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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, 2010
  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(State of Incorporation)

22-3264604(I.R.S. Employer Identification No.)1818 Market Street Philadelphia, PA(Address of Principal Executive Offices)

19103(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. þ
  12b-2
  Large accelerated filer o

Accelerated filer þNon-accelerated filero

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 18,
    2011Common Stock, $.01 par value per share

48,875,255 shares   DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
   
 ItemNumberCautionary Statement for Forward-Looking
    Information

3PART I1

Business

4Service
    Offerings

5Research and
    Development

9Our Customers

10Sales and
    Marketing

10Partnerships

11Competition

11Government
    Regulation

12Potential Liability
    and Insurance

15Intellectual
    Property

16Employees

16Available
    Information

161A

Risk Factors

171B

Unresolved Staff Comments

292

Properties

293

Legal Proceedings

29Special

Executive Officers of Registrant

30PART II5

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

326

Selected Financial Data

347

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

35Overview

35Results of
    Operations

36Executive
    Overview

36Year
    Ended December 31, 2009 Compared to the Year Ended
    December 31, 2010

39Year
    Ended December 31, 2008 Compared to the Year Ended
    December 31, 2009

42Liquidity and
    Capital Resources

44Inflation

46Recent Accounting
    Pronouncements

46Critical Accounting
    Policies

477A

Quantitative and Qualitative Disclosures About Market
    Risk

50Interest Rate
    Risk

50Foreign Currency
    Risk

508

Financial Statements and Supplementary Data

519

Changes in and Disagreements with Accountants on Accounting
    and Financial Disclosure

519A

Controls and Procedures

519B

Other Information

51PART III10

Directors, Executive Officers and Corporate Governance

5211

Executive Compensation

5212

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

5213

Certain Relationships and Related Transactions, and Director
    Independence

5214

Principal Accountant Fees and Services

52PART IV15

Exhibits and Financial Statement Schedules

53Signatures

57Index to Consolidated Financial Statements and
    Financial Statement Schedule

F-1EX-10.59EXHIBIT 12.1EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 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
  set-up,
      
    Establishes us as one of the market leaders in respiratory core
    lab services in the clinical trials market. The transaction
    provides us with a leadership position in an attractive clinical
    end market and serves to diversify our revenue base.
    Provides us with a leading diagnostic device capability. RS is a
    leader in diagnostic device manufacturing, having developed over
    20 proprietary devices and supporting software platforms for use
    in the clinical trials industry. This device manufacturing
    expertise has expanded our technological capabilities, enables
    us to provide greater breadth of services and technologies for
    clinical research, and will serve as a basis for development of
    other healthcare solutions.
    Expands our revenue base in cardiac safety. RS has a
    significant, and growing, business in cardiac safety services
    that will add to our current position in this market.
    Provides scale for our ePRO business, as well as expands the
    depth and breadth of our ePRO services. We believe that this
    transaction established us as one of the five largest providers
    in the ePRO market. RSs offering is based on innovative
    hand-held devices. When combined with our interactive voice
    response technology and our planned web-based technology, we
    will be able to offer our customers a multi-modality approach
    for their ePRO solutions.
    Significantly expands our global footprint. RS employs more than
    260 people, most of whom are in Germany. This increased
    local European presence will enable us to bolster our already
    strong international presence, better serve our continental
    European customers, and expand our relationships with other
    customers in Europe. 4




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
    Accelerates our movement into the Phase IV safety market
    and healthcare solutions. RS device manufacturing and
    services capabilities provides us with a platform and experience
    for future growth into these adjacent markets. Service
    Offerings    Year Ended December 31,2008


2009


2010Net revenues:Services


72.5
%


68.9
%


60.8
%Site support


23.0



28.4



39.2EDC licenses and services


4.5



2.7



Total net revenues


100.0



100.0



100.0   tm
    Centralized
    Cardiac Safety Solutions
         5




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® ®
  and/or and/or
  tm
     6




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10-K, E-14
  Respiratory
    Solutions
  and/or
       7




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Electronic
    Patient Reported Outcomes (ePRO)
    tm tm
      (C-SSRS)
  Consulting
     8




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Project
    Assurance
    Integrated
    Product Offering
    and/or ®
  Operations
     Research
    and Development  Overview
   9




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2010
    Research and Development Initiatives
    
    We launched the first set of studies using our ePRO VIAPad
    device along with our VIAConnect device for establishing
    connectivity to a new backend Customer Data Management System
    (CDMS);
    We launched EXPERT Logistics, a fully integrated logistics
    module that is part of our
    EXPERT®

    system, and allowed us to retire a much less efficient third
    party system;
    We continued the development of the next release of our Master
    Scope, which is scheduled for completion in 2011, and will
    enable support for our entire suite of medical devices;
    We completed the development phase of EXPERT ePRO, the next
    generation of our ePRO platform that will integrate voice and
    web based ePRO on our EXPERT platform, and we expect to complete
    testing and gain operational status during 2011;
    We released a new version of EXPERT providing enhancements
    across all modules  Data Coordination, Analysis,
    Review, and Reporting  and upgrades to MyStudy Portal
    consisting of new versions of our supporting IT infrastructure;
    We completed the automation of our financial reporting and the
    integration of this reporting across our internal corporate
    systems; and
    After our acquisition of RS, we began integrating our legacy
    technology team and technology assets with those we acquired
    from RS, focusing primarily on the integration of our medical
    devices and Master Scope with our EXPERT platform, and we
    started a number of system integration activities spanning the
    needs of all corporate organizations from customer care to sales
    and marketing to quality assurance that we expect to achieve
    full operational status in 2012. Our
    Customers   Sales and
    Marketing       10




