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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, 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, 2009
  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
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þNon-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 19,
    2010Common Stock, $.01 par value per share

48,610,757 shares   DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
   
 ItemNumberCautionary Statement for Forward-Looking Information

3PART I1

Business

4Service
    Offerings

6Research and
    Development

8Our Clients

10Sales and
    Marketing

10Partnerships

11Competition

11Government
    Regulation

12Potential Liability
    and Insurance

13Intellectual
    Property

13Employees

13Available
    Information

131A

Risk Factors

141B

Unresolved Staff Comments

242

Properties

243

Legal Proceedings

244

Submission of Matters to a Vote of Security
    Holders

24Special

Executive Officers of Registrant

24PART II5

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

266

Selected Financial Data

287

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

29Overview

29Results of
    Operations

30Executive
    Overview

30Year
    Ended December 31, 2008 Compared to the Year Ended
    December 31, 2009

33Year
    Ended December 31, 2007 Compared to the Year Ended
    December 31, 2008

36Liquidity and
    Capital Resources

39Inflation

40Recent Accounting
    Pronouncements

41Critical Accounting
    Policies

427A

Quantitative and Qualitative Disclosures About
    Market Risk

44Interest Rate
    Risk

44Foreign Currency
    Risk

458

Financial Statements and Supplementary
    Data

459

Changes in and Disagreements with Accountants
    on Accounting and Financial Disclosure

459A

Controls and Procedures

459B

Other Information

45PARTIII10

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

46PARTIV15

Exhibits and Financial Statement
    Schedules

47Signatures

50Index to Consolidated Financial Statements and
    Financial Statement Schedule

F-1EX-10.55EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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Cautionary
    Statement for Forward-Looking Information
  Form 10-K
     3




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PART I  ITEM 1.
    BUSINESS  General
  tm tm
  set-up,
    Cardiac
    Safety Market in Clinical Trials
       4




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10-K, ICH E-14
 5




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Operations
   Service
    Offerings    Year Ended December 31,2007


2008


2009Net revenues:EDC licenses and services


6.4
%


4.4
%


2.7
%Services


66.8



72.5



68.9Site support


26.8



23.1



28.4Total net revenues


100.0



100.0



100.0   tm
  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 or Internet, 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 6




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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 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
Portaltm. This is a hosted solution, which provides
sponsors and investigator sites with the ability to order
supplies, gain real time reports and respond to queries via a
secure web portal in lieu of less efficient means such as faxing
and telephone calls.   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. 7




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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 allows
    subjects to easily and quickly report data for a clinical trial.
    Because it can be accessed from a standard phone, our ePRO
    system is cost effective while being extremely scalable and
    suitable from Phase I through Phase IV. Diaries, screening,
    recruitment and all clinical assessments can be completed
    directly by the subject without requiring clinician involvement.
    Our solution consists of the following tools and services:     Data Collection  Our ePRO
    solution is an Interactive Voice Response (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
    solutions 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
    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.  Research
    and Development  Overview
       8




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Technology
    2009
    Research and Development Initiatives
    MyStudy
    Portaltm
  e-commerce tm
  
    Scalability, to not only support our sponsor customers, but also
    to enable access for our 25,000+ investigator site locations,
    Electronic site qualification process,
    On Demand, real time reporting,
    Ordering of supplies, and
    Electronic query management.  Cardiac
    Safety
  ®
  
    Protocol setup,
    Query management,
    Analysis,
    Cardiology review and
    New reporting features.  ®
  Electronic
    Patient Reported Outcomes (ePRO)
    
    New, innovative patient enrollment feature,
    Launch of suicidality assessments,
    Integration with MyStudy
    Portaltm, and
    New reports. 9




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Customer
    Relationship Management (CRM)
    
    Sales and marketing automation,
    Customer Care Functionality,
    Contracts and proposal management, and
    Forecasting.   Our
    Clients   Sales and
    Marketing      agreed-upon
  10-year
   10




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Partnerships    Backlog
     Competition        
    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;
    quality and performance;
    core technology underlying our service offerings;
    ability to implement solutions;
    capacity; 11




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
    price;
    financial and organizational stability; and
    ability to adapt to changing regulatory guidance.   Government
    Regulation          QT/QTc
   12




