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SECURITIES AND EXCHANGE
    COMMISSIONWashington, D.C. 20549
 FORM 10-K
  þ  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
  For the transition period from
    
    to
  Commission File
    No. 0-29100
  eResearchTechnology,
    Inc.
    Delaware

22-3264604(State of Incorporation)

(I.R.S. Employer Identification No.)1818 Market Street Philadelphia, PA

19103(Address of Principal Executive Offices)

(Zip Code)   (215) 972-0420
   Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Class

Name of Each Exchange on Which
    RegisteredCommon Stock, $.01 par value

The Nasdaq Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act: None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large accelerated
    filer þ

Accelerated
    filer oNon-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ




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Class

Outstanding at February 20,
    2009Common Stock, $.01 par value per share

51,285,890 shares   DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 



TABLE OF
    CONTENTS
   
 ItemNumberPART I1

Business

3General

3Product and Service
    Offerings

4Research and
    Development

8Our Clients

9Sales and
    Marketing

9Partnerships

9Competition

9Government
    Regulation

10Potential Liability
    and Insurance

11Intellectual
    Property

11Employees

11Available
    Information

121A

Risk Factors

121B

Unresolved Staff Comments

222

Properties

223

Legal Proceedings

234

Submission of Matters to a Vote of Security
    Holders

23Special

Executive Officers of Registrant

23PART II5

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities

256

Selected Financial Data

277

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

28Cautionary
    Statement for Forward-Looking Information

28Overview

28Results of
    Operations

29Executive
    Overview

29Year
    Ended December 31, 2007 Compared to the Year Ended
    December 31, 2008

32Year
    Ended December 31, 2006 Compared to the Year Ended
    December 31, 2007

36Liquidity and
    Capital Resources

38Inflation

41Recent Accounting
    Pronouncements

41Critical Accounting
    Policies

427A

Quantitative and Qualitative Disclosures About
    Market Risk

44Interest Rate
    Risk

44Foreign Currency
    Risk

448

Financial Statements and Supplementary
    Data

459

Changes in and Disagreements with Accountants
    on Accounting and Financial Disclosure

459A

Controls and Procedures

459B

Other Information

45PART III10

Directors, Executive Officers and Corporate
    Governance

4611

Executive Compensation

4612

Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters

4613

Certain Relationships and Related
    Transactions, and Director Independence

4614

Principal Accountant Fees and Services

46PART IV15

Exhibits and Financial Statement
    Schedules

47Signatures

50Index to Consolidated Financial Statements and
    Financial Statement Schedule

F-1EX-10.53EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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PART I  ITEM 1.
    BUSINESS General  tm tm
  set-up,
  Cardiac
    Safety Market in Clinical Trials
         3




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Operations
   Product
    and Service Offerings    Year Ended December 31,2006


2007


2008Net revenues:Licenses


3.5
%


2.7
%


2.4
%Services


64.0



70.5



74.6Site support


32.5



26.8



23.0Total net revenues


100.0



100.0



100.0   tm
 4




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tm
  Product and Service
    Solutions

DescriptionCardiac Safety

ERT provides a highly scalable set of Cardiac Safety solutions
    centered on our regulatory compliant (Title 21 CFR,
    Part 11) EXPERT®

    Technology Platform.
    EXPERT®

    provides for workflow enabled cardiac safety data collection,
    interpretation and distribution of ECG data and images.
    EXPERT®

    also enables analysis and cardiologist interpretation of ECGs
    performed on research subjects in connection with our
    clients clinical trials.EXPERT®

    is designed specifically to address global regulatory guidance
    and technical standards for digital ECG processing to include
    digital collection, waveform measurements and annotations,
    review and output to the regulatory standard file format.
    EXPERT®

    includes the ability for ECGs to be viewed as
    side-by-
    side ECG images for comparison, supplemented by the ability to
    review prior patient ECG tracings.EXPERT®

    further enhances our ECG solutions by permitting cardiologists,
    with training in our ECG interpretation guidelines and proper
    security access, to perform telecardiology, which is the ability
    to access and evaluate ECGs electronically in remote locations.
    Our
    EXPERT®

    solution supports a wide variety of workflows and rules that in
    turn provides us the flexibility to accommodate the unique needs
    of individual sponsors and studies.We provide the following centralized ECG testing services as
    part of our Cardiac Safety solutions:   Digital ECG Services. Allows the investigator to
    transmit, via modem, 12-lead ECG data directly to us for
    interpretation and rapid return of results to the investigator
    and the sponsor. ECGs are measured using a manual method or a
    semi-automatic method. Under the manual method, ECGs are
    measured by our cardiac safety specialists utilizing an on
    screen, high-resolution caliper placement system, and are then
    interpreted by a cardiologist. Under the semi-automatic method,
    ECGs are measured by a cardiac safety specialist and
    cardiologist adjudication of software algorithm placed
    measurements where appropriate and as desired by our clients.   Continuous Digital 12-lead ECG Recording. The
    12-lead ECG signals are recorded onto compact flash memory cards
    and submitted to us. From these recordings, 12-lead ECGs can be
    evaluated at specific time points. These ECGs are measured by a
    cardiac safety specialist and then interpreted by a
    cardiologist. Continuous digital 12-lead ECG recordings can also
    be used for studies assessing the incidence of arrhythmias,
    cardiac ischemia and/or heart rate variability findings.   Holter Recording. This is a continuous ECG
    recording of the hearts rhythm on a flash card that is
    reviewed by a cardiac safety specialist and then by a
    cardiologist. Holter data reported by us is provided for studies
    assessing the incidence of arrhythmias, cardiac ischemia and/or
    heart rate variability.   Paper ECG Services. Paper ECGs are measured by our
    cardiac safety specialists utilizing a high-resolution
    digitizing system, and are then interpreted by a 5




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cardiologist. Alternatively, paper ECGs may be scanned to a
    digital format, where appropriate.   FDA XML ECG Services. This service provides our
    clients with electronic versions of each ECG processed by
    EXPERT®.

    The ECGs processed by
    EXPERT®

    are rendered in a format compliant with the FDAs XML
    standard for digital ECGs.   MyStudy
    Portal/EXPERT®

    Direct. This is a hosted solution, which delivers near real time
    cardiac safety feedback at the program, trial, center and
    patient level, along with related metrics, such as trial
    enrollment, as well as the ability to organize and publish a
    variety of study-specific information and the ability to link
    data points in reports directly to digital ECG waveforms.   Cardiac Safety Equipment. We provide ECG equipment
    to clients to perform the ECG and Holter recordings and give
    them the means to send such recordings to ERT. The service
    comprises equipment rental and sales, along with related
    supplies and logistics management.Cardiac Safety Consulting

The centralization of electrocardiograms in clinical research
    has become increasingly important to organizations involved in
    the development of new drugs. Global regulators each apply their
    own slightly different interpretation of the ICH E14 guidelines
    and, as a result, sponsors look to their vendors to provide key
    scientific input into the overall process. Our cardiac safety
    consulting service aids sponsors in the development of protocol
    synopses, the creation and analysis of statistical plans as well
    as the provision of an expert medical report with regard to the
    cardiac findings. We are involved in all phases of clinical
    development from a consultancy point of view. We offer this
    service both as a stand-alone service and integrated with our
    full suite of Cardiac Safety solutions.EDC

