##### Table of Contents





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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 
    OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission File Number
    000-23019
  KENDLE INTERNATIONAL
    INC.
  Ohio(State or other
    jurisdiction
    of incorporation or organization)

31-1274091IRS Employer 
    ID No.   441 Vine Street, 500 Carew Tower
 Cincinnati, Ohio 45202
 513-381-5550
  Securities Registered Pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, no par value

The NASDAQ Stock Market LLC(NASDAQ Global Select Market)   Securities Registered Pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K.  [ o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o  Rule 12b-2 o þ
      Documents
    Incorporated by Reference




---



##### 





Kendle
    International Inc.
  Form 10-K
    Annual Report
    For the Fiscal Year Ended December 31, 2008
  Table of
    Contents
   
 PagePART IItem 1  Business


3Item 1A  Risk Factors


6Item 1B  Unresolved Staff
    Comments


13Item 2  Properties


13Item 3  Legal Proceedings


13Item 4  Submission of Matters to
    a Vote of Security Holders


13PART IIItem 5  Market for
    Registrants Common Equity, Related Shareholder Matters and
    Issuer Purchases of Equity Securities


14Item 6  Selected Financial
    Data


16Item 7  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


17Item 7A  Quantitative and
    Qualitative Disclosures about Market Risk


35Item 8  Financial Statements and
    Supplementary Data


38Item 9  Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


38Item 9A  Controls and
    Procedures


38Item 9B  Other Information


41PART IIIItem 10  Directors and Executive
    Officers of the Registrant


41Item 11  Executive
    Compensation


42Item 12  Security Ownership of
    Certain Beneficial Owners and Management and Related Stockholder
    Matters


42Item 13  Certain Relationships
    and Related Transactions, and Director Independence


43Item 14  Principal Accountant
    Fees and Services


43PART IVItem 15  Exhibits and Financial
    Statement Schedules


44SignaturesEX-12.1EX-21EX-23.1EX-24EX-31.1EX-31.2EX-32.1EX-32.2   2




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##### Table of Contents



Form 10-K
   PART I  ITEM 1.
    BUSINESS  General
    Early
    Stage
  First-in-Human
  Late
    Stage
           3




---



##### Table of Contents



Acquisition
    Activity
        Business
    Strategy
    
    Driving growth in the Companys core competency in Phases I
    through IV clinical trials.
    Meeting the specific development pipeline needs for the
    Companys targeted customers.
    Gaining share in the CRO market through further penetration in
    the large (greater than $10 million in contract value)
    trial sector as well as continued expansion in mid-sized trials.
    Expanding the Companys geographic footprint with a focus
    on high-growth regions such as Africa and Asia/Pacific.
    Setting the stage for business mix expansion, such as expansion
    in support of Early Stage.
    Building infrastructure to support the continued expansion and
    growth of the Company.  Customers
    and Marketing
      Backlog
   4




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##### Table of Contents



Competition
      Government
    Regulation
      Employees
  non-U.S. locations
 5




---



##### Table of Contents



Available
    Information
  www.kendle.com. Form 10-K. Form 10-K, Form 10-Q Form 8-K,
  http://www.SEC.gov
  ITEM 1A.
    RISK
    FACTORS  Form 10-K
  and/or
  Risks
    Related to Our Business
  The
    Company depends on the biopharmaceutical industry for most of
    its revenue.
    The
    CRO industry is highly competitive.
   6




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The
    Companys contracts may be delayed, terminated or reduced
    in scope with little or no notice.
      The
    fixed price nature of many of the Companys contracts could
    result in financial losses.
    The
    Companys backlog is composed of contracts varying in terms
    of amounts, global nature and type. To the extent this mix of
    contracts continues to shift toward larger (in excess of
    $10 million) contracts with a more global component, this
    may cause the rate at which the backlog converts into revenue to
    lengthen when compared with historical trends and the amount
    recognized as revenue could be affected by fluctuations in
    applicable foreign currencies.
  non-U.S. subsidiaries
  If the
    Company fails to hire, retain and integrate qualified personnel,
    it will be difficult for it to achieve its financial and
    operational goals.
  and/or
  If the
    Company is unable to attract suitable investigators and
    volunteers for clinical trials, the Companys business may
    suffer.
   7




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##### Table of Contents



The
    Company has grown rapidly and its growth has placed, and is
    expected to continue to place, significant demands on
    it.
    If the
    Company is required to write off goodwill or other intangible
    assets acquired in its business combinations, its financial
    position and results of operations would be adversely
    affected.
    The
    Companys indebtedness could adversely affect its business
    and financial condition.
       8




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##### Table of Contents




    Seek additional financing in the debt or equity markets;
    Seek to refinance or restructure all or a portion of its
    indebtedness;
    Sell selected assets;
    Reduce or delay planned capital expenditures      The
    Companys access to funds under the Facility or its money
    market fund holdings is dependent on the solvency and liquidity
    of the participating lenders or fund sponsors.
    The
    Company may be exposed to risk from its various
    counterparties.
    Change
    in government regulation or healthcare reform could adversely
    affect the Company.
    The
    Companys international operations are subject to numerous
    risks.
   9




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The
    Companys financial results are exposed to exchange rate
    fluctuations.
    The
    Companys quarterly operating results may
    vary.
    