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agreed-upon
 Partnerships    Backlog
     Competition        
    customer service;
    a significant base of reference customers;
    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; 11




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
    consulting capabilities;
    quality and performance;
    core technology underlying our service offerings;
    ability to implement solutions;
    capacity;
    cost of services and products;
    financial and organizational stability; and
    ability to adapt to changing regulatory guidance.   Government
    Regulation        QT/QTc
   12




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60601-1:2005 rd nd 60601-1 rd 60601-2-27
         13




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14




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Potential
    Liability and Insurance     15




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Intellectual
    Property    ® ®
    ® ® ® ® ® ® tm tm ® tm tm tm
 Employees   Available
    Information  www.ert.com Form 10-K, Form 10-Q, Form 8-K
   16




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ITEM 1A.
    RISK
    FACTORS  and/or
  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 customers;
    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.
     17




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If
    general economic conditions deteriorate or fail to improve,
    potential customers may be unable to get the necessary financing
    to conduct business and existing customers may fail to make
    timely payments for products we have sold or services that we
    have performed, which could adversely affect our ability to
    maintain or increase overall revenues and our overall financial
    position.
    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,
    such as the respiratory services and device manufacturing
    markets we entered as a result of the RS acquisition;
    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.   18




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Consolidation
    among our customers could cause us to lose customers, decrease
    the market for our product and 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.
    We depend
    on the need for clinical trials in the area of pulmonary disease
    to continue and a downturn in this specific therapeutic area
    could cause our revenues and profitability to
    decrease.
    Extensive
    governmental regulation of the clinical trial or device
    manufacturing processes could require costly modifications to
    our technology, adversely affect prospective customers
    willingness to use our product and service solutions and
    increase competition and reduce our market share.
   19




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
    take a significant amount of time,
    require the expenditure of substantial resources,
    involve stringent clinical and pre-clinical testing,
    involve modifications, repairs or replacements of our
    products; and
    result in limitations on the proposed uses of our products. 20




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and/or
    The FDA
    may recommend a different approach to measuring drug effects on
    the QT interval of an ECG which could make our systems and
    processes obsolete and adversely affect revenue and
    profitability. The FDA may recommend different approaches to
    pulmonary function testing which may make our current devices
    and processes obsolete and considerably decrease our revenues
    and profitability.
  ®
  We have
    customers from whom we derive substantial revenue and therefore
    the loss of even a few of our customers could significantly
    reduce our revenues and profitability.
   21




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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 customers 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
    diagnostic analysis and interpretation services.
    Our
    business could be seriously harmed by our dependence on a
    limited number of suppliers.
   22




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Interruptions
    or delays in service from our third-party providers could impair
    the delivery of customer data and harm our business.
  and/or
  The
    equipment that we manufacture, acquire and lease could
    malfunction or become obsolete due to technological advance.
    Malfunctions in the equipment may result in inaccurate or lost
    data. If we experience malfunctions or obsolescence, we may not
    be able to provide the quantity of equipment needed to service
    our customers. We may fail to obtain the necessary
    certifications for use of the equipment. Any such development
    would reduce our revenues and profitability and/or subject us to
    third party claims.
    60601-1:2005 rd and/or
 23




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Capacity
    constraint or system or device failures could result in the loss
    of or liability to customers, which could reduce our revenues,
    increase our expenses and reduce profitability.
      
    medical device malfunctions;
    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 customer 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 or are unable to fill open positions existing
    for these key executives, our operations could be disrupted, we
    could incur additional
 24




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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, including both
    software and devices, or maintain our technological advantages,
    we may lose our intellectual property rights and become less
    competitive.
    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 product and 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. 25




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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.        Our
    revenue and earnings are exposed to exchange rate fluctuations,
    which has substantially affected our operating
    results.
      Our
    effective income tax rate may fluctuate from quarter to quarter,
    which may affect our earnings and earnings per share.
   26




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
    the requirement to exclude from our quarterly worldwide
    effective income tax calculations losses in jurisdictions where
    no tax benefit can be recognized;
    actual and projected full year pretax income;
    transfer pricing;
    changes in tax laws in various taxing jurisdictions;
    audits by taxing authorities; and
    the establishment of valuation allowances against deferred tax
    assets if it is determined that it is more likely than not that
    future tax benefits will not be realized.    Our
    existing credit facility contains covenants that limit our
    flexibility and prevent us from taking certain
    actions.
    
    incur liens or indebtedness;
    merge, consolidate or dispose of assets;
    make loans or investments;
    pay dividends or other distributions;
    engage in certain transactions with affiliates; and
    change our business or amend our organizational documents.    
    nonpayment of principal, interest, fees or other amounts when
    due;
    breach of any representations or warranties;
    breach of any affirmative or negative covenants, subject to any
    applicable cure periods;
    default in respect of any indebtedness of us or any of our
    subsidiaries in an amount in excess of $1.0 million;
    bankruptcy, insolvency or similar events involving us or any of
    our subsidiaries;
    entry of a judgment against us or any of our subsidiaries of at
    least $750,000;
    a change of control;
    certain adverse events under our ERISA plans or those of our
    subsidiaries; and
    the occurrence of any event that has or could reasonably be
    expected to have a material adverse effect as define in the
    agreement.    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.
   27




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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;
    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; 28




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
    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.
      ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES      ITEM 3.
    LEGAL
    PROCEEDINGS   29




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SPECIAL
    ITEM. EXECUTIVE OFFICERS OF REGISTRANT    Name

