##### 



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-Q
  þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to   Commission File Number:
  PRA INTERNATIONAL
 (Exact name of Registrant as
    Specified in Its Charter)
  Delaware(State or Other
    Jurisdiction of
    Incorporation)

54-2040171(I.R.S. Employer
    Identification No.)    12120
    Sunset Hills Road
    Suite 600
    Reston, Virginia 20190 (Address
    of principal executive offices)
   (703) 464-6300 (Registrants
    telephone number, including area code)
      þ o
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ




---



##### 



INDEX
  PagePart I Financial
    InformationItem 1.


Financial Statements


3Consolidated Condensed Balance
    Sheets as of December 31, 2005 and September 30, 2006
    (unaudited)


3Consolidated Condensed Statements
    of Operations (unaudited) for the Three and Nine Months Ended
    September 30, 2005 and 2006 (unaudited)


4Consolidated Condensed Statement
    of Changes in Stockholders Equity and Other Comprehensive
    Income for the Nine Months Ended September 30, 2006


5Consolidated Condensed Statements
    of Cash Flows (unaudited) for the Nine Months Ended
    September 30, 2005 and 2006


6Notes to Condensed Consolidated
    Financial Statements


7Item 2.


Managements Discussion and
    Analysis of Financial Condition and Results of Operations


16Item 3.


Quantitative and Qualitative
    Disclosures About Market Risk


27Item 4.


Controls and Procedures


28Part II Other
    InformationItem 1.


Legal Proceeding


29Item 1A.


Risk Factors


29Item 2.


Unregistered Sales of Equity
    Securities and Use of Proceeds


30Item 6.


Exhibits


30  2




---



##### 



PART I
    FINANCIAL INFORMATION  ITEM 1.
    FINANCIAL
    STATEMENTS  PRA
    INTERNATIONAL AND SUBSIDIARIES
 CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except per share amounts) December 31,


September 30,2005


2006(Unaudited)ASSETSCurrent assetsCash and cash equivalents

$
73,640


$
20,514Accounts receivable and unbilled
    services, net


85,426



111,589Prepaid expenses and other current
    assets


8,678



9,911Deferred tax assets


663



805Total current assets


168,407



142,819Fixed assets, net


26,906



31,291Goodwill


106,748



202,950Other intangibles, net of
    accumulated amortization of $6,307 and $7,497 as of and
    December 31, 2005 and September 30, 2006, respectively


24,530



39,007Other assets


2,773



2,284Total assets

$
329,364


$
418,351LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable

$
21,640


$
15,714Accrued expenses and other current
    liabilities


34,574



32,773Income taxes payable


7,782



10,899Advance billings


62,651



87,212Total current liabilities


126,647



146,598Debt






24,000Deferred tax liability


7,499



6,793Other liabilities


6,352



5,431Total liabilities


140,498



182,822Commitments and ContingenciesStockholders equityCommon stock $0.01 par value;
    36,000,000 shares authorized as of December 31, 2005
    and September 30, 2006; 22,915,896 and
    23,941,544 shares issued and outstanding as of
    December 31, 2005 and September 30, 2006, respectively


229



240Treasury stock


(93
)


(93
)Additional paid-in capital


130,338



153,531Accumulated other comprehensive
    income


3,515



5,850Retained earnings


54,877



76,001Total stockholders equity


188,866



235,529Total liabilities and
    stockholders equity

$
329,364


$
418,351    3




---



##### 



PRA
    INTERNATIONAL AND SUBSIDIARIES
 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts) Three Months Ended


Nine Months EndedSeptember 30,


September 30,2005


2006


2005


2006RevenueService revenue

$
75,567


$
81,504


$
225,191


$
220,797Reimbursement revenue


7,602



8,120



24,585



24,829Total revenue


83,169



89,624



249,776



245,626Operating expensesDirect costs


34,537



40,988



103,973



112,729Reimbursable
    out-of-pocket
    costs


7,602



8,120



24,585



24,829Selling, general, and
    administrative


24,654



25,833



74,325



72,705Depreciation and amortization


2,856



3,697



8,479



8,774Income from operations


13,520



10,986



38,414



26,589Interest expense


(132
)


(529
)


(349
)


(823
)Interest income


380



265



1,228



1,296Other expense


(292
)


(65
)


(786
)