The process of designing, implementing and managing a clinical
    trial requires a well defined process and set of supporting
    products to effectively handle the variety of tasks and
    information comprising a clinical trial. We provide a suite of
    products to address the capture, management and dissemination of
    clinical trial data. Our integrated suite is comprised of the
    following:  
Portal  is an easy to use portal application enabling
clinical trial researchers and staff to gain real-time access to
study dashboards, progress reports, folders and forums enabling
efficient management and communication of study progress. Portal
also includes a web-based training environment, eHealth
Educationtm, which enables clinical research professionals to learn
about technology developments, new products, clinical protocols,
and other educational matters.   EDC Now!  uses the latest technology to
    provide a comprehensive electronic data capture (EDC) system
    which provides sponsors with the ability to roll out electronic
    studies in short time frames. This rapid time to start combined
    with a fixed price and scope approach helps sponsors realize the
    benefits of EDC without the risks normally associated with the
    typical EDC process.   Data Management  is a clinical data
    management application for collecting, cleaning and managing
    clinical trial data. 6




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   Adverse Event Reporting  is an adverse
    event management system enabling the generation of key
    regulatory reports, including CIOMS and Medwatch.   Trial Management  is a clinical trial
    management technology that can be used to set up clinical
    trials, establish standards, track study activities, plan
    resources, distribute supplies, manage the financial aspects of
    a trial and electronically view clinical trial data.Our EDC solution is available for license over a renewable term
    (subscription license) in addition to a traditional perpetual
    license with annual maintenance. Our EDC offerings may be hosted
    by us or one of our third-party hosting partners, or they may be
    installed on our clients computing infrastructure.ePRO

Data is collected during clinical trials allowing sponsors to
    gauge the efficacy of the compounds they are testing. Collecting
    data directly from the patient can be performed in a number of
    different methods, including electronically. We provide an
    electronic patient reported outcome (ePRO) service that performs
    this function for sponsors. Our solution consists of the
    following tools and services:   Data Collection  Our ePRO solution is
    an IVR system that allows subjects in a clinical trial to call
    into the system via a telephone and enter their reported data
    directly into the system.   Data Management  Once the data has been
    entered into the ePRO system there are a number of data
    management functions that can be performed depending on the
    requirements of the sponsor. This includes sending call reports
    to the sites, sending call reports to the sponsor, alerting the
    sites if data is outside specifically set boundaries, web access
    to the data by the sponsor, and cleaning of data per the specs
    provided by the sponsor.   Data Delivery  At the conclusion of the
    study, the data is compiled and then delivered according to the
    sponsor requirements. This can include SAS exports, ASCII
    exports, electronic file transfers and data delivery on digital
    media.Project Assurance

We provide a full spectrum of consulting services for all of our
    products that augment the study management and implementation
    efforts of clients in support of their clinical research
    requirements. The methodology provides a consistent framework
    through which we can effectively manage the delivery of all
    product and service solutions and provide the standards,
    guidelines and services that allow us to effectively anticipate
    our clients needs and assure proactive communication and
    implementation in order to meet and exceed our clients
    goals. The services include study initiation, project
    management, education, site qualification, configuration,
    technology and regulatory review, research dashboards and
    electronic reporting, data management, uniform standards and
    standard operating procedures, and migration services. In
    addition, we provide
    on-site
    research and technology advisory services, support services
    including online and help desk support, and software
    maintenance.  7




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Research
    and Development  Overview
    Technology
    2008
    Product Initiatives
    ® ® start-up ® ®
  ®
     8




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Our
    Clients    Sales and
    Marketing      agreed-upon
  10-year
    Partnerships    Competition     9




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
    client service;
    a significant base of reference clients;
    breadth and depth of solution, including the ability to
    accommodate both electronic forms and manual, paper-based
    research methods of data collection, management and analysis;
    scientific expertise;
    consulting capabilities;
    product quality and performance;
    core technology and product features;
    ability to implement solutions;
    capacity;
    price;
    financial and organizational stability; and
    ability to adapt to changing regulatory guidance.   Government
    Regulation           10




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QT/QTc
   Potential
    Liability and Insurance   Intellectual
    Property    ®
  ®
 Employees   11




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Available
    Information  www.ert.com. Form 10-K, Form 10-Q, Form 8-K
  ITEM 1A.
    RISK
    FACTORS  Form 10-K.
  Our
    future operating results are uncertain and may fluctuate. If we
    fail to meet the expectations of securities analysts and
    investors, our stock price would likely decline.
    
    we generate a significant percentage of our revenues from a
    limited number of clients;
    our sales cycles can be lengthy and variable;
    Thorough QTc studies are typically of large volume and of short
    duration; and
    sponsors and CROs may unexpectedly cancel, postpone or reduce
    the size of clinical trials.    If
    general economic conditions fail to improve or continue to
    deteriorate, our operations may be affected and/or we may be
    unable to secure future financing to make the necessary
    investments to grow our business.
   12




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If
    general economic conditions fail to improve or continue to
    deteriorate, potential clients may be unable to get the
    necessary financing to conduct business and existing clients may
    fail to make timely payments for services that we have
    performed, which could adversely affect our ability to increase
    overall revenues and our overall financial position.
    We depend
    entirely on the clinical trial market and a downturn in this
    market could cause our revenues and profitability to
    decrease.
    Extensive
    governmental regulation of the clinical trial process could
    require costly modifications to our products, adversely affect
    prospective clients willingness to use our product and
    service solutions and increase competition and reduce our market
    share.
     13




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The FDA
    may recommend a different approach to measure drug effects on
    the QT interval of an ECG which could make our systems and
    processes obsolete and adversely affect revenue and
    profitability.
  ®
  We have
    clients from whom we derive substantial revenue and therefore
    the loss of even a few of our clients could significantly reduce
    our revenues and profitability.
    Consolidation
    among our clients could cause us to lose clients, decrease the
    market for our products and result in a reduction of our
    revenues and profitability.
     14




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Our
    failure to continue to expand our business or manage growth
    successfully could disrupt our business operations, increase our
    costs and delay implementation of our business
    strategies.
    We may
    not be successful in competing against others providing similar
    product and service solutions, which could reduce our revenues,
    profitability and market share.
    Our
    failure to establish and maintain partnerships and other
    strategic alliances may delay the development of our product and
    service solutions, cause us to lose clients and prevent us from
    growing our business, any of which could also cause our stock
    price to decline.
    We may
    incur liability as a result of providing consulting and Cardiac
    Safety analysis and interpretation services.
   15




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Our
    business could be seriously harmed by our dependence on a
    limited number of suppliers.
    Interruptions
    or delays in service from our third-party providers could impair
    the delivery of our hosted solutions and harm our
    business.
    The
    cardiac safety equipment that we own and lease could become
    obsolete due to technological advance. We may not be able to
    provide the quantity of equipment needed to service our clients.
    We may fail to obtain the necessary certifications for use of
    the equipment. Any such development would reduce our revenues
    and profitability.
    Capacity
    constraint or system failures could result in the loss of or
    liability to clients, which could reduce our revenues, increase
    our expenses and reduce profitability.
   16




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
    software or hardware malfunctions that interrupt operation of
    our applications or cause loss of data integrity;
    power loss or telecommunications failures;
    overloaded systems;
    human error; and
    natural disasters.    Our
    software products are complex and may contain undetected
    software errors, which could lead to an increase in our costs or
    a reduction in our revenues and profitability.
    
    cause sales of our solutions to decrease and our revenues and
    profitability to decline;
    cause us to incur significant warranty and repair costs;
    divert the attention of our technical personnel away from
    product development efforts; and
    cause significant client relations problems.    Rapidly
    changing technology may impair our ability to develop and market
    our solutions and cause us to become less competitive.
      