Age

PositionJoel Morganroth, MD


65


Chairman of the Board of Directors, President, Chief Executive
    Officer and Chief Scientific OfficerKeith D. Schneck


55


Executive Vice President, Chief Financial Officer and SecretaryJohn M. Blakeley


43


Executive Vice President and Chief Commercial OfficerThomas P. Devine


58


Executive Vice President and Chief Information OfficerAmy Furlong


38


Executive Vice President and Chief Operations OfficerJeffrey S. Litwin, MD


52


Executive Vice President and Chief Medical OfficerAchim Schuelke


49


Executive Vice President and Chief Technology OfficerEric Schwartz


42


Executive Vice President and Chief Legal OfficerJohn B. Sory


45


Executive Vice President and Chief Development Officer              30




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31




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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

Low2009First Quarter

$
7.50


$
4.48Second Quarter


6.68



4.90Third Quarter


7.56



5.32Fourth Quarter


8.50



5.742010First Quarter

$
6.93


$
5.34Second Quarter


8.73



6.37Third Quarter


8.95



6.42Fourth Quarter


8.59



5.36      32




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Stockholder
    Return Performance Graph
    Form 10-K
  
  
 33




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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 31,2006


2007


2008


2009


2010Net revenues:Services

$
59,712


$
55,309


$
96,567


$
64,655


$
85,718Site support


21,072



28,042



30,679



26,667



55,274EDC licenses and services


6,063



3,017



5,894



2,501



Total net revenues


86,847



86,368



133,140



93,823



140,992Costs of revenues:Cost of services


24,337



25,431



38,609



29,886



43,403Cost of site support


13,965



18,821



18,445



13,544



30,212Cost of EDC licenses and services


436



286



1,843



863



Total costs of revenues


38,738



44,538



58,897



44,293



73,615Gross margin


48,109



41,830



74,243



49,530



67,377Operating expenses:Selling and marketing


9,122



11,051



13,273



12,905



16,064General and administrative


11,458



14,668



18,181



14,859



30,607Research and development


4,093



4,146



4,394



3,853



5,089Total operating expenses


24,673



29,865



35,848



31,617



51,760Operating income


23,436



11,965



38,395



17,913



15,617Foreign exchange (losses) gains


(296
)


(154
)


832



(618
)


(956
)Other income (expense), net


1,232



1,404



898



183



(239
)Income before income taxes


24,372



13,215



40,125



17,478



14,422Income tax provision


9,007



4,905



15,123



6,791



4,551Net income

$
15,365


$
8,310


$
25,002


$
10,687


$
9,871Basic net income per share

$
0.31


$
0.17


$
0.49


$
0.22


$
0.20Diluted net income per share

$
0.29


$
0.16


$
0.48


$
0.22


$
0.20   Consolidated
    Balance Sheet Data (in thousands)
  December 31,2006


2007


2008


2009


2010Cash, cash equivalents and short-term investments

$
56,913


$
46,879


$
66,426


$
78,761


$
30,393Working capital


61,320



45,594



75,289



82,950



47,819Total assets


115,064



147,696



169,122



164,861



214,835Total stockholders equity


93,622



113,512



137,428



137,672



150,655  34




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ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS Overview  tm
          out-of-pocket
   35




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Results
    of Operations Executive
    Overview     36




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37




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Year Ended December 31,2008


2009


2010Net revenues:Services


72.6
%


68.9
%


60.8
%Site support


23.0
%


28.4
%


39.2
%EDC licenses and services


4.4
%


2.7
%


0.0
%Total net revenues


100.0
%


100.0
%


100.0
%Costs of revenues:Cost of services


29.0
%


31.9
%


30.8
%Cost of site support


13.8
%


14.4
%


21.4
%Cost of EDC licenses and services


1.4
%


0.9
%


0.0
%Total costs of revenues


44.2
%


47.2
%


52.2
%Gross margin:Gross margin services


60.0
%


53.8
%


49.4
%Gross margin site support


39.9
%


49.2
%


45.3
%Gross margin EDC licenses and services


68.7
%


65.5
%


N/ATotal gross margin


55.8
%


52.8
%


47.8
%Operating expenses:Selling and marketing


10.0
%


13.8
%


11.4
%General and administrative


13.7
%


15.8
%


21.7
%Research and development


3.3
%


4.1
%


3.6
%Total operating expenses


27.0
%


33.7
%


36.7
%Operating income


28.8
%


19.1
%


11.1
%Foreign exchange gains (losses)


0.6
%


(0.7
)%


(0.7
)%Other income (expense), net


0.7
%


0.2
%


(0.3
)%Income before income taxes


30.1
%


18.6
%


10.2
%Income tax provision


11.3
%


7.2
%


3.2
%Net income


18.8
%


11.4
%


7.0
%  38




---



##### Table of Contents



Year
    Ended December 31, 2009 Compared to the Year Ended
    December 31, 2010    Year Ended December 31,2009


2010


Increase (Decrease)Services:Net revenues

$
64,655


$
85,718


$
21,063



32.6
%Costs of revenues


29,886



43,403



13,517



45.2
%Gross margin

$
34,769


$
42,315


$
7,546



21.7
%Site support:Net revenues

$
26,667


$
55,274


$
28,607



107.3
%Costs of revenues


13,544



30,212



16,668



123.1
%Gross margin

$
13,123


$
25,062


$
11,939



91.0
%EDC licenses and services:Net revenues

$
2,501


$



$
(2,501
)


(100.0
)%Costs of revenues


863







(863
)


(100.0
)%Gross margin

$
1,638


$



$
(1,638
)