(519
)Income before income taxes


13,476



10,657



38,507



26,543Provision for income taxes


4,267



2,474



13,785



5,419Net income

$
9,209


$
8,183


$
24,722


$
21,124Net income per shareBasic

$
0.41


$
0.34


$
1.10


$
0.91Diluted

$
0.38


$
0.33


$
1.01


$
0.86Weighted average number of
    common shares outstandingBasic


22,548



23,754



22,436



23,294Diluted


24,477



24,938



24,362



24,557    4




---



##### 



CONSOLIDATED
    CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS
    EQUITY AND OTHER COMPREHENSIVE INCOME

(Unaudited)

(In thousands) AdditionalPaid-in


Accumulated


RetainedCapital


Other


Earnings/





OtherCommon Stock


Treasury Stock


Common


Comprehensive


(Accumulated





ComprehensiveShares


Amount


Shares


Amount


Stock


Income/(Loss)


Deficit)


Total


IncomeBalance as of December 31, 2005


22,915,896


$
229



14,216


$
(93
)

$
130,338


$
3,515


$
54,877


$
188,866Exercise of common stock options


336,242



4











2,615











2,619Shares issued in connection with
    acquisition


674,505



7











15,279











15,286Shares issued in connection with
    prior acquisition


14,116















175











175Shares issued from manager stock
    purchase plan


785















20











20Stock option tax benefit


















1,626











1,626Stock-based compensation expense


















3,478











3,478Net income


























21,124



21,124


$
21,124Other comprehensive incomeForeign currency translation
    adjustment, net of tax






















2,415







2,415



2,415Fair market value adjustment on
    cash flow hedge, net of tax






















(80
)






(80
)


(80
)Comprehensive income

































$
23,459Balance as of September 30,
    2006 (unaudited)


23,941,544


$
240



14,216


$
(93
)

$
153,531


$
5,850


$
76,001


$
235,529    5




---



##### 



PRA
    INTERNATIONAL AND SUBSIDIARIES
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands) Nine Months EndedSeptember 30,2005


2006Cash flow from operating
    activitiesNet income

$
24,722


$
21,124Adjustments to reconcile net
    income to net cash provided by (used in) operating activities:Depreciation and amortization


8,479



8,774Stock-based compensation






3,478Provision for doubtful receivables


370



416Provision for deferred income taxes


(3,035
)


(4,582
)Excess tax benefits from
    share-based compensation






(1,626
)Changes in assets and liabilities,
    net of acquisition:Accounts receivable and unbilled
    services


1,547



(17,745
)Prepaid expenses and other assets


(1,390
)


751Accounts payable and accrued
    expenses


5,814



(22,330
)Income taxes


(3,391
)


4,557Advance billings


(42,060
)


22,512Net cash (used in) provided by
    operating activities


(8,944
)


15,329Cash flow from investing
    activitiesPurchase of fixed assets


(8,037
)


(4,941
)Disposal of fixed assets


97



115Purchase of marketable securities


(22,375
)


Cash paid for acquisitions, net of
    cash acquired


(7,297
)


(93,450
)Proceeds from marketable securities


46,875



Net cash provided by (used in)
    investing activities


9,263



(98,276
)Cash flow from financing
    activitiesRepayment of debt and capital
    leases


(138
)


(6,050
)Drawdown on revolving line of
    credit, net






30,000Issuance costs related to public
    offerings


(600
)


Excess tax benefits from
    share-based compensation


2,842



1,626Proceeds from stock option
    exercises


1,889



2,619Net cash provided by financing
    activities


3,993



28,195Effect of exchange rate on cash
    and cash equivalents


120



1,626Increase (decrease) in cash and
    cash equivalents


4,432



(53,126
)Cash and cash equivalents at
    beginning of period


65,888



73,640Cash and cash equivalents at end
    of period

$
70,320


$
20,514Supplemental disclosure of cash
    flow informationCash paid for taxes

$
16,850


$
5,957Cash paid for interest

$
213


$
487Supplemental disclosure of
    noncash investing and financing activitiesThe Company purchased all the
    assets and liabilities of PBR for cash and stock of $109,060.Fair value of assets