    rapid technological change;
    changing client needs;
    frequent new product introductions; and
    evolving industry standards. 17




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If
    clinical trial sponsors and CROs do not shift from their
    existing paper-based methods of collecting and managing clinical
    trial data at investigator sites to an electronic system with
    centralization, we may not achieve the market penetration
    necessary to grow the business at expected levels.
    We depend
    on certain key executives. If we lose the services of any of
    these executives, our operations could be disrupted, we could
    incur additional expenses and our ability to expand our
    operations could be impeded, particularly if we are not able to
    recruit a suitable replacement in a timely manner.
    If we are
    unable to protect our proprietary technology or maintain our
    technological advantages, we may lose our intellectual property
    rights and become less competitive.
  ® continuation-in-part ® ®
  We may
    acquire or make investments in companies or technologies that
    could cause disruption of our business and loss of value or
    dilution to our stockholders.
   18




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
    managing the risks and challenges of entering markets or types
    of businesses in which we have limited or no direct experience;
    difficulties in integrating the operations, technologies,
    products, existing contracts and personnel of the target company
    and realizing the anticipated synergies of the combined
    businesses;
    the price we pay or other resources that we devote may exceed
    the value we eventually realize or the value we could have
    realized if we had allocated the purchase price or other
    resources to another opportunity;
    potential loss of key employees, customers and strategic
    alliances from either our current business or the target
    companys business;
    failure of a party to perform ancillary contractual obligations
    related to the acquisition;
    the diversion of managements attention from other business
    concerns; and
    assumption of unanticipated problems or latent liabilities, such
    as problems with the quality of the target companys
    products.      Goodwill
    is subject to impairment which could result in a significant
    expense.
    Third
    parties may claim that we infringe upon their intellectual
    property rights, which could result in the loss of our rights,
    subject us to liability and divert management
    attention.
   19




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
    stop using the challenged intellectual property or selling our
    product or service solutions that incorporate it;
    obtain a license to use the challenged intellectual property or
    to sell product or service solutions that incorporate it, which
    could be costly or unavailable; and
    redesign those product or service solutions that are based on or
    incorporate the challenged intellectual property, which could be
    costly and time consuming or could adversely affect the
    functionality and market acceptance of our products.    Our
    international operations expose us to additional
    risks.
    
    government regulations;
    trade restrictions;
    burdensome foreign taxes;
    exchange rate controls and currency exchange rate fluctuations;
    political and economic instability;
    varying technology standards; and
    difficulties in staffing and managing foreign operations.       20




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In the
    event we are unable to satisfy regulatory requirements relating
    to internal control over financial reporting, or if these
    internal controls are not effective, our business and financial
    results may suffer.
    In the
    course of conducting our business, we possess or could be deemed
    to possess personal medical information in connection with the
    conduct of clinical trials. If we fail to keep this information
    properly protected we could be subject to significant
    liability.
    The
    market price and trading volume of our common stock may be
    volatile, which could result in substantial losses for investors
    purchasing shares in the public markets and subject us to
    securities class action litigation. The current market price of
    our common stock may not be indicative of future market prices
    and we may be unable to sustain or increase the value of an
    investment in our common stock.
    
    changes in estimates of our financial results or recommendations
    by securities analysts;
    financial results that are below estimate of such results;
    changes in general economic, industry and market conditions;
    sales or transfers of large blocks of stock by existing
    investors;
    investors general perception of us; 21




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
    period-to-period
    fluctuations in our financial results or those of companies that
    are perceived to be similar to us;
    changes in market valuations of similar companies;
    announcements by us or our competitors of significant products,
    contracts, acquisitions or strategic alliances;
    future issuances of securities or the incurrence of debt by us,
    or other changes in our capital structure;
    success of competitive products and technologies;
    the failure of any of our software products, services and hosted
    solutions to achieve or maintain commercial success;
    regulatory developments in the United States and foreign
    countries;
    changes in industry analyst recommendations;
    additions or departures of key personnel; and
    litigation involving our company or our general industry or both.    Sales of
    large blocks of our common stock could cause the market price of
    our common stock to drop significantly, even if our business is
    doing well.
      Third
    parties have made claims for damages against the Company and may
    continue to do so, which could result in an unfavorable
    settlement or judgment against us.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES   22




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ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   SPECIAL
    ITEM. EXECUTIVE OFFICERS OF REGISTRANT    Name

Age

PositionMichael J. McKelvey, Ph.D.


56


President, Chief Executive Officer and DirectorJoel Morganroth, MD


63


Chairman of the Board of Directors and Chief Scientific OfficerKeith D. Schneck


53


Executive Vice President, Chief Financial Officer and SecretaryThomas P. Devine


56


Executive Vice President and Chief Development OfficerAmy Furlong


36


Executive Vice President, Cardiac SafetyJeffrey S. Litwin, MD


51


Executive Vice President and Chief Medical OfficerJohn M. Blakeley


41


Executive Vice President, Sales and MarketingRobert S. Brown


53


Senior Vice President, Strategic Marketing, Planning &
    PartnershipsGeorge Tiger


49


Senior Vice President, Americas Sales          23




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24




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PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    Calendar Period

High


Low2007First Quarter

$
8.21


$
6.12Second Quarter


9.72



7.66Third Quarter


12.00



9.36Fourth Quarter


12.34



8.532008First Quarter

$
12.73


$
8.94Second Quarter


17.82



11.90Third Quarter


18.85



9.81Fourth Quarter


12.00



3.86         ISSUER
    PURCHASES OF EQUITY SECURITIES
  (c) Total Number of


(d) Maximum NumberShares Purchased as


of Shares that mayPart of Publicly


yet be Purchased(a) Total Number of


(b) Average Price


Announced Plans or


Under the Plans orPeriod

Shares Purchased


Paid per Share


Programs


ProgramsOctober 2008





$








8,315,400November 2008





$








8,315,400December 2008


439,749


$
5.80



439,749



7,875,651Total


439,749







439,749  25




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Stockholder
    Return Performance Graph
    Form 10-K
  
 26




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ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
  Consolidated
    Statements of Operations Data (in thousands, except per share
    data)
  Year Ended December 31,2004


2005


2006


2007


2008Net revenues:Licenses

$
9,803


$
6,063


$
3,017


$
2,700


$
3,203Services


76,340



59,712



55,309



69,547



99,258Site support


23,250



21,072



28,042



26,451



30,679Total net revenues


109,393



86,847



86,368



98,698



133,140Costs of revenues:Cost of licenses


664



436



286



304



755Cost of services


24,124



24,337



25,431



30,522



39,697Cost of site support


11,486



13,965



18,821



17,808



18,445Total costs of revenues


36,274



38,738



44,538



48,634



58,897Gross margin


73,119



48,109



41,830



50,064



74,243Operating expenses:Selling and marketing


9,391



9,122



11,051



11,222



13,273General and administrative


10,276



11,458



14,668



12,258



18,181Research and development


4,090



4,093



4,146



4,333



4,394Total operating expenses


23,757



24,673



29,865



27,813



35,848Operating income


49,362



23,436



11,965



22,251



38,395Other income, net


863



936



1,250



2,206



1,730Income before income taxes


50,225



24,372



13,215



24,457



40,125Income tax provision


20,501



9,007



4,905



9,205



15,123Net income

$
29,724


$
15,365


$
8,310


$
15,252


$
25,002Basic net income per share

$
0.58


$
0.31


$
0.17


$
0.30


$
0.49Diluted net income per share

$
0.54


$
0.29


$
0.16


$
0.29


$
0.48   Consolidated
    Balance Sheet Data (in thousands)
  December 31,2004


2005


2006


2007


2008Cash, cash equivalents and short-term investments

$
64,964


$
52,001


$
56,913


$
46,879


$
66,426Working capital


53,492



45,795



61,320



45,594



75,289Total assets


116,895



104,766



115,064



147,696



169,122Treasury stock


(31,555
)