(100.0
)%TotalNet revenues

$
93,823


$
140,992


$
47,169



50.3
%Costs of revenues


44,293



73,615



29,322



66.2
%Gross margin


49,530



67,377



17,847



36.0
%Operating expenses:Selling and marketing


12,905



16,064



3,159



24.5
%General and administrative


14,859



30,607



15,748



106.0
%Research and development


3,853



5,089



1,236



32.1
%Total operating expenses


31,617



51,760



20,143



63.7
%Operating income


17,913



15,617



(2,296
)


(12.8
)%Foreign exchange losses


(618
)


(956
)


(338
)


54.7
%Other income (expense), net


183



(239
)


(422
)


(230.6
)%Income before income taxes


17,478



14,422



(3,056
)


(17.5
)%Income tax provision


6,791



4,551



(2,240
)


(33.0
)%Net income

$
10,687


$
9,871


$
(816
)


(7.6
)%     Year Ended December 31

Increase2009

2010

(Decrease)Costs of revenues:Cost of services


46.2
%


50.6
%


4.4
%Cost of site support


50.8
%


54.7
%


3.9
%Cost of EDC licenses and services


34.5
%


N.M.



N.M.Total costs of revenues


47.2
%


52.2
%


5.0
%Operating expenses:Selling and marketing


13.8
%


11.4
%


(2.4
)%General and administrative


15.8
%


21.7
%


5.9
%Research and development


4.1
%


3.6
%


(0.5
)%Total operating expenses


33.7
%


36.7
%


3.0
%  39




---



##### Table of Contents



EDC
    Revenues
      Costs of
    Revenues
      Operating
    Expenses
     40




---



##### Table of Contents



41




---



##### Table of Contents



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


2009


Increase (Decrease)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
%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
)%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
)%Foreign exchange gains (losses)


832



(618
)


(1,450
)


(174.3
)%Other income, net


898



183



(715
)


(79.6
)%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
)%     Year Ended December 31,


Increase2008


2009


(Decrease)Costs of revenues:Cost of services


40.0
%


46.2
%


6.2
%Cost of site support


60.1
%


50.8
%


(9.3
)%Cost of EDC licenses and services


31.3
%


34.5
%


3.2
%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
%  42




---



##### Table of Contents



Revenues
        Costs of
    Revenues
      Operating
    Expenses
   43




---



##### Table of Contents



Liquidity
    and Capital Resources     44




---



##### Table of Contents



15-month
 45




---



##### Table of Contents



Payments due by periodLess than


1-3


3-5


More thanContractual Obligations

Total


1 year


years


years


5 yearsLong-term debt(a)

$
21,759


$
316


$
21,443


$



$
Purchase obligations(b)


5,116



3,813



1,303







Operating leases


22,727



4,201



5,974



4,034



8,518Total

$
49,602


$
8,330


$
28,720


$
4,034


$
8,518     (a)
    
    Debt amounts include principal maturity and expected interest
    payments that reflects the year-end interest rate.(b)
    
    Purchase obligations include agreements to purchase goods or
    services that are enforceable and legally binding on us and that
    specify all significant terms, including: fixed or minimum
    quantities to be purchased; fixed, minimum or variable price
    provisions; and the approximate timing of the transaction. We
    have excluded agreements that are cancelable without penalty.
    Purchase obligations relate to purchases of rental equipment.   Inflation   Recent
    Accounting Pronouncements  ASC 605-25 No. 08-1,
   46




---



##### Table of Contents



2010-06
 Critical
    Accounting Policies      Revenue
    Recognition
       47




---



##### Table of Contents



out-of-pocket
    Business
    Combinations
          Goodwill
   48




---



##### Table of Contents



Accounting
    for Income Taxes
      Depreciation
    and Amortization of Long-lived Assets
        Stock-Based
    Compensation
   49




---



##### Table of Contents



page F-1 Form 10-K,
  ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   Interest
    Rate Risk  Long-term
    debt
    Investments
   Foreign
    Currency Risk  year-to-year
   50




---



##### 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   51




---



##### 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   52




---



##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Form 10-K:
  Form 10-K
  Form 10-K
    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
.9

Definitive Purchase Agreement between Blitz
    F10-acht-drei-fünf GmbH & Co. KG, an indirect
    wholly-owned
    subsidiary of eResearchTechnology, Inc., and CareFusion Germany
    234 GmbH, an indirect wholly-owned subsidiary of CareFusion
    Corporation, dated April 29, 2010.(8)10
.10

Reciprocal Guaranty between CareFusion Corporation, in favor of
    Blitz F10-acht-drei-fünf GmbH & Co. KG, and
    eResearchTechnology, Inc., in favor of CareFusion Germany 234
    GmbH.(8)10
.13

2010 Bonus Plan.(8)*10
.14

2009 Bonus Plan.(9)*10
.15

Credit Agreement dated May 27, 2010 between
    eResearchTechnology, Inc. and Citizens Bank of Pennsylvania.(10)10
.16

Revolver Note dated May 27, 2010 made by
    eResearchTechnology, Inc. payable to the order of Citizens Bank
    of Pennsylvania.(11) 53




---



##### Table of Contents



10
.17

Guaranty dated May 27, 2010 by ERT Tech Corporation, ERT
    Investment Corporation, Covance Cardiac Safety Services Inc. and
    eResearchTechnology, Inc. in favor of Citizens Bank of
    Pennsylvania.(12)10
.18

Charge Over Shares and Securities dated May 27, 2010
    between eResearchTechnology, Inc. and Citizens Bank of
    Pennsylvania.(13)10
.19

