayDate
      February 19, 2009
                    Ciaran
      MurrayChief
      Financial
Officer
  97
  INDEX
TO EXHIBITS
 Exhibit
                    Number
                  
                  Title3.1
                  
                  Amended
      Memorandum and Articles of Association (incorporated by reference to
      Exhibits 3.1 and 3.2 to the Form 6-k (File No. 333-08704) filed on
      December 5, 2008).4.1
                  
                  ICON
      plc Share Option Plan 2003, as updated on October 26, 2006, for the 2006
      bonus issue, further updated on February 5, 2007 and updated on July 21,
      2008, for the 2008 bonus issue (incorporated by reference to Exhibit 4.1
      to the Form S-8 (File No. 333-152802) filed on August 6,
      2008).4.2
                  
                  ICON
      plc Consultants Share Option Plan 2008 (incorporated by reference to
      Exhibit 4.2 to the Form S-8 (File No. 333-152802) filed on August 6,
      2008).4.3
                  
                  ICON
      plc Employee Share Option Plan 2008 (incorporated by reference to Exhibit
      4.3 to the Form S-8 (File No. 333-152802) filed on August 6,
      2008).4.4
                  
                  ICON
      plc Employees Restricted Share Unit Plan (incorporated by reference to
      Exhibit 4.4 to the Form S-8 (File No. 333-152802) filed on August 6,
      2008).8.1
                  
                  List
      of Subsidiaries (incorporated by reference to Item 4 of Form 20-F filed
      herewith).10.1(a)
                  
                  Office
      Space Lease, dated September 25, 1998, between ICON Clinical Research,
      Inc. and O’Neill Lansdale Properties, L.P.10.1(b)
                  
                  Amended
      and Restated Office Space Lease, dated January 1, 2001, between ICON
      Clinical Research and 212 Church Associates, L.P.10.1(c)
                  
                  Amendment
      Number 1 to the Amended and Restated Office Space Lease, between ICON
      Clinical Research , Inc. and 212 C Associates, L.P.10.1(d)
                  
                  Amendment
      Number 2 to the Amended and Restated Office Space Lease, dated January 11,
      2005, between ICON Clinical Research , Inc. and 212 C Associates,
      L.P.10.2
                  
                  Agreement
      of Lease, dated August 13, 2001, between ICON Clinical Research (UK)
      Limited, ICON plc and Capital Business Parks Globeside
      Limited.10.3
                  
                  Agreement
      of Lease, dated November 29, 2002, between ICON Laboratories, Inc. and MSM
      Reality Co. LLC, Davrick, LLC and Sholom Blau Co. LLC (together, the
      “Landlord”).10.4
                  
                  Highwoods
      Properties Office Lease, dated February 17, 2003, between ICON Clinical
      Research, Inc. and Highwoods Realty Limited
Partnership.12.1*
                  
                  Section
      302 certifications.12.2*
                  
                  Section
      906 certifications.23.1
                  
                  Consent
      of KPMG, Independent Registered Public Accounting
  Firm
  *          Filed
herewith
    98