$
124,268Cash paid and equity issued






(109,060
)Liabilities assumed





$
15,208    6




---



##### 



PRA
    INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS
  (1)
    Basis of
    Preparation  Form 10-Q Regulation S-X. Form 10-K
  (2)  Significant
    Accounting Policies
  Principles
    of Consolidation
    Use of
    Estimates
    Unbilled
    Services
    Fair
    Value of Financial Instruments
    Goodwill
    and Other Intangibles
   7




---



##### 



PRA
    INTERNATIONAL AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Advance
    Billings
    Revenue
    Recognition
        Reimbursement
    Revenue and Reimbursable
    Out-of-Pocket
    Costs
  out-of-pocket out-of-pocket out-of-pocket
    Significant
    Customers
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2005


2006


2005


2006Customer A


15
%


*



13
%


*Customer B


11
%


*



10
%


*Customer C


10
%


*



11
%


*Customer D


*



*



*



10
%     *
    
    Less than 10% of consolidated service revenues in the respective
    period. 8




---



##### 



PRA
    INTERNATIONAL AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Concentration
    of Credit Risk 
    December 31,


September 30,2005


2006Customer A


16
%


17
%Customer C


11
%


*Customer D


*



16
%     *
    
    Less than 10% of consolidated accounts receivable and unbilled
    services as of the end of each period.    Foreign
    Currency Translation
    Comprehensive
    Income (Loss)
    Income
    Taxes
    Stock-Based
    Compensation
   9




---



##### 



PRA
    INTERNATIONAL AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
      Stock
    Options
      For the Nine Months EndedSeptember 30,2005


2006Dividend yield


0
%


0
%Expected volatility


37.80
%


48.63
%Risk-free interest rate


3.88
%


4.56
%Expected terms in years


5



6.5     For the NineMonths EndedSeptember 30,2005


2006($ In thousands, except per share data)Weighted-average fair value of
    options granted per share

$
10.53


$
12.81Intrinsic value of options
    exercised

$
8,056


$
5,688Cash received from options
    exercised

$
1,889


$
2,619Actual tax benefit realized for
    tax deductions from option exercises

$
2,842


$
1,626  10




---



##### 



PRA
    INTERNATIONAL AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Weighted AverageRemaining


AggregateWtd. Average


Contractual


IntrinsicOptions


Exercise Price


Life


Value(Millions)Outstanding December 31, 2005


3,149,373


$
11.60Granted


828,750



25.47Exercised


(336,242
)


8.41Expired/forfeited


(194,225
)


21.53Outstanding September 30, 2006


3,447,656


$
14.69



5.7


$
42Exercisable at September 30,
    2006


1,712,529


$
6.84



5.3


$
34   Accounting for Stock Issued to Employees
  For the Three


For the NineMonths Ended


Months EndedSeptember 30, 2005


September 30, 2005Net income, as reported

$
9,209


$
24,722Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of tax


(380
)


(1,049
)SFAS No. 123 pro forma
    net income

$
8,829


$
23,673Basic net income per share, as
    reported

$
0.41


$
1.10Basic net income per share, pro
    forma

$
0.39


$
1.06Diluted net income per share, as
    reported

$
0.38


$
1.01Diluted net income per share, pro
    forma

$
0.36


$
0.97   Net
    income per share
     11




---



##### 



PRA
    INTERNATIONAL AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2005


2006


2005


2006Numerator:Net income for basic and diluted
    EPS

$
9,209


$
8,183


$
24,722


$
21,124Denominator:Weighted average shares for basic
    EPS


22,548



23,754



22,436



23,294Effect of dilutive stock options


1,929



1,184



1,926



1,263Weighted average shares for
    diluted EPS


24,477



24,938



24,362



24,557Basic earnings per share

$
0.41


$
0.34


$
1.10


$
0.91Diluted earnings per share

$
0.38


$
0.33


$
1.01


$
0.86   Recent
    Accounting Pronouncements
  Accounting for
    Uncertainty in Income Taxes  an interpretation of
    FASB Statement No. 109, Accounting for Income Taxes
  (3)
    Accounts
    receivable and unbilled services    December 31,


September 30,2005


2006Accounts receivable

$
45,933


$
66,673Unbilled services


44,189



50,08590,122



116,758Less: Allowance for doubtful
    accounts


(4,696
)


(5,169
)$
85,426


$
111,589   (4)
    Goodwill
    and Other Intangibles    Carrying amount as of
    December 31, 2005