(56,387
)


(62,190
)


(62,190
)


(64,763
)Total stockholders equity


86,854



79,973



93,622



113,512



137,428  27




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ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS Cautionary
    Statement for Forward-Looking Information  Form 10-K.
     Overview    set-up,
 28




---



##### Table of Contents



Results
    of Operations Executive
    Overview     29




---



##### Table of Contents



30




---



##### Table of Contents



Year Ended December 31,2006


2007


2008Net revenues:Licenses


3.5
%


2.7
%


2.4
%Services


64.0



70.5



74.6Site support


32.5



26.8



23.0Total net revenues


100.0



100.0



100.0Costs of revenues:Cost of licenses


0.3



0.3



0.6Cost of services


29.5



30.9



29.8Cost of site support


21.8



18.1



13.8Total costs of revenues


51.6



49.3



44.2Gross margin


48.4



50.7



55.8Operating expenses:Selling and marketing


12.7



11.4



10.0General and administrative


17.0



12.4



13.7Research and development


4.8



4.4



3.3Total operating expenses


34.5



28.2



27.0Operating income


13.9



22.5



28.8Other income, net


1.4



2.3



1.3Income before income taxes


15.3



24.8



30.1Income tax provision


5.7



9.3



11.3Net income


9.6
%


15.5
%


18.8
%  31




---



##### Table of Contents



Year
    Ended December 31, 2007 Compared to the Year Ended
    December 31, 2008    Year Ended December 31,2007


2008


Increase (Decrease)Licenses:Net revenues

$
2,700


$
3,203


$
503



18.6
%Costs of revenues


304



755



451



148.4
%Gross margin

$
2,396


$
2,448


$
52



2.2
%Services:Cardiac SafetyNet revenues

$
63,508


$
92,861


$
29,353



46.2
%Costs of revenues


27,929



36,976



9,047



32.4
%Gross margin

$
35,579


$
55,885


$
20,306



57.1
%Technology consulting and trainingNet revenues

$
2,630


$
3,220


$
590



22.4
%Costs of revenues


1,753



1,839



86



4.9
%Gross margin

$
877


$
1,381


$
504



57.5
%Software maintenanceNet revenues

$
3,409


$
3,177


$
(232
)


(6.8
%)Costs of revenues


840



882



42



5.0
%Gross margin

$
2,569


$
2,295


$
(274
)


(10.7
%)Total servicesNet revenues

$
69,547


$
99,258


$
29,711



42.7
%Costs of revenues


30,522



39,697



9,175



30.1
%Gross margin

$
39,025


$
59,561


$
20,536



52.6
%Site support:Net revenues

$
26,451


$
30,679


$
4,228



16.0
%Costs of revenues


17,808



18,445



637



3.6
%Gross margin

$
8,643


$
12,234


$
3,591



41.5
%TotalNet revenues

$
98,698


$
133,140


$
34,442



34.9
%Costs of revenues


48,634



58,897



10,263



21.1
%Gross margin


50,064



74,243



24,179



48.3
%Operating expenses:Selling and marketing


11,222



13,273



2,051



18.3
%General and administrative


12,258



18,181



5,923



48.3
%Research and development


4,333



4,394



61



1.4
%Total operating expenses


27,813



35,848



8,035



28.9
%Operating income


22,251



38,395



16,144



72.6
%Other income, net


2,206



1,730



(476
)


(21.6
%)Income before income taxes


24,457



40,125



15,668



64.1
%Income tax provision


9,205



15,123



5,918



64.3
%Net income

$
15,252


$
25,002


$
9,750



63.9
%  32




---



##### Table of Contents



Year Ended December 31,


Increase2007


2008


(Decrease)Cost of licenses


11.3
%


23.6
%


12.3
%Cost of services:Cardiac Safety


44.0
%


39.8
%


(4.2
%)Technology consulting and training


66.7
%


57.1
%


(9.6
%)Software maintenance


24.6
%


27.8
%


3.2
%Total cost of services


43.9
%


40.0
%


(3.9
%)Cost of site support


67.3
%


60.1
%


(7.2
%)Total costs of revenues


49.3
%


44.2
%


(5.1
%)Operating expenses:Selling and marketing


11.4
%


10.0
%


(1.4
%)General and administrative


12.4
%


13.7
%


1.3
%Research and development


4.4
%


3.3
%


(1.1
%)Total operating expenses


28.2
%


27.0
%


(1.2
%)   Revenues
         33




---



##### Table of Contents



Costs of
    Revenues
    ®
      Operating
    Expenses
   34




---



##### Table of Contents



35




---



##### Table of Contents



Year
    Ended December 31, 2006 Compared to the Year Ended
    December 31, 2007    Year Ended December 31,2006


2007


Increase (Decrease)Licenses:Net revenues

$
3,017


$
2,700


$
(317
)


(10.5
%)Costs of revenues


286



304



18



6.3
%Gross margin

$
2,731


$
2,396


$
(335
)


(12.3
%)Services:Cardiac SafetyNet revenues

$
48,139


$
63,508


$
15,369



31.9
%Costs of revenues


22,478



27,929



5,451



24.3
%Gross margin

$
25,661


$
35,579


$
9,918



38.7
%Technology consulting and trainingNet revenues

$
3,184


$
2,630


$
(554
)


(17.4
%)Costs of revenues


1,939



1,753



(186
)


(9.6
%)Gross margin

$
1,245


$
877


$
(368
)


(29.6
%)Software maintenanceNet revenues

$
3,986


$
3,409


$
(577
)


(14.5
%)Costs of revenues


1,014



840



(174
)


(17.2
%)Gross margin

$
2,972


$
2,569


$
(403
)


(13.6
%)Total servicesNet revenues

$
55,309


$
69,547


$
14,238



25.7
%Costs of revenues


25,431



30,522



5,091



20.0
%Gross margin

$
29,878


$
39,025


$
9,147



30.6
%Site support:Net revenues

$
28,042


$
26,451


$
(1,591
)


(5.7
%)Costs of revenues


18,821



17,808



(1,013
)


(5.4
%)Gross margin

$
9,221


$
8,643


$
(578
)


(6.3
%)TotalNet revenues

$
86,368


$
98,698


$
12,330



14.3
%Costs of revenues


44,538



48,634



4,096



9.2
%Gross margin


41,830



50,064



8,234



19.7
%Operating expenses:Selling and marketing


11,051



11,222



171



1.5
%General and administrative


14,668



12,258



(2,410
)


(16.4
%)Research and development


4,146



4,333



187



4.5
%Total operating expenses


29,865



27,813



(2,052
)