    Exchange rate fluctuations;
    Timing of contract amendments for changes in scope that could
    affect the value of a contract and potentially impact the amount
    of net service revenues from quarter to quarter.
    Commencement, completion, execution or cancellation of large
    contracts;
    Collections of accounts receivable
    Progress of ongoing contracts and retention of customers;
    Timing of and charges associated with completed acquisitions or
    other events; and
    Changes in the mix, both in terms of geography and type of
    services.    The
    Companys business depends on the continued effectiveness
    and availability of its information technology infrastructure,
    and failures of this infrastructure could harm its
    operations.
    The
    Companys business depends on the successful implementation
    and deployment of its enterprise wide reporting solution and
    failure could limit the Companys ability to manage its
    business and obtain accurate financial reporting.
   10




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The
    Companys business could expose it to potential liability
    for personal injury claims that could affect its financial
    condition.
    The
    nature of the Companys business exposes it to litigation
    and regulatory risk.
    The
    Companys operations might be affected by the occurrence of
    a natural disaster or other catastrophic event.
    The
    Companys continued operations rely on dependable air
    travel.
    New
    standards or changes in existing accounting standards issued by
    the Financial Accounting Standards Board (FASB), SEC or other
    standard setting bodies may adversely affect the Companys
    financial statements and could entail significant expenditures.
    The application of these standards often requires the use of
    estimates and assumptions which may materially differ from
    actual results.
  and/or
 11




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Risks
    related to our Common Stock
  Current
    market conditions have caused significant volatility in the
    Companys stock price.
    The
    Companys convertible note hedge and warrant transactions
    may affect the trading price of its common stock.
    
    May enter into various over-the-counter derivative transactions
    or purchase or sell the Companys common stock in secondary
    market transactions; and
    May enter into, or may unwind, various over-the-counter
    derivatives or purchase or sell the Companys common stock
    in secondary market transactions, including during any
    conversion reference period with respect to a conversion of the
    Convertible Notes.     12




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Anti-takeover
    provisions in the Companys charter documents and under
    Ohio law may make an acquisition of it, which may be beneficial
    to its stockholders, more difficult, which could depress its
    stock price.
    
    The authorization of undesignated preferred stock, the terms,
    rights, privileges and restrictions of which may be established
    and shares of which may be issued without shareholder approval;
    Limitations on persons authorized to call a special meeting of
    shareholders; and
    Advance notice procedures required for shareholders to nominate
    candidates for election as directors or to bring matters before
    an annual meeting of shareholders.    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES        ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   13




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    ®
  2008 Quarterly

First


Second


Third


FourthRanges of stock priceHigh

$
51.60


$
46.71


$
52.00


$
45.90Low


39.07



35.35



35.42



15.86   2007 Quarterly

First


Second


Third


FourthRanges of stock priceHigh

$
39.61


$
37.57


$
44.51


$
51.34Low


30.02



31.22



34.70



39.02    14




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##### Table of Contents



Performance
    Graph
    COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN* Amoung
    Kendle International Inc., The NASDAQ Composite Index
    And The NASDAQ Health Services Index
  
   *
    
    $100 invested on
    12/31/03 in
    stock & index-including reinvestment of dividends.   Dollar Value of $100 Investment at December 31,2003

2004

2005

2006

2007

2008Kendle International Inc.


100.00



138.80



405.99



496.06



771.61



405.68NASDAQ Composite


100.00



110.08



112.88



126.51



138.13



80.47NASDAQ Health Services


100.00



127.29



135.26



141.82



142.06



100.14   Securities
    Authorized Under Equity Compensation Plans:
  Form 10-K.
 15




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA    CONSOLIDATED
    STATEMENTS OF OPERATIONS
  For the Years Ended December 31,2008


2007(1)


2006(2)


2005


2004(In thousands except per share data)Net service revenues

$
475,092


$
397,584


$
283,471


$
202,032


$
172,888Reimbursable out-of-pocket revenues


203,489



171,234



90,465



48,607



42,980Total revenues


678,581



568,818



373,936



250,639



215,868Cost and expenses:Direct costs


247,436



204,161



152,826



108,582



96,909Reimbursable out-of-pocket costs


203,489



171,234



90,465



48,607



42,980Selling, general and administrative


155,577



125,744



91,796



68,216



59,797Depreciation and amortization


15,253



14,865



10,403



7,991



9,175Employee severance and office consolidation costs










236







302Intangible impairment charge










8,200







Total costs and expenses


621,755



516,004



353,926



233,396



209,163Income from operations


56,826



52,814



20,010



17,243



6,705Other income (expense):Interest income


760



1,466



1,939



1,019



400Interest expense


(9,637
)