$
106,748Acquisitions


95,150Foreign currency exchange rate
    changes


1,052Carrying amount as of
    September 30, 2006

$
202,950  12




---



##### 



PRA
    INTERNATIONAL AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    As of December 31,


As of September 30,Weighted


2005


2006Average


Gross





Net


Gross





NetAmortization


Carrying


Accumulated


Carrying


Carrying


Accumulated


CarryingPeriod


Amount


Amortization


Amount


Amount


Amortization


Amount(In Years)Non-compete and other agreements


2


$
2,504


$
2,413


$
91


$
3,058


$
2,637


$
421Customer relationships


10



8,492



3,420



5,072



23,541



4,386



19,155Trade names


Indefinite



19,841



474



19,367



19,905



474



19,431$
30,837


$
6,307


$
24,530


$
46,504


$
7,497


$
39,007     (In thousands)2006 (remaining 3 months)

$
7972007


2,5732008


2,3612009


2,3612010


2,3612011 and thereafter


9,123$
19,576   (5)
    Accounting
    for Derivative Instruments and Hedging Activities        (6)
    Commitments
    and Contingencies  Legal
    Proceedings
   13




---



##### 



PRA
    INTERNATIONAL AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    (7)
    Related-Party
    Transactions    (8)
    Segment
    Reporting  Operations by Geographic Area    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2005


2006


2005


2006Service revenueUnited States

$
42,399


$
43,017


$
128,789


$
120,856Canada


7,253



7,970



21,753



23,713Europe


23,533



27,920



67,845



69,821Other


2,382



2,597



6,804



6,407$
75,567


$
81,504


$
225,191


$
220,797   December 31,


September 30,2005


2006Long-lived assetsUnited States

$
23,423


$
19,834Canada


1,448



725Europe


4,265



12,207Other


543



810$
29,679


$
33,576   (9)
    Acquisitions  lock-up
 14




---



##### 



PRA
    INTERNATIONAL AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
      Three Months Ended


Nine Months EndedSeptember 30,


September 30,2005


2006


2005


2006Pro forma revenue

$
93,800


$
92,039


$
286,558


$
271,150Pro forma net income

$
8,036


$
7,772


$
24,574


$
20,661Pro forma net income per diluted
    share

$
0.32


$
0.30


$
0.98


$
0.82  15




---



##### 



ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS    Overview
           16




---



##### 



Service
    Revenue
      Reimbursement
    Revenue and Reimbursable
    Out-of-Pocket
    Costs
  out-of-pocket out-of-pocket out-of-pocket out-of-pocket and/or
  Direct
    Costs
    Selling,
    General, and Administrative Expenses
    Depreciation
    and Amortization
   17




---



##### 



Income
    Taxes
      Exchange
    Rate Fluctuations
    September 30,


December 31,


September 30,2005


2005


2006U.S. Dollars per:Euro


1.25



1.24



1.25Pound Sterling


1.84



1.81



1.82Canadian Dollar


0.82



0.83



0.89   Results
    of Operations
   18




---



##### 



Year Ended December 31,


Nine Months Ended September 30,2003


2004


2005


2005


2006Service revenue


100.0
%


100.0
%


100.0
%


100.0
%


100.0
%Direct costs


51.1



48.3



46.3



46.2



51.1Selling, general, and
    administrative


32.5



32.5



32.5



33.0



32.9Depreciation and amortization


3.6



3.5



3.8



3.8



4.0Management fee


0.3



0.3











Option repurchase






1.3











Vested option bonus






0.9











Income from operations


12.5



13.1



17.4



17.0



12.0Interest expense


(2.9
)


(1.4
)


(0.2
)


(0.1
)


(0.4
)Interest income


0.1



0.1



0.6



0.5



0.6Other income (expenses), net


(1.6
)


0.0



(0.4
)


(0.3
)


(0.2
)Income before income taxes


8.1



11.8



17.4



17.1



12.0Provision for income taxes


2.8



4.3



6.4



6.1



2.4Net income


5.3
%


7.5
%


10.9
%


11.0
%


9.6
%   Selected
    Consolidated Financial Data
  Form 10-K
  Year Ended December 31,


Nine Months Ended September 30,2003


2004


2005


2005


2006(Unaudited)