(6.9
%)Operating income


11,965



22,251



10,286



86.0
%Other income, net


1,250



2,206



956



76.5
%Income before income taxes


13,215



24,457



11,242



85.1
%Income tax provision


4,905



9,205



4,300



87.7
%Net income

$
8,310


$
15,252


$
6,942



83.5
%  36




---



##### Table of Contents



Year Ended December 31,


Increase2006


2007


(Decrease)Cost of licenses


9.5
%


11.3
%


1.8
%Cost of services:Cardiac Safety


46.7
%


44.0
%


(2.7
%)Technology consulting and training


60.9
%


66.7
%


5.8
%Software maintenance


25.4
%


24.6
%


(0.8
%)Total cost of services


46.0
%


43.9
%


(2.1
%)Cost of site support


67.1
%


67.3
%


0.2
%Total costs of revenues


51.6
%


49.3
%


(2.3
%)Operating expenses:Selling and marketing


12.7
%


11.4
%


(1.3
%)General and administrative


17.0
%


12.4
%


(4.6
%)Research and development


4.8
%


4.4
%


(0.4
%)Total operating expenses


34.5
%


28.2
%


(6.3
%)       ® set-up
      ®
 37




---



##### Table of Contents



®
               Liquidity
    and Capital Resources   38




---



##### Table of Contents



® 98-1, ® ®
  ® tm ® tm ® tm
   39




---



##### Table of Contents



40




---



##### Table of Contents



No. 95-3,
    Payments due by periodLess than


1-3


3-5


More thanContractual Obligations

Total


1 year


years


years


5 yearsCapital lease obligations

$
49


$
49


$



$



$
Operating leases


22,638



3,073



5,907



4,652



9,006Total

$
22,687


$
3,122


$
5,907


$
4,652


$
9,006    Inflation   Recent
    Accounting Pronouncements  No. 157-2,
     41




---



##### Table of Contents



No. 142-3, FSP 142-3 FSP 142-3 FSP 142-3
   Critical
    Accounting Policies      Revenue
    Recognition
    SOP 97-2, SOP 98-9, SOP 97-2,
     42




---



##### Table of Contents



Business
    Combinations
          Goodwill
      Accounting
    for Income Taxes
     43




---



##### Table of Contents



Depreciation
    and Amortization of Long-lived Assets
        Stock-Based
    Compensation
    page F-1 Form 10-K,
  ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   Interest
    Rate Risk   Foreign
    Currency Risk   44




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Conclusions
    regarding disclosure controls and procedures
  Rule 13a-15
  Managements
    annual report on internal control over financial
    reporting
  page F-2.
  Report of
    the independent registered public accounting firm
  page F-3.
  Changes
    in internal control over financial reporting
  Rule 13a-15
  ITEM 9B.
    OTHER
    INFORMATION   45




---



##### Table of Contents



PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Form 10-K.
  ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   46




---



##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Form 10-K:
  1.
    The consolidated financial statements of eResearchTechnology,
    Inc. (the Company) filed as a part of this
    Form 10-K
    are listed on the attached Index to Consolidated Financial
    Statements and Financial Statement Schedule at F-1.2.
    The financial statement schedule of the Company filed as a part
    of this
    Form 10-K
    is listed in the attached Index to Consolidated Financial
    Statements and Financial Statement Schedule at F-1.    3
.1

Restated Certificate of Incorporation, as amended.(1)3
.2

Bylaws.(2)3
.3

Amendment to Bylaws.(3)3
.4

Certificate of Merger between the Company and ERT Operating
    Company.(4)4
.1

Form of Stock Certificate.(4)10
.1

Registration Rights Agreement dated August 27, 1999.(5)10
.2

Share Purchase Agreement dated November 27, 2007 by and
    among the Company, Covance Central Laboratory Services Limited
    Partnership, Covance Cardiac Safety Services Inc. and Covance
    Inc.(6)10
.4

Exclusive Marketing Agreement dated November 27, 2007 by
    and between the Company and Covance Inc.(7)10
.7

1996 Stock Option Plan, as amended.(4)*10
.12

2007 Bonus Plan.(8)*10
.13

2008 Bonus Plan.(9)*10
.20

1818 Market Street Office Lease between the Company and NNN 1818
    Market Street, LLC and Affiliates.(10)10
.23

Sublease Agreement between the Company and Raytheon
    Engineers & Constructors, Inc.(3)10
.25

Amendment to the Sublease Agreement between the Company and
    17th Ludlow Property, L.L.C.(11)10
.26

Amendment to the Sublease Agreement between the Company and
    17th Ludlow Property, L.L.C.(12)10
.29

Promissory Note to Wachovia Bank, National Association effective
    June 26, 2008.(13)10
.30

Loan Agreement with Wachovia Bank, National Association
    effective June 26, 2008.(13)10
.31

Amended and Restated 2003 Equity Incentive Plan, as amended.(8)*10
.40

Management Employment Agreement effective February 7, 2006
    between Joseph Esposito and the Company.(14)* 47




---



##### Table of Contents



10
.41

Amendment to Management Employment Agreement effective
    August 16, 2004 between Dr. Joel Morganroth and the
    Company.(1)*10
.42

Management Employment Agreement effective January 1, 2008
    between Dr. Joel Morganroth and the Company.(15)*10
.43

Consultant Agreement effective January 1, 2007 between
    Dr. Joel Morganroth and the Company.(8)*10
.44

Management Employment Agreement effective August 20, 2004
    between Dr. Jeffrey Litwin and the Company.(1)*10
.46

Consultant Agreement effective January 1, 2008 between
    Dr. Joel Morganroth and the Company.(15)*10
.47

Management Employment Agreement effective September 2, 2004
    between Robert Brown and the Company.(9)*10
.48

Management Employment Agreement effective June 23, 2006
    between Michael J. McKelvey and the Company.(16)*10
.49

Management Employment Agreement effective May 17, 2006
    between Richard A. Baron and the Company.(16)*10
.50

Amendment to Management Employment Agreement effective
    June 12, 2006 between Richard A. Baron and the Company.(16)*10
.51

Amended and Restated Management Employment Agreement effective
    June 17, 2008 between Steven M. Eisenstein and the
    Company(13)*10
.52

Lease Agreement dated August 18, 2000 between Advance/GLD 2
    L.L.C. and the Company.(17)10
.53

Management Employment Agreement effective July 28, 2008
    between Keith D. Schneck and the Company.*10
.54

Lease Agreement dated September 28, 2004 between Royal and
    Sun Alliance Insurance PLC and the Companys subsidiary,
    eResearchTechnology Limited.(18)10
.56

Management Employment Agreement effective May 21, 2001
    between Dr. Joel Morganroth and the Company.(19)*10
.59

Attornment Agreement between 17th Ludlow Property, L.L.C.
    and the Company.(4)21
.1

Subsidiaries of the Registrant.(15)23
.1

Consent of KPMG LLP.31
.1

Certification of Chief Executive Officer.31
.2

Certification of Chief Financial Officer.32
.1

Statement of Chief Executive Officer Pursuant to
    Section 1350 of Title 18 of the United States Code.32
.2

Statement of Chief Financial Officer Pursuant to
    Section 1350 of Title 18 of the United States Code.  48




---



##### Table of Contents



*
    
    Management contract or compensatory plan or arrangement.(1)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on November 4, 2004.(2)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys Registration
    Statement on
    Form S-1,
    File
    No. 333-17001,
    declared effective by the Securities and Exchange Commission on
    February 3, 1997.(3)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-K
    on March 31, 1999.(4)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-K
    on March 12, 2002.(5)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 8-K
    on September 9, 1999.(6)
    
    Incorporated by reference to Exhibit 2.1, filed with the
    Companys
    Form 8-K
    on December 4, 2007.(7)
    
    Incorporated by reference to Exhibit 10.1, filed with the
    Companys
    Form 8-K
    on December 4, 2007. Confidential treatment has been
    requested with respect to certain portions of this exhibit.
    Omitted portions have been filed separately with the SEC.(8)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on May 4, 2007.(9)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on May 8, 2008.(10)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on November 7, 2008.(11)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on November 7, 2003.(12)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on May 3, 2004.(13)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on August 7, 2008.(14)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-K
    on March 10, 2006.(15)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-K
    on March 7, 2008.(16)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on August 4, 2006.(17)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on November 13, 2000.(18)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-K
    on March 11, 2005.(19)
    