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Potential
    Liability and Insurance   Intellectual
    Property    ®
  TM
    ® ® ® tm ® tm tm tm ® tm tm tm tm
 Employees     Available
    Information  www.ert.com Form 10-K, Form 10-Q, Form 8-K
 13




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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 deteriorate or fail to improve, our
    operations may be affected and/or we may be unable to secure
    future financing to make the necessary investments to grow our
    business.
     14




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If
    general economic conditions deteriorate or fail to improve,
    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 maintain or increase overall
    revenues and our overall financial position.
    Consolidation
    among our clients could cause us to lose clients, decrease the
    market for our service solutions and result in a reduction of
    our revenues and profitability.
      We depend
    entirely on the clinical trial market and a downturn in this
    market could cause our revenues and profitability to
    decrease.
   15




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Extensive
    governmental regulation of the clinical trial process could
    require costly modifications to our technology, adversely affect
    prospective clients willingness to use our service
    solutions and increase competition and reduce our market
    share.
          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.
  ®
 16




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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.
    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
    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 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.
   17




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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 customer data and harm our business.
  and/or
  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.
   18




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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.  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.    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.
   19




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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.
  ® TM 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.
    
    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, the expense that we incur 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.   20




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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.
      
    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 21




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
    difficulties in staffing and managing foreign operations.        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.
   22




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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;
    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.
     23




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ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES      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.


57


President, Chief Executive Officer and DirectorJoel Morganroth, MD


64


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


54


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


57


Executive Vice President and Chief Development OfficerAmy Furlong


37


Executive Vice President, Cardiac Safety OperationsJeffrey S. Litwin, MD


51


Executive Vice President and Chief Medical OfficerJohn M. Blakeley


42


Executive Vice President, Sales and MarketingRobert S. Brown


54


Senior Vice President, Strategic PartnershipsJohn B. Sory


44


Senior Vice President, Health Care SolutionsGeorge Tiger


50


Senior Vice President, Global Sales      24




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25




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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

Low2008First Quarter

$
12.73


$
8.94Second Quarter


17.82



11.90Third Quarter


18.85



9.81Fourth Quarter


12.00



3.862009First Quarter

$
7.50


$
4.48Second Quarter


6.68



4.90Third Quarter


7.56



5.32Fourth Quarter


8.50



5.74      26




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Stockholder
    Return Performance Graph
    Form 10-K
  
  
 27




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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 31,2005


2006


2007


2008


2009Net revenues:EDC licenses and services

$
6,063


$
3,017


$
6,331


$
5,894


$
2,501Services


59,712



55,309



65,916



96,567



64,655Site support


21,072



28,042



26,451



30,679



26,667Total net revenues


86,847



86,368



98,698



133,140



93,823Costs of revenues:Cost of EDC licenses and services


436



286



2,018



1,843



863Cost of services


24,337



25,431



28,808



38,609



29,886Cost of site support


13,965



18,821



17,808



18,445



13,544Total costs of revenues


38,738



44,538



48,634



58,897



44,293Gross margin


48,109



41,830



50,064



74,243



49,530Operating expenses:Selling and marketing


9,122



11,051



11,222



13,273



12,905General and administrative


11,458



14,668



12,258



18,181



14,859Research and development


4,093



4,146



4,333



4,394



3,853Total operating expenses


24,673



29,865



27,813



35,848



31,617Operating income


23,436



11,965



22,251



38,395



17,913Other income (expense), net


936



1,250



2,206



1,730



(435
)Income before income taxes


24,372



13,215



24,457



40,125



17,478Income tax provision


9,007



4,905



9,205



15,123



6,791Net income

$
15,365


$
8,310


$
15,252


$
25,002


$
10,687Basic net income per share

$
0.31


$
0.17


$
0.30


$
0.49


$
0.22Diluted net income per share

$
0.29


$
0.16


$
0.29


$
0.48


$
0.22   Consolidated
    Balance Sheet Data (in thousands)
  December 31,2005


2006


2007


2008


2009Cash, cash equivalents and short-term investments

$
52,001


$
56,913


$
46,879


$
66,426


$
78,761Working capital


45,795



61,320



45,594



75,289



82,950Total assets


104,766



115,064



147,696



169,122



164,861Treasury stock


(56,387
)


(62,190
)


(62,190
)


(64,763
)


(79,883
)Total stockholders equity


79,973



93,622



113,512



137,428



137,672  28




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ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS Overview      tm
        out-of-pocket
   29