First Amendment dated May 28, 2010 to the Agreement
    Relating to the Sale, Purchase and Transfer of All Shares of
    Research Services Germany 234 GmbH between CareFusion Germany
    234 GmbH and Blitz F10-acht-drei-fünf GmbH & Co.
    KG.(14)10
.20

1818 Market Street Office Lease between the Company and NNN 1818
    Market Street, LLC and Affiliates.(15)10
.31

Amended and Restated 2003 Equity Incentive Plan, as amended.(16)*10
.42

Management Employment Agreement effective March 1, 2010
    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
.45

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

Consultant Agreement effective March 1, 2010 between Joel
    Morganroth, M.D., P.C. and the Company.(8)*10
.48

Management Employment Agreement effective June 23, 2006
    between Michael J. McKelvey and the Company.(17)*10
.49

Amendment to Management Employment Agreement effective
    March 17, 2010 between Michael McKelvey and the Company.(8)*10
.50

Amendment to Management Employment Agreement effective
    March 17, 2010 between Jeffrey S. Litwin and the
    Company.(8)*10
.51

Amendment to Management Employment Agreement effective
    March 17, 2010 between Amy Furlong and the Company.(8)*10
.52

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

Management Employment Agreement effective July 28, 2008
    between Keith D. Schneck and the Company.(19)*10
.54

Lease Agreement dated September 28, 2004 between Royal and
    Sun Alliance Insurance PLC and the Companys subsidiary,
    eResearchTechnology Limited.(20)10
.56

Amendment to Management Employment Agreement effective
    March 17, 2010 between Keith D. Schneck and the
    Company.(8)* 54




---



##### Table of Contents



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)*10
.59

Retirement Agreement effective December 21, 2010 between
    Michael J. McKelvey and the Company.*12
.1

Statement of Computation of Ratio of Earnings to Fixed Charges.21
.1

Subsidiaries of the Registrant.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.(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 7, 2010.(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 Exhibit 10.1, filed in
    connection with the Companys Form
    8-K on
    June 3, 2010.(11)
    Incorporated by reference to Exhibit 10.2, filed in
    connection with the Companys Form
    8-K on
    June 3, 2010.(12)
    Incorporated by reference to Exhibit 10.3, filed in
    connection with the Companys Form
    8-K on
    June 3, 2010. 55




---



##### Table of Contents



(13)
    Incorporated by reference to Exhibit 10.4, filed in
    connection with the Companys Form
    8-K on
    June 3, 2010.(14)
    Incorporated by reference to Exhibit 10.5, filed in
    connection with the Companys Form
    8-K on
    June 3, 2010.(15)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on November 7, 2008.(16)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on November 6, 2009.(17)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-K
    on March 7, 2008.(18)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on August 4, 2006.(19)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-Q
    on November 13, 2000.(20)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-K
    on March 2, 2009.(21)
    Incorporated by reference to the exhibit with the same number,
    filed in connection with the Companys
    Form 10-K
    on March 11, 2005. 56




---



##### Table of Contents



SIGNATURES    eResearchTechnology, Inc.
  By:
    /s/  Joel
    Morganroth, MD   President and Chief Executive Officer,
 Chairman of the Board of Directors
    Signature

Title

Date/s/  Joel
    Morganroth, MDJoel
    Morganroth, MD

President and Chief Executive Officer, Chairman of the Board of
    Directors (Principal executive officer)

March 3, 2011/s/  Keith
    D. SchneckKeith
    D. Schneck

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

March 3, 2011/s/  Klaus
    P. BesierKlaus
    P. Besier

Director

March 3, 2011/s/  Sheldon
    M. BonovitzSheldon
    M. Bonovitz

Director

March 3, 2011/s/  Michael
    DeManeMichael
    DeMane

Director

March 3, 2011/s/  Gerald
    A. Faich, MD, MPHGerald
    A. Faich, MD, MPH

Director

March 3, 2011/s/  Elam
    M. HitchnerElam
    M. Hitchner

Director

March 3, 2011/s/  Stephen
    S. PhillipsStephen
    S. Phillips

Director

March 3, 2011/s/  Stephen
    M. ScheppmannStephen
    M. Scheppmann

Director

March 3, 2011  57




---



##### 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-35  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.        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 31,2009


2010AssetsCurrent Assets:Cash and cash equivalents

$
68,979


$
30,343Short-term investments


9,782



50Investment in marketable securities


1,026



648Accounts receivable, less allowance for doubtful accounts of
    $548 and $515, respectively


16,579



37,236Inventory






4,698Prepaid income taxes


2,698



1,988Prepaid expenses and other


3,308



4,393Deferred income taxes


1,649



3,431Total current assets


104,021



82,787Property and equipment, net


24,205



42,615Goodwill


34,676



71,637Intangible assets


1,607



17,187Other assets


352



609Total assets

$
164,861


$
214,835Liabilities and Stockholders EquityCurrent Liabilities:Accounts payable

$
3,007


$
7,136Accrued expenses


5,990



16,162Income taxes payable


346



Deferred revenues


11,728



11,670Total current liabilities


21,071



34,968Deferred rent


2,357



2,368Deferred income taxes


2,502



3,703Long-term debt






21,000Other liabilities


1,259



2,141Total liabilities


27,189



64,180Commitments 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, 60,189,235 and
    60,460,782 shares issued, respectively


602



605Additional paid-in capital


97,367



100,441Accumulated other comprehensive loss


(1,580
)


(1,545
)Retained earnings


121,166



131,037Treasury stock, 11,589,603 shares at cost


(79,883
)