(Unaudited)RevenueService revenue

$
247,888


$
277,479


$
294,739


$
225,191


$
220,797Reimbursement revenue


42,109



30,165



31,505



24,585



24,829Total revenue

$
289,997


$
307,644


$
326,244


$
249,776


$
245,626Operating expensesDirect costs


126,501



134,067



136,572



103,973



112,729Reimbursable
    out-of-pocket
    costs


42,109



30,165



31,505



24,585



24,829Selling, general, and
    administrative


80,585



90,139



95,827



74,325



72,705Depreciation and amortization


8,967



9,691



11,156



8,479



8,774Management fee


800



704











Option repurchase(1)






3,713











Vested option bonus(1)






2,738











Income from operations


31,035



36,427



51,184



38,414



26,589Interest income (expense), net


(6,856
)


(3,643
)


1,181



879



473Other income (expenses), net


(4,023
)


(38
)


(1,137
)


(786
)


(519
)Income before income taxes


20,156



32,746



51,228



38,507



26,543Provision for income taxes


6,909



11,997



19,005



13,785



5,419Net income

$
13,247


$
20,749


$
32,223


$
24,722


$
21,124 19




---



##### 



Year Ended December 31,


Nine Months Ended September 30,2003


2004


2005


2005


2006(Unaudited)


(Unaudited)Net income per shareBasic

$
0.83


$
1.13


$
1.43


$
1.10


$
0.91Diluted

$
0.71


$
1.02


$
1.32


$
1.01


$
0.86Shares used to compute net income
    per share:Basic


15,965,408



18,442,313



22,527,108



22,436,480



23,294,442Diluted


18,666,012



20,329,852



24,389,592



24,362,464



24,557,484Other Financial Data:Net cash provided by (used in)
    operating activities

$
2,058


$
71,636


$
(1,477
)

$
(8,944
)

$
15,329Net cash provided by (used in)
    investing activities


(9,599
)


(32,350
)


4,016



9,263



(98,276
)Net cash provided by (used in)
    financing activities


26,028



(6,430
)


5,441



3,993



28,195Non-GAAP Data:Adjusted EBITDA(2)

$
35,979


$
52,531


$
61,203


$
46,107


$
34,844Adjusted EBITDA as a % of service
    revenue


14.5
%


18.9
%


20.8
%


20.5
%


15.8
%EBITDA(2)

$
35,979


$
46,080


$
61,203


$
46,107


$
34,844EBITDA as a % of service revenue


14.5
%


16.6
%


20.8
%


20.5
%


15.8
%Consolidated Balance Sheet
    Data:Cash and cash equivalents

$
32,328


$
65,888


$
73,640


$
70,320


$
20,514Marketable securities






24,500











Working capital


(8,449
)


11,478



41,760



35,366



(3,779
)Total assets


298,558



337,344



329,364



320,652



418,351Long-term debt and capital leases,
    less current maturities


57,810



75



9



11



24,004Stockholders equity


74,565



150,379



188,866



179,865



235,529     (1)
    
    Includes a $3.7 million charge for the repurchase of
    options, predominantly from former employees, and a
    $2.7 million charge for a per-vested-option bonus paid to
    all employee option holders, both of which were executed in
    connection with the culmination of the January 2004 tender
    process.(2)
    
    Adjusted EBITDA and EBITDA are not substitutes for operating
    income, net income, or cash flow from operating activities as
    determined in accordance with GAAP as measures of performance or
    liquidity. See Managements Discussion and Analysis
    of Financial Condition and Results of Operations 
    Non-GAAP Financial Measures. For each of the periods
    indicated, the following table sets forth a reconciliation of
    EBITDA and Adjusted EBITDA to net cash provided by (used in)
    operating activities and to net income.  20




---



##### 



Year Ended December 31,


Nine Months Ended September 30,2003


2004


2005


2005


2006(Unaudited)


(Unaudited)Adjusted EBITDA

$
35,979


$
52,531


$
61,203


$
46,107


$
34,844Option repurchase






(3,713
)










Vested option bonus






(2,738
)










EBITDA


35,979



46,080



61,203



46,107



34,844Depreciation and amortization


(8,967
)


(9,691
)


(11,156
)


(8,479
)


(8,774
)Interest expense, net


(6,856
)


(3,643
)


1,181



879



473Provision for income taxes


(6,909
)


(11,997
)


(19,005
)


(13,785
)