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on August 10, 2001. 49




---



##### Table of Contents



SIGNATURES    eResearchTechnology, Inc.
  By:
    /s/  Michael
    J. McKelvey   President and Chief Executive Officer, Director
    Signature

Title

Date/s/  Michael
    J. McKelveyMichael
    J. McKelvey

President and Chief Executive Officer, Director (Principal
    executive officer)

March 2, 2009/s/  Joel
    Morganroth, MDJoel
    Morganroth, MD

Chairman of the Board of Directors

March 2, 2009/s/  Keith
    D. SchneckKeith
    D. Schneck

Executive Vice President, Chief Financial Officer and Secretary
    (Principal financial and accounting officer)

March 2, 2009/s/  Sheldon
    M. BonovitzSheldon
    M. Bonovitz

Director

March 2, 2009/s/  Michael
    DeManeMichael
    DeMane

Director

March 2, 2009/s/  Gerald
    A. Faich, MD, MPHGerald
    A. Faich, MD, MPH

Director

March 2, 2009/s/  David
    D. GathmanDavid
    D. Gathman

Director

March 2, 2009/s/  Elam
    M. HitchnerElam
    M. Hitchner

Director

March 2, 2009/s/  Stephen
    S. PhillipsStephen
    S. Phillips

Director

March 2, 2009/s/  Stephen
    M. ScheppmannStephen
    M. Scheppmann

Director

March 2, 2009  50




---



##### 



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
    SCHEDULE   
 Report of Management


F-2Reports of Independent Registered Public
    Accounting Firm


F-3Consolidated Balance Sheets


F-5Consolidated Statements of Operations


F-6Consolidated Statements of Stockholders
    Equity and Comprehensive Income


F-7Consolidated Statements of Cash Flows


F-8Notes to Consolidated Financial Statements


F-9Financial Statement Schedule:II. Valuation and Qualifying Accounts


F-31   F-1




---



##### Table of Contents



Report of
    Management  Managements
    Report on Financial Statements
    Managements
    Report on Internal Control Over Financial Reporting
      
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect our transactions and
    dispositions of our assets;
    provide reasonable assurance that our transactions are recorded
    as necessary to permit preparation of our consolidated financial
    statements in accordance with accounting principles generally
    accepted in the United States of America, and that our receipts
    and expenditures are being made only in accordance with
    authorizations of our management and our directors; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use, or disposition of
    our assets that could have a material effect on the consolidated
    financial statements.    Internal Control  Integrated
    Framework
  Audit
    Committee Oversight
  Form 10-K.
 F-2




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
    on Internal Control over Financial Reporting     Internal Control  Integrated Framework
        Internal Control  Integrated
    Framework
    
    F-3




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
             Internal Control 
    Integrated Framework
  
    F-4




---



##### Table of Contents



eResearchTechnology,
    Inc. and SubsidiariesConsolidated Balance Sheets
    (In thousands, except share and per share amounts)
  December 31,2007


2008AssetsCurrent Assets:Cash and cash equivalents

$
38,082


$
66,376Short-term investments


8,797



50Accounts receivable, net


26,718



29,177Prepaid income taxes


743



1,892Prepaid expenses and other


3,087



2,885Deferred income taxes


901



1,831Total current assets


78,328



102,211Property and equipment, net


33,347



29,639Goodwill


30,908



34,603Intangible assets


3,849



2,149Deferred income taxes


1,011



Other assets


253



520Total assets

$
147,696


$
169,122Liabilities and Stockholders EquityCurrent Liabilities:Accounts payable

$
3,505


$
3,971Accrued expenses


11,875



8,140Income taxes payable


2,352



2,492Current portion of capital lease obligations


1,097



43Deferred revenues


13,905



12,276Total current liabilities


32,734



26,922Capital lease obligations, excluding current portion


48



Deferred rent


228



2,183Deferred income taxes






1,332Other liabilities


1,174



1,257Total liabilities


34,184



31,694Commitments and contingenciesStockholders Equity:Preferred stock  $10.00 par value,
    500,000 shares authorized, none issued and outstanding






Common stock  $.01 par value,
    175,000,000 shares authorized, 58,870,291 and
    59,950,257 shares issued, respectively


589



600Additional paid-in capital


87,957



93,828Accumulated other comprehensive income (loss)


1,679



(2,716
)Retained earnings


85,477



110,479Treasury stock, 8,247,119 and 8,686,868 shares at cost,
    respectively


(62,190
)


(64,763
)Total stockholders equity


113,512



137,428Total liabilities and stockholders equity

$
147,696


$
169,122    F-5




---



##### Table of Contents



eResearchTechnology,
    Inc. and SubsidiariesConsolidated Statements of Operations
    (In thousands, except per share amounts)
  Year Ended December 31,2006


2007


2008Net revenues:Licenses

$
3,017


$
2,700


$
3,203Services


55,309



69,547



99,258Site support


28,042



26,451



30,679Total net revenues


86,368



98,698



133,140Costs of revenues:Cost of licenses


286



304



755Cost of services


25,431



30,522



39,697Cost of site support


18,821



17,808



18,445Total costs of revenues


44,538



48,634



58,897Gross margin


41,830



50,064



74,243Operating expenses:Selling and marketing


11,051



11,222



13,273General and administrative


14,668



12,258



18,181Research and development


4,146



4,333



4,394Total operating expenses


29,865



27,813



35,848Operating income


11,965



22,251



38,395Other income, net


1,250



2,206



1,730Income before income taxes


13,215



24,457



40,125Income tax provision


4,905



9,205



15,123Net income

$
8,310


$
15,252


$
25,002Basic net income per share

$
0.17


$
0.30


$
0.49Diluted net income per share

$
0.16


$
0.29


$
0.48Shares used to calculate basic net income per share


49,474



50,476



50,870Shares used to calculate diluted net income per share


51,485



51,743



52,015    F-6




---



##### Table of Contents



eResearchTechnology,
    Inc. and SubsidiariesConsolidated Statements of Stockholders
    Equity and Comprehensive Income
    (In thousands, except share amounts)
  AccumulatedAdditional


OtherCommon Stock


Paid-in


Comprehensive


Retained


TreasuryShares


Amount


Capital


Income


Earnings


Stock


TotalBalance, January 1, 2006


56,871,010



569



73,290



586



61,915



(56,387
)


79,973Comprehensive incomeNet income


















8,310







8,310Currency translation adjustment, net of tax














924











924Total comprehensive income


























9,234Purchase of treasury stock






















(5,803
)


(5,803
)Share-based compensation










2,970















2,970Tax benefit from exercise of stock options










3,397















3,397Exercise of stock options


1,485,536



15



3,836















3,851Balance, December 31, 2006


58,356,546



584



83,493



1,510



70,225



(62,190
)


93,622Comprehensive incomeNet income


















15,252







15,252Currency translation adjustment, net of tax














169











169Total comprehensive income


























15,421Share-based compensation










2,015















2,015Capitalized share-based compensation










40















40Tax benefit from exercise of stock options










759















759Exercise of stock options


513,745



5



1,650















1,655Balance, December 31, 2007


58,870,291



589



87,957



1,679



85,477



(62,190
)


113,512Comprehensive incomeNet income


















25,002







25,002Currency translation adjustment, net of tax














(4,395
)