(79,883
)Total stockholders equity


137,672



150,655Total liabilities and stockholders equity

$
164,861


$
214,835    F-5




---



##### Table of Contents



eResearchTechnology,
    Inc. and SubsidiariesConsolidated Statements of
    Operations
    (In thousands, except per share amounts)
  Year Ended December 31,2008


2009


2010Net revenues:Services

$
96,567


$
64,655


$
85,718Site support


30,679



26,667



55,274EDC licenses and services


5,894



2,501



Total net revenues


133,140



93,823



140,992Costs of revenues:Cost of services


38,609



29,886



43,403Cost of site support


18,445



13,544



30,212Cost of EDC licenses and services


1,843



863



Total costs of revenues


58,897



44,293



73,615Gross margin


74,243



49,530



67,377Operating expenses:Selling and marketing


13,273



12,905



16,064General and administrative


18,181



14,859



30,607Research and development


4,394



3,853



5,089Total operating expenses


35,848



31,617



51,760Operating income


38,395



17,913



15,617Foreign exchange gains (losses)


832



(618
)


(956
)Other income (expense), net


898



183



(239
)Income before income taxes


40,125



17,478



14,422Income tax provision


15,123



6,791



4,551Net income

$
25,002


$
10,687


$
9,871Net income per common share:Basic

$
0.49


$
0.22


$
0.20Diluted

$
0.48


$
0.22


$
0.20Shares used in computing net income per common share:Basic


50,870



49,173



48,808Diluted


52,015



49,468



49,190    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 (Loss)


Earnings


Stock


TotalBalance, January 1, 2008


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
)


137,672Comprehensive incomeNet income


















9,871







9,871Change in unrealized losses on marketable securities














(68
)










(68
)Currency translation adjustment, net of tax














103











103Total comprehensive income


























9,906Share-based compensation










2,718















2,718Capitalized share-based compensation










75















75Restricted stock grants


209,116



2



(2
)Tax benefit from exercise of stock options










55















55Exercise of stock options


62,431



1



228















229Balance, December 31, 2010


60,460,782


$
605


$
100,441


$
(1,545
)

$
131,037


$
(79,883
)

$
150,655    F-7




---



##### Table of Contents



eResearchTechnology,
    Inc. and SubsidiariesConsolidated Statements of Cash
    Flows
    (In thousands)
  Year Ended December 31,2008


2009


2010Operating activities:Net income

$
25,002


$
10,687


$
9,871Adjustments to reconcile net income to net cashprovided by operating activities:Gain on sale of EDC operations






(530
)


Depreciation and amortization


16,038



12,583



19,751Cost of sales of equipment


743



96



1,158Provision for uncollectible accounts


189



210



Share-based compensation


2,604



2,790



2,717Deferred income taxes


1,098



1,680



(651
)Changes in operating assets and liabilities:Accounts receivable


(3,840
)


12,726



(7,091
)Inventory










(1,265
)Prepaid expenses and other


41



(293
)


476Accounts payable


175



(767
)


4,131Accrued expenses


1,162



(3,490
)


8,054Income taxes


(1,290
)


(3,286
)


(687
)Deferred revenues


(1,909
)


1,379



(358
)Deferred rent


(64
)


148



(179
)Net cash provided by operating activities


39,949



33,933



35,927Investing activities:Purchases of property and equipment


(10,969
)


(6,207
)


(21,746
)Purchases of investments






(9,732
)


(999
)Proceeds from sales of investments


8,747







10,731Payment related to sale of EDC operations






(1,150
)


Payments for acquisitions


(6,042
)


(655
)


(82,789
)Net cash used in investing activities


(8,264
)


(17,744
)


(94,803
)Financing activities:Proceeds from long-term debt










23,000Repayment of long-term debt










(2,000
)Repayment of capital lease obligations


(1,102
)


(43
)


Proceeds from exercise of stock options


2,369



523



229Stock option income tax benefit


849



152



55Repurchase of common stock for treasury


(2,573
)


(15,120
)


Net cash (used in) provided by financing activities


(457
)


(14,488
)


21,284Effect of exchange rate changes on cash


(2,934
)


902



(1,044
)Net increase (decrease) in cash and cash equivalents


28,294



2,603



(38,636
)Cash and cash equivalents, beginning of period


38,082



66,376



68,979Cash and cash equivalents, end of period

$
66,376


$
68,979


$
30,343    F-8




---



##### Table of Contents



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




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Use of
    Estimates
    Revenues
          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.
 F-11




---



##### Table of Contents



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


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueMunicipal 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   December 31, 2010Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueMunicipal securities

$
50


$



$



$
50Total short-term investments as of December 31, 2010

$
50


$



$



$
50   Allowance
    for Doubtful Accounts
    Inventory
  first-in, Work-in-process
  Property
    and Equipment
    and/or
 F-12




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
          Goodwill
     F-13




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Business
    Combinations and Valuation of Intangible Assets
    Long-lived
    Assets
    Software
    Development Costs
    Advertising
    Costs
    Share-Based
    Compensation
  Accounting
    for Share-Based Compensation
   F-14




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Valuation
    Assumptions for Options Granted
    2008

2009

2010Risk-free interest rate


2.23
%


1.39
%


2.36
%Expected dividend yield


0.00
%


0.00
%


0.00
%Expected life


3.5 years



3.5 years



3.8 yearsExpected volatility


51.50
%


63.97
%


61.75
%     Income
    Taxes
    Other
    Income (Expense), Net
    Supplemental
    Cash Flow Information
        Concentration
    of Credit Risk and Significant Customers and Vendors
   F-15




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
      Translation
    of Foreign Financial Statements
    Net
    Income per Common Share
   F-16