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Results
    of Operations Executive
    Overview  2008-2009,
     30




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31




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Year Ended December 31,2007


2008


2009Net revenues:EDC licenses and services


6.4
%


4.4
%


2.7
%Services


66.8



72.6



68.9Site support


26.8



23.0



28.4Total net revenues


100.0



100.0



100.0Costs of revenues:Cost of EDC licenses and services


2.0



1.4



0.9Cost of services


29.2



29.0



31.9Cost of site support


18.1



13.8



14.4Total costs of revenues


49.3



44.2



47.2Gross margin


50.7



55.8



52.8Operating expenses:Selling and marketing


11.4



10.0



13.8General and administrative


12.4



13.7



15.8Research and development


4.4



3.3



4.1Total operating expenses


28.2



27.0



33.7Operating income


22.5



28.8



19.1Other income (expense), net


2.3



1.3



(0.5
)Income before income taxes


24.8



30.1



18.6Income tax provision


9.3



11.3



7.2Net income


15.5
%


18.8
%


11.4
%  32




---



##### Table of Contents



Year
    Ended December 31, 2008 Compared to the Year Ended
    December 31, 2009    Year Ended December 31,2008


2009


Increase (Decrease)EDC licenses and servicesNet revenues

$
5,894


$
2,501


$
(3,393
)


(57.6
%)Costs of revenues


1,843



863



(980
)


(53.2
%)Gross margin

$
4,051


$
1,638


$
(2,413
)


(59.6
%)Services:Net revenues

$
96,567


$
64,655


$
(31,912
)


(33.0
%)Costs of revenues


38,609



29,886



(8,723
)


(22.6
%)Gross margin

$
57,958


$
34,769


$
(23,189
)


(40.0
%)Site support:Net revenues

$
30,679


$
26,667


$
(4,012
)


(13.1
%)Costs of revenues


18,445



13,544



(4,901
)


(26.6
%)Gross margin

$
12,234


$
13,123


$
889



7.3
%TotalNet revenues

$
133,140


$
93,823


$
(39,317
)


(29.5
%)Costs of revenues


58,897



44,293



(14,604
)


(24.8
%)Gross margin


74,243



49,530



(24,713
)


(33.3
%)Operating expenses:Selling and marketing


13,273



12,905



(368
)


(2.8
%)General and administrative


18,181



14,859



(3,322
)


(18.3
%)Research and development


4,394



3,853



(541
)


(12.3
%)Total operating expenses


35,848



31,617



(4,231
)


(11.8
%)Operating income


38,395



17,913



(20,482
)


(53.3
%)Other income (expense), net


1,730



(435
)


(2,165
)


N.M.Income before income taxes


40,125



17,478



(22,647
)


(56.4
%)Income tax provision


15,123



6,791



(8,332
)


(55.1
%)Net income

$
25,002


$
10,687


$
(14,315
)


(57.3
%)    33




---



##### Table of Contents



Year Ended December 31,

Increase2008

2009

(Decrease)Cost of EDC licenses and services


31.3
%


34.5
%


3.2
%Cost of services


40.0
%


46.2
%


6.2
%Cost of site support


60.1
%


50.8
%


(9.3
%)Total costs of revenues


44.2
%


47.2
%


3.0
%Operating expenses:Selling and marketing


10.0
%


13.8
%


3.8
%General and administrative


13.7
%


15.8
%


2.1
%Research and development


3.3
%


4.1
%


0.8
%Total operating expenses


27.0
%


33.7
%


6.7
%   EDC
    Revenues
       34




---



##### Table of Contents



Costs of
    Revenues
      Operating
    Expenses
         35




---



##### Table of Contents



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


2008


Increase (Decrease)EDC licenses and servicesNet revenues

$
6,331


$
5,894


$
(437
)


(6.9
%)Costs of revenues


2,018



1,843



(175
)


(8.7
%)Gross margin

$
4,313


$
4,051


$
(262
)


(6.1
%)Services:Net revenues

$
65,916


$
96,567


$
30,651



46.5
%Costs of revenues


28,808



38,609



9,801



34.0
%Gross margin

$
37,108


$
57,958


$
20,850



56.2
%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
%  36




---



##### Table of Contents



Year Ended December 31,

Increase2007

2008

(Decrease)Cost of EDC licenses and services


31.9
%


31.3
%


(0.6
%)Cost of services


43.7
%


40.0
%


(3.7
%)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
      Costs of
    Revenues
  ®
 37