(4,395
)Total comprehensive income


























20,607Purchase of treasury stock






















(2,573
)


(2,573
)Share-based compensation










2,600















2,600Capitalized share-based compensation










58















58Tax benefit from exercise of stock options










855















855Exercise of stock options


1,079,966



11



2,358















2,369Balance, December 31, 2008


59,950,257


$
600


$
93,828


$
(2,716
)

$
110,479


$
(64,763
)

$
137,428    F-7




---



##### Table of Contents



eResearchTechnology,
    Inc. and SubsidiariesConsolidated Statements of Cash Flows
    (In thousands)
  Year Ended December 31,2006


2007


2008Operating activities:Net income

$
8,310


$
15,252


$
25,002Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortization


11,253



15,129



16,038Cost of sales of equipment


3,722



1,143



743Provision for uncollectible accounts


111



30



189Share-based compensation


2,975



2,004



2,604Deferred income taxes


(1,753
)


(521
)


1,098Investment impairment charge


226







Changes in operating assets and liabilities exclusive of CCSS
    acquisition:Accounts receivable


(2,567
)


(4,192
)


(3,840
)Prepaid expenses and other


132



352



41Accounts payable


950



(2,147
)


175Accrued expenses


(1,634
)


2,928



(80
)Income taxes


(351
)


3,658



(1,290
)Deferred revenues


(4,897
)


2,487



(667
)Deferred rent


(145
)


(122
)


(64
)Net cash provided by operating activities


16,332



36,001



39,949Investing activities:Purchases of property and equipment


(15,181
)


(11,073
)


(10,969
)Purchases of investments


(46,425
)


(58,008
)


Proceeds from sales of investments


40,658



91,555



8,747Payments for acquisition






(35,800
)


(6,042
)Net cash used in investing activities


(20,948
)


(13,326
)


(8,264
)Financing activities:Repayment of capital lease obligations


(153
)


(2,504
)


(1,102
)Proceeds from exercise of stock options


3,851



1,655



2,369Stock option income tax benefit


3,400



760



849Repurchase of common stock for treasury


(5,803
)






(2,573
)Net cash (used in) provided by financing activities


1,295



(89
)


(457
)Effect of exchange rate changes on cash


386



(1
)


(2,934
)Net increase (decrease) in cash and cash equivalents


(2,935
)


22,585



28,294Cash and cash equivalents, beginning of period


18,432



15,497



38,082Cash and cash equivalents, end of period

$
15,497


$
38,082


$
66,376    F-8




---



##### Table of Contents



eResearchTechnology,
    Inc. and SubsidiariesNotes To Consolidated Financial
    Statements
  1.
    Background
    and Summary of Significant Accounting Policies:  Background
    set-up,
    Principles
    of Consolidation
    Reclassifications
    Use of
    Estimates
    Revenues
   F-9




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    97-2, SOP 98-9, SOP 97-2,
  No. 00-21,
  No. 01-14,
    Business
    Combinations
         F-10




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Cash and
    Cash Equivalents
    Short-term
    Investments
    Property
    and Equipment
    SOP 98-1, and/or
     F-11




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
        Goodwill
        Business
    Combinations and Valuation of Intangible Assets
    Long-lived
    Assets
   F-12




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    Software
    Development Costs
    Advertising
    Costs
    Stock-Based
    Compensation
  Accounting
    for Stock-Based Compensation
    Valuation
    Assumptions for Options Granted
    2006


2007


2008Risk-free interest rate


4.82
%


4.68
%


2.23
%Expected life


3.5 years



3.5 years



3.5 yearsExpected volatility


59.68
%


55.89
%


51.50
%    F-13




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Income
    Taxes
    Other
    Income, Net
    Supplemental
    Cash Flow Information
        Concentration
    of Credit Risk and Significant Clients
      Translation
    of Foreign Financial Statements
   F-14




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    Net
    Income per Common Share
      Net





Per ShareYear Ended December 31,

Income


Shares


Amount2006Basic net income

$
8,310



49,474


$
0.17Effect of dilutive shares






2,011



(0.01
)Diluted net income

$
8,310



51,485


$
0.162007Basic net income

$
15,252



50,476


$
0.30Effect of dilutive shares






1,267



(0.01
)Diluted net income

$
15,252



51,743


$
0.292008Basic net income

$
25,002



50,870


$
0.49Effect of dilutive shares






1,145



(0.01
)Diluted net income

$
25,002



52,015


$
0.48     Comprehensive
    Income
  paid-in-capital
  Recent
    Accounting Pronouncements
  No. 157-2,
 F-15




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
        No. 142-3, FSP 142-3 FSP 142-3 FSP 142-3
    2.
    Business
    Combination  10-year 10-year
 F-16




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  No. 95-3,
    Property and equipment

$
2,447Backlog


1,900Customer relationships


1,700Technology


400Deferred tax assets


1,740Goodwill, including workforce


33,392Accrued liabilities relating to severance and lease costs


(3,034
)Other net assets acquired


2,743Purchase price

$
41,288     Pro Forma
    Results
    F-17




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Year Ended December 31,2006


2007(Unaudited)(In thousands)Revenue

$
117,243


$
120,163Operating income


14,455



21,176Net income


8,785



13,439Basic net income per share

$
0.18


$
0.27Diluted net income per share

$
0.17


$
0.26   3.
    Intangible
    Assets    December 31, 2007EstimatedAccumulated


Net Book


Useful LifeDescription

Gross Value


Amortization


Value


(In Years)Backlog

$
1,900


$
104


$
1,796
*


3Customer Relationships


1,700



14



1,686



10Technology


400



33



367



1Total

$
4,000


$
151


$
3,849   December 31, 2008Estimated








EstimatedFair


Accumulated


Net Book


Useful LifeDescription

Value


Amortization


Value


(In Years)Backlog

$
1,900


$
1,269


$
631
*


3Customer Relationships


1,700



182


$
1,518



10Technology


400



400


$




1Total

$
4,000


$
1,851


$
2,149     *
    
    The backlog is being amortized over three years on an
    accelerated basis.   F-18




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    Amortizationof IntangibleYears Ending December 31,

Assets2009


5422010


4312011


1702012


1702013


170Thereafter


666Total

$
2,149   4.
    Accounts
    Receivable, Net    December 31,2007


2008Billed

$
24,996


$
29,660Unbilled


2,275



212Allowance for doubtful accounts


(553
)


(695
)$
26,718


$
29,177   5.
    Property
    and Equipment, Net    December 31,2007


2008Computer and other equipment

$
13,380


$
14,933Cardiac safety rental equipment


36,797



35,190Furniture and fixtures


3,171



3,336Leasehold improvements


4,052



5,841System development costs


21,931



23,97079,331



83,270Less-Accumulated depreciation


(45,984
)


(53,631
)$
33,347


$
29,639   6.
    Line of
    Credit   F-19




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  7.
    Income
    Taxes    Year Ended December 31,2006


2007


2008Current provision:Federal

$
3,023


$
7,038


$
8,249State and local


102



1,212



2,822Foreign


835



1,473



2,6393,960



9,723



13,710Deferred provision (benefit):Federal


847



(403
)


1,405State and local


500



378



521Foreign


(402
)


(493
)


(513
)945



(518
)


1,413$
4,905


$
9,205


$
15,123       Year Ended December 31,2006


2007


2008Tax at federal statutory rate

$
4,625


$
8,560


$
14,044State and local taxes, net of federal


391



1,033



2,172Foreign tax differential










(931
)Federal tax credits


(115
)


(175
)


(90
)Tax-free interest income


(425
)