---



##### Table of Contents



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





ShareYear Ended December 31,

Income


Shares


Amount2008Basic 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


$
0.222010Basic net income

$
9,871



48,808


$
0.20Effect of dilutive shares






382



Diluted net income

$
9,871



49,190


$
0.20     Comprehensive
    Income
  paid-in-capital
  Recent
    Accounting Pronouncements
  ASC 605-25 No. 08-1,
   F-17




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    2010-06
  2.
    Business
    Combinations  Research
    Services (RS)
  stepped-up
    Fair value of assets acquired:Cash

$
149Accounts receivable


12,729Inventory


2,598Other current assets


1,142Property and equipment, net


11,179Goodwill


36,756Other intangible assets, net


21,349Other assets


407Liabilities assumed:Accrued and other liabilities


(3,257
)Deferred revenue


(375
)Net assets acquired

$
82,677    F-18




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Pro Forma
    Results
    Year Ended December 31,2009

2010(Unaudited, in thousands except per share amounts)Revenue

$
143,785


$
169,332Operating income


16,112



21,986Net income


8,529



14,494Basic net income per share

$
0.17


$
0.30Diluted net income per share

$
0.17


$
0.29   Covance
    Cardiac Safety Services, Inc. (CCSS)
    LeaseLiabilityBalance at December 31, 2009

$
1,758Adjustments to previous estimates


593Cash payments


(450
)Balance at December 31, 2010

$
1,901    F-19




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Goodwill
    Balance at January 1, 2009

$
34,603Sale of EDC operations


(130
)Other adjustments


203Balance at December 31, 2009


34,676Acquisition


36,756Other adjustments


205Balance at December 31, 2010

$
71,637     Note 3.
    Inventory    December 31,2010Raw materials

$
2,196Work in process


843Finished goods


1,6594,698     4.
    Intangible
    Assets    December 31, 2009EstimatedAccumulated


Net Book


Useful LifeDescription

Gross Value


Amortization


Value


(In Years)CCSS:Backlog

$
1,900


$
1,643


$
257
*


3Customer Relationships


1,700



350


$
1,350



10Technology


400



400


$




1Total

$
4,000


$
2,393


$
1,607   F-20




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  December 31, 2010EstimatedAccumulated


Net Book


Useful LifeDescription

Gross Value


Amortization


Value


(In Years)CCSS:Backlog

$
1,900


$
1,900


$
*



3Customer Relationships


1,700



524


$
1,176



10Technology


400



400


$




1Total

$
4,000


$
2,824


$
1,176RS:Backlog

$
12,782


$
4,687


$
8,095
*


4Technology


8,248



602



7,646



8Covenants
    not-to-compete


319



49



270



4$
21,349


$
5,338


$
16,011     *
    
    CCSS backlog is being amortized over three years on an
    accelerated basis and RS backlog is being amortized over four
    years on an accelerated basis.      Amortization of Intangible AssetsYears Ending December 31,

CCSS


RS


Total2011

$
170


$
6,735


$
6,9052012


170



3,238



3,4082013


170



1,451



1,6212014


170



1,064



1,2342015


170



1,031



1,201Thereafter


326



2,492



2,818Total

$
1,176


$
16,011


$
17,187   5.
    Accounts
    Receivable, Net    December 31,2009


2010Billed

$
15,481


$
36,233Unbilled


1,646



1,518Allowance for doubtful accounts


(548
)


(515
)$
16,579


$
37,236  F-21




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  6.
    Property
    and Equipment, Net    December 31,2009


2010Computer and other equipment

$
15,839


$
18,715Rental equipment


37,293



56,241Furniture and fixtures


3,585



3,664Leasehold improvements


5,974



6,030System development costs


26,830



33,01489,521



117,664Less-Accumulated depreciation


(65,316
)


(75,049
)$
24,205


$
42,615   Note 7.
    Credit
    Agreement       F-22




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  8.
    Income
    Taxes    Year Ended December 31,2008


2009


2010Current provision:Federal

$
8,249


$
3,909


$
1,589State and local


2,822



216



493Foreign


2,639



1,374



2,95713,710



5,499



5,039Deferred provision (benefit):Federal


1,405



543



309State and local


521



924



(1,089
)Foreign


(513
)


(175
)


2921,413



1,292



(488
)$
15,123


$
6,791


$
4,551       Year Ended December 31,2008


2009


2010Tax at federal statutory rate

$
14,044


$
6,118


$
4,904State and local taxes, net of federal


2,172



477



(382
)Impact of foreign operations


(931
)


(315
)


(1,732
)Federal tax credits


(90
)


90



Tax-free interest income


(59
)






(6
)Share-based compensation expense


352



423



481Decrease in unrecognized tax benefits


(550
)


(186
)


(2
)Acquisition transaction costs










1,383Other


185



184



(95
)$
15,123


$
6,791


$
4,551    F-23




---



##### Table of Contents



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


2010Depreciation

$
1,205


$
779Capitalized R&D expenses


1,055



690Net operating loss carryforwards


35



307Investment impairment


1,112



1,188Reserves and accruals


2,521



4,158Share-based compensation expense


1,868



2,063Gross deferred tax assets


7,796



9,185Repatriation of UK earnings


(703
)


(703
)Depreciation


(5,642
)


(6,626
)Amortization of intangibles


(1,192
)


(940
)Gross deferred tax liabilities


(7,537
)


(8,269
)Deferred tax assets valuation allowance


(1,112
)


(1,188
)Net deferred tax assets (liabilities)

$
(853
)

$
(272
)           non-U.S. income
 F-24




---



##### Table of Contents



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


2010Unrecognized tax benefits at January 1

$
498


$
179Increase in unrecognized tax benefits for tax positions taken in
    a prior year