---



##### Table of Contents



Operating
    Expenses
         38




---



##### Table of Contents



Liquidity
    and Capital Resources        ®
   39




---



##### Table of Contents



Payments due by periodLess than


1-3


3-5


More thanContractual Obligations

Total


1 year


years


years


5 yearsOperating leases

$
20,271


$
3,607


$
5,187


$
3,898


$
7,579Total

$
20,271


$
3,607


$
5,187


$
3,898


$
7,579    Inflation   40




---



##### Table of Contents



Recent
    Accounting Pronouncements  tm 105-10 tm
    350-30-35 No. 142-3,
  825-10-65 No. FAS 107-1 28-1,
  ASC 855-10
  820-10 No. 2009-5,
  605-25 No. 08-1,
 41




---



##### Table of Contents



Critical
    Accounting Policies      Revenue
    Recognition
    tm
     42




---



##### Table of Contents



out-of-pocket
    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   44




---



##### Table of Contents



Foreign
    Currency Risk  year-to-year
    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  (a)
    The following documents are filed as part of this
    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. All other
    schedules have been omitted because they are not required, not
    applicable, or the required information is otherwise included.3.
    Exhibits.  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
.13

2008 Bonus Plan.(8)*10
.14

2009 Bonus Plan.(9)*10
.20

1818 Market Street Office Lease between the Company and NNN 1818
    Market Street, LLC and Affiliates.(10)10
.28

Modification Number One to Promissory Note and Loan Agreement
    with Wachovia Bank, National Association dated May 19,
    2009.(11)10
.29

Loan Agreement with Wachovia Bank, National Association
    effective June 26, 2008.(12)10
.30

Promissory Note to Wachovia Bank, National Association effective
    June 26, 2008.(12)10
.31

Amended and Restated 2003 Equity Incentive Plan, as amended.(13)*10
.42

Management Employment Agreement effective January 1, 2008
    between Dr. Joel Morganroth and the Company.(14)*10
.43

Consultant Agreement effective January 1, 2007 between
    Dr. Joel Morganroth and the Company.(15)* 47




---



##### Table of Contents



10
.44

Management Employment Agreement effective August 20, 2004
    between Dr. Jeffrey Litwin and the Company.(1)*10
.45

Management Employment Agreement effective August 31, 2004
    between Amy Furlong and the Company.(9)*10
.46

Consultant Agreement effective January 1, 2008 between
    Dr. Joel Morganroth and the Company.(14)*10
.47

Management Employment Agreement effective September 2, 2004
    between Robert Brown and the Company.(8)*10
.48

Management Employment Agreement effective June 23, 2006
    between Michael J. McKelvey and the Company.(16)*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.(18)*10
.54

Lease Agreement dated September 28, 2004 between Royal and
    Sun Alliance Insurance PLC and the Companys subsidiary,
    eResearchTechnology Limited.(19)10
.55

Management Employment Agreement effective November 10, 2009
    between John Sory and the Company.*10
.57

Management Employment Agreement effective January 1, 2009
    between Dr. Joel Morganroth and the Company.(9)*10
.58

Consultant Agreement effective January 1, 2009 between
    Dr. Joel Morganroth and the Company.(9)*21
.1

Subsidiaries of the Registrant.(14)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.    *
    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. 48




---



##### Table of Contents



(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 8, 2008.(9)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on May 8, 2009.  (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 August 7, 2009.(12)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on August 7, 2008.(13)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on November 6, 2009.(14)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-K
    on March 7, 2008.(15)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on May 4, 2007.(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 2, 2009.(19)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-K
    on March 11, 2005. 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 3, 2010/s/  Joel
    Morganroth, MDJoel
    Morganroth, MD

Chairman of the Board of Directors

March 3, 2010/s/  Keith
    D. SchneckKeith
    D. Schneck

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

March 3, 2010/s/  Sheldon
    M. BonovitzSheldon
    M. Bonovitz

Director

March 3, 2010/s/  Michael
    DeManeMichael
    DeMane

Director

March 3, 2010/s/  Gerald
    A. Faich, MD, MPHGerald
    A. Faich, MD, MPH

Director

March 3, 2010/s/  Elam
    M. HitchnerElam
    M. Hitchner

Director

March 3, 2010/s/  Stephen
    S. PhillipsStephen
    S. Phillips

Director

March 3, 2010/s/  Stephen
    M. ScheppmannStephen
    M. Scheppmann

Director

March 3, 2010  50




---



##### Table of Contents



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-33  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
  KPMG
    LLP
    F-4