(551
)


(59
)Share-based compensation expense


483



361



352Decrease in unrecognized tax benefits










(550
)Other


(54
)


(23
)


185$
4,905


$
9,205


$
15,123    F-20




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    December 31,2007


2008Goodwill amortization

$
902


$
623Depreciation






1,412Capitalized R&D expenses


1,522



1,274Tax credit carryforwards


147



Net operating loss carryforwards


311



116Investment impairment


1,029



1,049Reserves and accruals


1,941



2,552Share-based compensation expense


698



1,258Gross deferred tax assets


6,550



8,284Repatriation of UK earnings


(1,301
)


(703
)Depreciation


(761
)


(5,112
)Amortization of intangibles


(1,547
)


(921
)Gross deferred tax liabilities


(3,609
)


(6,736
)Deferred tax assets valuation allowance


(1,029
)


(1,049
)Net deferred tax assets

$
1,912


$
499          F-21




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    December 31,


December 31,2007


2008Unrecognized tax benefits at January 1, 2008

$
781


$
991Increase in unrecognized tax benefits for tax positions taken in
    a prior year


54



23Increase in unrecognized tax benefits for tax positions taken in
    the current year


156



34Settlements






Expiration of statutes of limitations






(550
)Unrecognized tax benefits at December 31, 2008

$
991


$
498     8.
    Accrued
    Expenses    2007


2008Accrued compensation

$
5,886


$
5,518Accrued CCSS contingent purchase price payment


3,010



Accrued outside services


688



421Deferred rent


591



408Other accrued liabilities


1,700



1,793Total accrued expenses

$
11,875


$
8,140   9.
    Employee
    Retirement Plan    10.
    Related
    Party Transactions   F-22




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    11.
    Stock
    Option Plans       F-23




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    Weighted


RemainingAverage


Contractual


IntrinsicShares


Exercise Price


Term


Value(In Years)


(In thousands)Outstanding as of January 1, 2008


4,109,611


$
8.44Granted


909,200



12.38Exercised


(1,079,966
)


2.19Cancelled/forfeited


(302,985
)


11.26Outstanding as of December 31, 2008


3,635,860


$
11.03



4.8


$
2,285Options exercisable or expected to vest at December 31, 2008


3,433,544


$
11.01



4.8


$
2,285Options exercisable at December 31, 2008


2,287,085


$
10.82



4.2


$
2,285         Tax
    Effect Related to Share-Based Compensation Expense
    12.
    Commitments
    and Contingencies  Leases
   F-24




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
      Capital


Operating


SubleaseLeases


Leases


Income2009

$
49


$
3,073


$
3082010






3,414



3232011






2,493



3232012






2,439



2962013






2,213



2014 and thereafter






9,006



$
49


$
22,638


$
1,250Less imputed interest


(1
)Net present value of capital lease obligations


48Less current installments


(48
)Long-term capital lease obligations, excluding current
    installments

$
   Other
    commitments and contingencies
  ® tm
   F-25




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    No. 95-3,
  Indemnification
    Agreements
    with the Companys Management
     F-26




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
        his/her
 F-27




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    Contingencies
    Potential
    Liability and Insurance
    13.
    Fair
    Value of Financial Instruments    Level 1

Unadjusted quoted prices in active markets for identical assets
    or liabilitiesLevel 2

Unadjusted quoted prices in active markets for similar assets or
    liabilities, orUnadjusted quoted prices for identical or similar assets or
    liabilities in markets that are not active, orInputs other than quoted prices that are observable for the
    asset or liabilityLevel 3

Unobservable inputs for the asset or liability  F-28




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    Fair Value Measurements at December 31, 2008Quoted Prices





Significantin Active Markets


Significant Other


Unobservablefor Identical  Assets


Observable Inputs


InputsTotal


(Level 1)


(Level 2)


(Level 3)Money market funds

$
66,376


$
66,376


$



$
Auction rate securities


50











50Total

$
66,426


$
66,376


$



$
50   14.
    Operating
    Segments and Geographic Information      Year Ended December 31, 2006NorthAmerica


Europe


TotalLicense revenues

$
3,017


$



$
3,017Service revenues


44,377



10,932



55,309Site support revenues


20,438



7,604



28,042Net revenues from external customers

$
67,832


$
18,536


$
86,368Operating income

$
10,497


$
1,468


$
11,965Long-lived assets

$
22,340


$
8,789


$
31,129Total assets

$
97,716


$
17,348


$
115,064   Year Ended December 31, 2007NorthAmerica


Europe


TotalLicense revenues

$
2,700


$



$
2,700Service revenues


55,567



13,980



69,547Site support revenues


17,430



9,021



26,451Net revenues from external customers

$
75,697


$
23,001


$
98,698Operating income

$
18,305


$
3,946


$
22,251Long-lived assets

$
25,919


$
7,428


$
33,347Total assets

$
132,886


$
14,810


$
147,696   F-29




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Year Ended December 31, 2008NorthAmerica


Europe


TotalLicense revenues

$
3,203


$



$
3,203Service revenues


81,814



17,444



99,258Site support revenues


20,644



10,035



30,679Net revenues from external customers

$
105,661


$
27,479


$
133,140Operating income

$
30,641


$
7,754


$
38,395Long-lived assets

$
25,816


$
3,823


$
29,639Total assets

$
152,073


$
17,049


$
169,122   15.
    Quarterly
    Financial Data (Unaudited)    2007March 31


June 30


September 30


December 31Net revenues:Licenses

$
782


$
580


$
651


$
687Services


13,968



17,561



16,453



21,565Site support


6,334



6,593



6,867



6,657Total net revenues


21,084



24,734



23,971



28,909Costs of revenues:Cost of licenses


66



63



70



105Cost of services


6,790



7,233



7,567



8,932Cost of site support


4,195



4,117



4,831



4,665Total costs of revenues


11,051



11,413



12,468



13,702Gross margin


10,033



13,321



11,503



15,207Operating income


3,101



6,246



5,361



7,543Net income


2,248



4,139



3,706



5,159Basic net income per share

$
0.04


$
0.08


$
0.07


$
0.10Diluted net income per share

$
0.04


$
0.08


$
0.07


$
0.10   F-30




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  2008March 31


June 30


September 30


December 31Net revenues:Licenses

$
625


$
870


$
891


$
817Services


25,273



27,380



24,857



21,748Site support


7,775



7,222



8,182



7,500Total net revenues


33,673



35,472



33,930



30,065Costs of revenues:Cost of licenses


200



170



179



206Cost of services


10,514



10,483



9,951



8,749Cost of site support


5,268



4,599



4,698



3,880Total costs of revenues


15,982



15,252



14,828



12,835Gross margin


17,691



20,220



19,102



17,230Operating income


8,496



10,758



10,549



8,592Net income


5,746



6,660



6,930



5,666Basic net income per share

$
0.11


$
0.13


$
0.14


$
0.11Diluted net income per share

$
0.11


$
0.13


$
0.13


$
0.11    F-31




---



##### Table of Contents



SCHEDULE II
   eResearchTechnology,
    Inc. and Subsidiaries
 VALUATION AND QUALIFYING ACCOUNTS
    Balance








BalanceBeginning of


Charges to


Deductions


EndPeriod


Expense


from Reserve


of PeriodDecember 31, 2006

$
466


$
111


$
24
(a)

$
553December 31, 2007

$
553


$
30


$
30
(a)

$
553December 31, 2008

$
553


$
169


$
27
(a)

$
695     (a)
    
    Write-off of individual accounts receivable. F-32