316Increase in unrecognized tax benefits for tax positions taken in
    the current year


13



42IRS audit settlement


(146
)


Expiration of statutes of limitations


(186
)


(2
)Unrecognized tax benefits at December 31

$
179


$
535     9.
    Accrued
    Expenses    2009


2010Accrued compensation

$
2,485


$
9,281Due to customers


1,242



2,068Accrued outside services


252



638Deferred rent


394



186Other accrued liabilities


1,617



3,989Total accrued expenses

$
5,990


$
16,162   10.
    Employee
    Retirement Plan      11.
    Related
    Party Transactions   F-25




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
      12.
    Equity
    Incentive Plans       F-26




---



##### Table of Contents



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


RemainingAverage


Contractual


IntrinsicShare Options

Shares


Exercise Price


Term


Value(in years)


(in thousands)Outstanding as of January 1, 2010


4,406,606


$
9.62Granted


889,060



6.45Exercised


(62,431
)


3.66Cancelled/forfeited


(505,292
)


6.89Outstanding as of December 31, 2010


4,727,943


$
9.36



4.0


$
4,895Options exercisable or expected to vest at December 31, 2010


4,485,744


$
9.51



3.9


$
4,539Options exercisable at December 31, 2010


3,113,280


$
10.72



3.2


$
2,522   WeightedAverageGrant DateRestricted Stock

Shares


Fair ValueOutstanding as of January 1, 2010





$
Granted


209,116



6.22Exercised






Cancelled/forfeited


(55,331
)


6.05Outstanding as of December 31, 2010


153,785


$
6.28   in-the-money
        Tax
    Effect Related to Share-Based Compensation Expense
   F-27




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    13.
    Commitments
    and Contingencies  Leases
        GrossOperating


SubleaseLeases


Income2011

$
4,201


$
3232012


3,053



2972013


2,921



2014


2,036



2015


1,998



2016 and thereafter


8,518



$
22,727


$
620   Other
    commitments and contingencies
    10-year 10-year
 F-28




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
      Agreements
    with the Companys Management
         F-29




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  Contingencies
        Potential
    Indemnifications and Insurance
      14.
    Fair
    Value of Financial Instruments    available-for-sale Available-for-sale Available-for-sale
 F-30




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
    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     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)Cash and cash equivalents

$
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   Fair Value Measurements at December 31, 2010Quoted Prices





Significantin Active Markets


Significant Other


Unobservablefor Identical Assets


Observable Inputs


InputsTotal


(Level 1)


(Level 2)


(Level 3)Cash and cash equivalents

$
30,343


$
30,343


$



$
Municipal securities


50











50Marketable securities


648







648



Total

$
31,041


$
30,343


$
648


$
50     15.
    Operating
    Segments and Geographic Information   F-31




---



##### Table of Contents



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


UK


Germany


Eliminations


TotalService revenues

$
79,123


$
17,444


$



$



$
96,567Site support revenues


20,644



10,035











30,679EDC licenses and services revenues


5,894















5,894Net 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


UK


Germany


Eliminations


TotalService revenues

$
49,869


$
14,786


$



$



$
64,655Site support revenues


18,600



8,067











26,667EDC licenses and services revenues


2,501















2,501Net 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   Year Ended December 31, 2010NorthAmerica


UK


Germany


Eliminations


TotalService revenues

$
41,805


$
22,765


$
21,148


$



$
85,718Site support revenues


18,918



10,312



26,044







55,274Net revenues from external customers


60,723



33,077



47,192







140,992Intersegment revenues


12,599



65







(12,664
)


Total revenues

$
73,322


$
33,142


$
47,192


$
(12,664
)

$
140,992Operating income

$
(211
)

$
10,510


$
5,318


$



$
15,617Long-lived assets

$
23,345


$
6,230


$
13,040


$



$
42,615Total assets

$
98,266


$
16,701


$
99,868


$



$
214,835  F-32




---



##### Table of Contents



eResearchTechnology,
    Inc. and Subsidiaries
    Notes To Consolidated Financial
    Statements  (Continued)
  16.
    Quarterly
    Financial Data (Unaudited)    2009March 31


June 30


September 30


December 31Net revenues:Services

$
16,108


$
16,215


$
15,969


$
16,363Site support


6,260



6,878



6,757



6,772EDC licenses and services


1,418



1,083







Total net revenues


23,786



24,176



22,726



23,135Costs of revenues:Cost of services


7,693



7,671



7,577



6,945Cost of site support


3,635



3,470



3,418



3,021Cost of EDC licenses and services


466



397







Total 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   2010March 31


June 30


September 30


December 31Net revenues:Services


14,835



18,697



25,929



26,257Site support


7,033



10,399



19,199



18,643Total net revenues


21,868



29,096



45,128



44,900Costs of revenues:Cost of services


7,311



8,325



13,526



14,241Cost of site support


2,799



4,957



11,505



10,951Total costs of revenues


10,110



13,282



25,031



25,192Gross margin


11,758



15,814



20,097



19,708Operating income


2,747



1,051



6,589



5,230Net income


1,752



826



3,173



4,120Basic net income per share

$
0.04


$
0.02


$
0.06


$
0.08Diluted net income per share

$
0.04


$
0.02


$
0.06


$
0.08      F-33




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##### 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, 2008

$
553


$
169


$
27
(a)

$
695December 31, 2009

$
695


$
215


$
362
(a)

$
548December 31, 2010

$
548


$
76


$
109
(a)

$
515     (a)
    
    Write-off of individual accounts receivable. F-34