---



##### Table of Contents



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


December 31,2008


2009AssetsCurrent Assets:Cash and cash equivalents

$
66,376


$
68,979Short-term investments


50



9,782Investment in marketable securities






1,026Accounts receivable, less allowance for doubtful accounts of
    $695 and $548, respectively


29,177



16,579Prepaid income taxes


1,892



2,698Prepaid expenses and other


2,885



3,308Deferred income taxes


1,831



1,649Total current assets


102,211



104,021Property and equipment, net


29,639



24,205Goodwill


34,603



34,676Intangible assets


2,149



1,607Other assets


520



352Total assets

$
169,122


$
164,861Liabilities and Stockholders EquityCurrent Liabilities:Accounts payable

$
3,971


$
3,007Accrued expenses


9,382



5,990Income taxes payable


2,492



346Current portion of capital lease obligations


43



Deferred revenues


11,034



11,728Total current liabilities


26,922



21,071Deferred rent


2,183



2,357Deferred income taxes


1,332



2,502Other liabilities


1,257



1,259Total liabilities


31,694



27,189Commitments 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, 59,950,257 and
    60,189,235 shares issued, respectively


600



602Additional paid-in capital


93,828



97,367Accumulated other comprehensive income (loss)


(2,716
)


(1,580
)Retained earnings


110,479



121,166Treasury stock, 8,686,868 and 11,589,603 shares at cost,
    respectively


(64,763
)


(79,883
)Total stockholders equity


137,428



137,672Total liabilities and stockholders equity

$
169,122


$
164,861    F-5




---



##### Table of Contents



eResearchTechnology,
    Inc. and SubsidiariesConsolidated Statements of
    Operations
    (In thousands, except per share amounts)
  Year Ended December 31,2007


2008


2009Net revenues:EDC licenses and services

$
6,331


$
5,894


$
2,501Services


65,916



96,567



64,655Site support


26,451



30,679



26,667Total net revenues


98,698



133,140



93,823Costs of revenues:Cost of EDC licenses and services


2,018



1,843



863Cost of services


28,808



38,609



29,886Cost of site support


17,808



18,445



13,544Total costs of revenues


48,634



58,897



44,293Gross margin


50,064



74,243



49,530Operating expenses:Selling and marketing


11,222



13,273



12,905General and administrative


12,258



18,181



14,859Research and development


4,333



4,394



3,853Total operating expenses


27,813



35,848



31,617Operating income


22,251



38,395



17,913Other income (expense), net


2,206



1,730



(435
)Income before income taxes


24,457



40,125



17,478Income tax provision


9,205



15,123



6,791Net income

$
15,252


$
25,002


$
10,687Basic net income per share

$
0.30


$
0.49


$
0.22Diluted net income per share

$
0.29


$
0.48


$
0.22Shares used to calculate basic net income per share


50,476



50,870



49,173Shares used to calculate diluted net income per share


51,743



52,015



49,468    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, 2007


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
)


137,428Comprehensive incomeNet income


















10,687







10,687Change in unrealized losses on marketable securities














(83
)










(83
)Currency translation adjustment, net of tax














1,219











1,219Total comprehensive income


























11,823Purchase of treasury stock






















(15,120
)


(15,120
)Share-based compensation










2,784















2,784Capitalized share-based compensation










82















82Tax benefit from exercise of stock options










152















152Exercise of stock options


238,978



2



521















523Balance, December 31, 2009


60,189,235


$
602


$
97,367


$
(1,580
)

$
121,166


$
(79,883
)

$
137,672    F-7




---



##### Table of Contents



eResearchTechnology,
    Inc. and SubsidiariesConsolidated Statements of Cash
    Flows
    (In thousands)
  Year Ended December 31,2007


2008


2009Operating activities:Net income

$
15,252


$
25,002


$
10,687Adjustments to reconcile net income to net cash provided by
    operating activities:Gain on sale of EDC operations










(530
)Depreciation and amortization


15,129



16,038



12,583Cost of sales of equipment


1,143



743



96Provision for uncollectible accounts


30



189



210Share-based compensation


2,004



2,604



2,790Deferred income taxes


(521
)