(5,419
)Net income


13,247



20,749



32,223



24,722



21,124Depreciation and amortization


8,967



9,691



11,156



8,479



8,774Stock-based compensation


















3,478Provision for doubtful receivables


4,851



1,914



(123
)


370



416Amortization of debt discount


1,642















Excess tax benefits from
    share-based compensation


















(1,626
)Provision for deferred income taxes


(3,997
)


2,606



2,354



(3,035
)


(4,582
)Debt issuance costs write-off


750



1,241











Changes in assets and liabilities:Accounts receivable and unbilled
    services


(18,538
)


15,373



(3,057
)


1,547



(17,745
)Prepaid expenses and other assets


408



1,226



(2,465
)


(1,390
)


751Accounts payable and accrued
    expenses


(4,873
)


7,793



11,022



5,814



(22,330
)Income taxes


(481
)


12,150



(3,677
)


(3,391
)


4,557Advance billings


82



(1,107
)


(48,910
)


(42,060
)


22,512Net cash provided by (used in)
    operating activities

$
2,058


$
71,636


$
(1,477
)

$
(8,944
)

$
15,329   Three
    Months Ended September 30, 2006 Compared to Three Months
    Ended September 30, 2005
     21




---



##### 



Nine
    months Ended September 30, 2006 Compared to Nine months
    Ended September 30, 2005
           22




---



##### 



Recent
    Developments
  lock-up
  Liquidity
    and Capital Resources
           23




---



##### 



Non-GAAP Financial
    Measures
       24




---



##### 



Critical
    Accounting Policies and Estimates
    Revenue
    Recognition
    Allowance
    for Doubtful Accounts
   25




---



##### 



Tax
    Valuation Allowance
      Stock-Based
    Compensation
        Long-Lived
    Assets
   26




---



##### 



Goodwill
    and Indefinite-Lived Intangible Assets
      Inflation
    Potential
    Liability and Insurance
    Special
    Note Regarding Risks and Forward-Looking
    Statements
    ITEM 3
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest
    Rate Risk
    Foreign
    Exchange Risk
   27




---



##### 



Foreign
    Currency Hedges
   ITEM 4 
    CONTROLS AND PROCEDURES  Effectiveness
    of Our Disclosure Controls and Procedures
  Rule 13a-15
 28




---



##### 



Changes
    in Internal Control Over Financial Reporting
       PART II
    OTHER INFORMATION  ITEM 1.
    LEGAL
    PROCEEDINGS    ITEM 1A.
    RISK
    FACTORS    The
    sale of a substantial number of our shares of common stock in
    the public market could reduce the market price of our shares,
    which in turn could negatively impact your investment in
    us.
   29




---



##### 



Our
    business could be harmed if we cannot successfully integrate
    future acquisitions.
    ITEM 2.
    UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS    lock-up lock-up
  and/or
  ITEM 6.
    EXHIBITS  ExhibitNumber

Description of Exhibit10
.1(1)

Share and Loan Note Purchase
    Agreement by and among PRA International, Colomera Investments
    B.V., PBR Holdings SA and Pharma Bio-Research Metaholdings B.V.,
    dated June 18, 2006. The schedules to Share Purchase
    Agreement are omitted but will be furnished to the Securities
    and Exchange Commission supplementally upon request.10
.2(1)

Amendment of the Share and Loan
    Note Purchase Agreement by and among PRA International,
    Colomera Investments B.V., PBR Holdings SA and Pharma
    Bio-Research Metaholdings B.V., dated July 21, 2006.21
.1(2)

Subsidiaries of PRA International.31
.1(1)

Certification of the Chief
    Executive Officer pursuant to
    Rule 13a-14(a).31
.2(1)

Certification of the Chief
    Financial Officer pursuant to
    Rule 13a-14(a).32
.1(2)

Certification Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002 
    Chief Executive Officer.32
.2(2)

Certification Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002 
    Chief Financial Officer.     (1)
    
    Incorporated by reference to
    Form 8-K
    filed on July 26, 2006 (File
    No. 000-51029).(2)
    
    Furnished herewith.(3)
    
    Filed herewith. 30




---



##### 



SIGNATURES
      By:
    /s/  Patrick
    K. Donnelly    Title:
    Chief Executive Officer  By:
    /s/  J.
    Matthew Bond    Title:
    Chief Financial Officer   31