1,098



1,680Changes in operating assets and liabilities:Accounts receivable


(4,192
)


(3,840
)


12,726Prepaid expenses and other


352



41



(293
)Accounts payable


(2,147
)


175



(767
)Accrued expenses


2,928



1,162



(3,490
)Income taxes


3,658



(1,290
)


(3,286
)Deferred revenues


2,487



(1,909
)


1,379Deferred rent


(122
)


(64
)


148Net cash provided by operating activities


36,001



39,949



33,933Investing activities:Purchases of property and equipment


(11,073
)


(10,969
)


(6,207
)Purchases of investments


(58,008
)






(9,732
)Proceeds from sales of investments


91,555



8,747



Payments related to sale of EDC operations










(1,150
)Payments for acquisition


(35,800
)


(6,042
)


(655
)Net cash used in investing activities


(13,326
)


(8,264
)


(17,744
)Financing activities:Repayment of capital lease obligations


(2,504
)


(1,102
)


(43
)Proceeds from exercise of stock options


1,655



2,369



523Stock option income tax benefit


760



849



152Repurchase of common stock for treasury






(2,573
)


(15,120
)Net cash used in financing activities


(89
)


(457
)


(14,488
)Effect of exchange rate changes on cash


(1
)


(2,934
)


902Net increase in cash and cash equivalents


22,585



28,294



2,603Cash and cash equivalents, beginning of period


15,497



38,082



66,376Cash and cash equivalents, end of period

$
38,082


$
66,376


$
68,979    F-8




---



##### Table of Contents



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




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##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Use of
    Estimates
    Revenues
  tm
          out-of-pocket
     F-10




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    Business
    Combinations
        Cash and
    Cash Equivalents
    Short-term
    Investments and Investments in Marketable Securities
  Available-for-sale available-for-sale.
    Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueMunicipal securities

$
50


$



$



$
50Total short-term investments as of December 31, 2008

$
50


$



$



$
50Municipal securities

$
6,764


$



$
(2
)

$
6,762Corporate debt securities


1,769



1







1,770Bonds of government sponsored agencies


1,250











1,250Total short-term investments as of December 31, 2009

$
9,783


$
1


$
(2
)

$
9,782  F-11




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##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Allowance
    for Doubtful Accounts
    Property
    and Equipment
    and/or
       F-12




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    Goodwill
        Business
    Combinations and Valuation of Intangible Assets
    Long-lived
    Assets
    Software
    Development Costs
   F-13




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Advertising
    Costs
    Stock-Based
    Compensation
  Accounting
    for Stock-Based Compensation
    Valuation
    Assumptions for Options Granted
    2007

2008

2009Risk-free interest rate


4.68
%


2.23
%


1.39
%Expected life


3.5 years



3.5 years



3.5 yearsExpected volatility


55.89
%


51.50
%


63.97
%     Income
    Taxes
    Other
    Income (Expense), Net
   F-14




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Supplemental
    Cash Flow Information
        Concentration
    of Credit Risk and Significant Clients and Vendors
        Translation
    of Foreign Financial Statements
   F-15




---



##### 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


Amount2007Basic 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


$
0.482009Basic net income

$
10,687



49,173


$
0.22Effect of dilutive shares






295



Diluted net income

$
10,687



49,468


$
0.22     Comprehensive
    Income
  paid-in-capital
  Recent
    Accounting Pronouncements
  tm 105-10 tm
 F-16




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
      350-30-35 No. 142-3,
  825-10-65 No. FAS 107-1 28-1,
  855-10
  820-10 No. 2009-5,
  605-25 No. 08-1,
   F-17




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    2.
    Business
    Combination  10-year 10-year
    LeaseSeverance


LiabilityBalance at acquisition at November 28, 2007

$
1,165


$
900Adjustments to previous estimates


16



Cash payments


(55
)


Balance at December 31, 2007


1,126



900Additional reserve recorded


21



Adjustments to previous estimates


(255
)


1,183Cash payments


(801
)


(325
)Balance at December 31, 2008


91



1,758Adjustments to previous estimates






500Cash payments


(91
)


(500
)Balance at December 31, 2009

$



$
1,758    F-18




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    Pro Forma
    Results
    Year EndedDecember 31,2007(Unaudited)(In thousands)Revenue

$
117,243Operating income


14,455Net income


8,785Basic net income per share

$
0.18Diluted net income per share

$
0.17   3.
    Intangible
    Assets    December 31, 2008EstimatedAccumulated


Net Book


Useful LifeDescription

Gross 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   F-19




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  December 31, 2009EstimatedAccumulated


Net Book





Useful LifeDescription

Gross Value


Amortization


Value





(In Years)Backlog

$
1,900


$
1,643


$
257
*






3Customer Relationships


1,700



350


$
1,350







10Technology


400



400


$








1Total

$
4,000


$
2,393


$
1,607     *
    
    The backlog is being amortized over three years on an
    accelerated basis.      Amortizationof IntangibleYears Ending December 31,

Assets2010

$
4312011


1702012


1702013


1702014


170Thereafter


496Total

$
1,607   4.
    Accounts
    Receivable, Net    December 31,2008


2009Billed

$
29,660


$
15,481Unbilled


212



1,646Allowance for doubtful accounts


(695
)


(548
)$
29,177


$
16,579  F-20




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
   5.
    Property
    and Equipment, Net    December 31,2008


2009Computer and other equipment

$
14,933


$
15,839Cardiac safety rental equipment


35,190



37,293Furniture and fixtures


3,336



3,585Leasehold improvements


5,841



5,974System development costs


23,970



26,83083,270



89,521Less-Accumulated depreciation


(53,631
)


(65,316
)$
29,639


$
24,205   6.
    Line of
    Credit    7.
    Income
    Taxes    Year Ended December 31,2007


2008


2009Current provision:Federal

$
7,038


$
8,249


$
3,909State and local


1,212



2,822



216Foreign


1,473



2,639



1,3749,723



13,710



5,499Deferred provision (benefit):Federal


(403
)


1,405



543State and local


378



521



924Foreign


(493
)


(513
)


(175
)(518
)


1,413



1,292$
9,205


$
15,123


$
6,791    F-21




---



##### Table of Contents



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


2008


2009Tax at federal statutory rate

$
8,560


$
14,044


$
6,118State and local taxes, net of federal


1,033



2,172



477Foreign tax differential






(931
)


(315
)Federal tax credits


(175
)


(90
)


90Tax-free interest income


(551
)


(59
)


Share-based compensation expense


361



352



423Decrease in unrecognized tax benefits






(550
)


(186
)Other


(23
)


185



184$
9,205


$
15,123


$
6,791       December 31,2008


2009Goodwill amortization

$
623


$
Depreciation


1,412



1,205Capitalized R&D expenses


1,274



1,055Net operating loss carryforwards


116



35Investment impairment


1,049



1,112Reserves and accruals


2,552



2,521Share-based compensation expense


1,258



1,868Gross deferred tax assets


8,284



7,796Repatriation of UK earnings


(703
)


(703
)Depreciation


(5,112
)


(5,642
)Amortization of intangibles


(921
)


(1,192
)Gross deferred tax liabilities


(6,736
)


(7,537
)Deferred tax assets valuation allowance


(1,049
)


(1,112
)Net deferred tax assets (liabilities)

$
499


$
(853
)    F-22




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
          non-U.S. income
    2008


2009Unrecognized tax benefits at January 1

$
991


$
498Increase in unrecognized tax benefits for tax positions taken in
    a prior year


23



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


34



13IRS audit settlement






(146
)Expiration of statutes of limitations


(550
)


(186
)Unrecognized tax benefits at December 31

$
498


$
179     8.
    Accrued
    Expenses    2008


2009Accrued compensation

$
5,518


$
2,485Due to clients


1,242



1,242Accrued outside services


421



252Deferred rent


408



394Other accrued liabilities


1,793



1,617Total accrued expenses

$
9,382


$
5,990  F-23




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
   9.
    Employee
    Retirement Plan    10.
    Related
    Party Transactions      11.
    Equity
    Incentive Plans       F-24




---



##### 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, 2009


3,635,860


$
11.03Granted


1,305,650



4.71Exercised


(261,215
)


2.52Cancelled/forfeited


(273,689
)


11.71Outstanding as of December 31, 2009


4,406,606


$
9.62



4.8


$
2,493Options exercisable or expected to vest at December 31, 2009


4,125,446


$
9.77



4.7


$
2,278Options exercisable at December 31, 2009


2,532,206


$
11.26



4.1


$
1,060   in-the-money
        Tax
    Effect Related to Share-Based Compensation Expense
   F-25




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
   12.
    Commitments
    and Contingencies  Leases
        GrossOperating


SubleaseLeases


Income2010

$
3,607


$
3232011


2,630



3232012


2,557



2962013


2,316



2014


1,582



2015 and thereafter


7,579



$
20,271


$
942   Other
    commitments and contingencies
  tm
   F-26




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  10-year 10-year
    Indemnification
    Agreements
    with the Companys Management
     F-27




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
         F-28




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  his/her
  Contingencies
    Potential
    Liability and Insurance
    13.
    Fair
    Value of Financial Instruments    available-for-sale Available-for-sale Available-for-sale
  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, or
    Unadjusted quoted prices for identical or similar assets or
    liabilities in markets that are not active, or
    Inputs other than quoted prices that are observable for the
    asset or liabilityLevel 3

Unobservable inputs for the asset or liability  F-29




---



##### 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


$



$
Municipal securities


50











50Total

$
66,426


$
66,376


$



$
50   Fair Value Measurements at December 31, 2009Quoted Prices



Significantin Active Markets

Significant Other

Unobservablefor Identical Assets

Observable Inputs

InputsTotal

(Level 1)

(Level 2)

(Level 3)Money market funds

$
68,979


$
68,979


$



$
Municipal securities


6,762



6,712







50Corporate debt securities


1,770



1,770







Bonds of government sponsored agencies


1,250



1,250







Marketable securities


1,026







1,026



Total

$
79,787


$
78,711


$
1,026


$
50   14.
    Operating
    Segments and Geographic Information      Year Ended December 31, 2007NorthAmerica


Europe


TotalEDC licenses and services revenues

$
6,331


$



$
6,331Service revenues


51,936



13,980



65,916Site 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-30




---



##### Table of Contents



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


Europe


TotalEDC licenses and services revenues

$
5,894


$



$
5,894Service revenues


79,123



17,444



96,567Site 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   Year Ended December 31, 2009NorthAmerica


Europe


TotalEDC licenses and services revenues

$
2,501


$



$
2,501Service revenues


49,869



14,786



64,655Site support revenues


18,600



8,067



26,667Net revenues from external customers

$
70,970


$
22,853


$
93,823Operating income

$
12,924


$
4,989


$
17,913Long-lived assets

$
20,715


$
3,490


$
24,205Total assets

$
142,685


$
22,176


$
164,861   15.
    Quarterly
    Financial Data (Unaudited)    2008March 31


June 30


September 30


December 31Net revenues:EDC licenses and services

$
1,303


$
1,487


$
1,564


$
1,540Services


24,595



26,763



24,184



21,025Site support


7,775



7,222



8,182



7,500Total net revenues


33,673



35,472



33,930



30,065Costs of revenues:Cost of EDC licenses and services


451



468



452



472Cost of services


10,263



10,185



9,678



8,483Cost 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



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  2009March 31


June 30


September 30


December 31Net revenues:EDC licenses and services

$
1,418


$
1,083


$



$
Services


16,108



16,215



15,969



16,363Site support


6,260



6,878



6,757



6,772Total net revenues


23,786



24,176



22,726



23,135Costs of revenues:Cost of EDC licenses and services


466



397







Cost of services


7,693



7,671



7,577



6,945Cost of site support


3,635



3,470



3,418



3,021Total costs of revenues


11,794



11,538



10,995



9,966Gross margin


11,992



12,638



11,731



13,169Operating income


3,340



4,844



4,709



5,020Net income


2,070



2,548



2,819



3,250Basic net income per share

$
0.04


$
0.05


$
0.06


$
0.07Diluted net income per share

$
0.04


$
0.05


$
0.06


$
0.07    F-32




---



##### Table of Contents



SCHEDULE II
    eResearchTechnology, Inc. and Subsidiaries
    VALUATION AND QUALIFYING ACCOUNTSAllowance
    for Doubtful Accounts

(In thousands) Balance





BalanceBeginning of

Charges to

Deductions

EndPeriod

Expense

from Reserve

of PeriodDecember 31, 2007

$
553


$
30


$
30
(a)

$
553December 31, 2008

$
553


$
169


$
27
(a)

$
695December 31, 2009

$
695


$
215


$
362
(a)

$
548     (a)
    
    Write-off of individual accounts receivable. F-33