(14,870
)


(6,781
)


(460
)


(776
)Write-off of deferred financing costs






(4,152
)










Other


(2,043
)


(4,816
)


(1,795
)


(287
)


(873
)Gain on debt extinguishment














300



597Total other income (expenses)


(10,920
)


(22,372
)


(6,637
)


572



(652
)Income before income taxes


45,906



30,442



13,373



17,815



6,053Income taxes


16,509



11,755



4,843



7,141



2,481Net income

$
29,397


$
18,687


$
8,530


$
10,674


$
3,572INCOME PER SHARE DATABasic:Net income per share

$
1.99


$
1.29


$
0.60


$
0.79


$
0.27Weighted average shares


14,751



14,520



14,323



13,572



13,166Diluted:Net income per share

$
1.96


$
1.26


$
0.58


$
0.76


$
0.27Weighted average shares


14,993



14,889



14,762



14,120



13,391   CONSOLIDATED
    BALANCE SHEET DATA(3)
  As of December 31,2008


2007


2006


2005


2004Working capital

$
68,595


$
60,084


$
56,404


$
63,992


$
40,714Total assets


555,559



499,723



455,072



184,759



162,680Total short and long-term debt, including capital leases


200,311



200,455



200,099



4,572



9,853Total shareholders equity


185,143



141,523



140,112



122,504



102,775     (1)
    
    Includes the effects of the January 1, 2007 adoption of
    FASB Interpretation No. 48, Accounting for Uncertainty in
    Income Taxes.(2)
    
    Includes the effects of the January 1, 2006 adoption of
    SFAS 123R, Share-Based Payment.(3)
    
    From 2004 to 2008, the Company made three acquisitions. See the
    Acquisitions section of Managements Discussion and
    Analysis of Financial Condition and Results of Operations. 16




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Refer
    to Risk Factors previously discussed in Part 1 Item 1A
    and the Cautionary Statement for Forward-Looking Information
    later in this section.
  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations
    Company
    Overview
      Late
    Stage Segment Contracts
      
    The customer may request a change in the assumptions;
    The customer may increase or decrease the scope of services,
    which requires a change to the service assumptions; and
    The Company may discover that, for a particular contract, the
    assumptions are incorrect or insufficient to permit completion
    of the contract. 17




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##### Table of Contents



Early
    Stage Segment Contracts
   18




---



##### Table of Contents



Acquisitions
          Recent
    Developments and CRO Marketplace
  and/or
     19




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##### Table of Contents



Results
    of Operations
    Early


Late


SupportStage(b)


Stage(c)


& Other(d)


Total(In thousands)Year ended December 31, 2008Net service revenues

$
35,199


$
430,317


$
9,576


$
475,092Income from operations

$
6,177


$
105,140


$
(54,491
)

$
56,826Operating Margin %(a)


17.5
%


24.4
%






12.0
%Year ended December 31, 2007Net service revenues

$
21,373


$
366,379


$
9,832


$
397,584Income from operations

$
2,941


$
85,971


$
(36,098
)

$
52,814Operating Margin %(a)


13.8
%


23.5
%






13.3
%Year ended December 31, 2006Net service revenues

$
23,328


$
254,954


$
5,189


$
283,471Income from operations

$
(2,855
)

$
66,631


$
(43,766
)

$
20,010Operating Margin %(a)


(12.2
)%


26.1
%






7.1
%     (a)
    
    Expressed as a percentage of net service revenues.(b)
    
    The Early Stage segment results for the twelve months ended
    December 31, 2008 include the June (acquisition date)
    through December operating results of DecisionLine.(c)
    
    The Late Stage segment results for the twelve months ended
    December 31, 2006 include the April (acquisition date)
    through December operating results of IC-Research and the August
    (acquisition date) through December operating results of CRL
    Clinical Services.(d)
    
    Support and Other consists of unallocated corporate expenses,
    primarily information technology, marketing and communications,
    human resources, finance and legal.  Year
    Ended December 31, 2008 (2008) Compared with Year
    Ended December 31, 2007 (2007)
  Net
    Service Revenues
         20




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##### Table of Contents



For the Year Ended December 31,2008


2007Net Service





Net ServiceRevenues


% of Revenue


Revenues


% of Revenue


% of Growth(In thousands)North America

$
229,346



48
%

$
198,242



50
%


16
%Latin America


38,996



8
%


20,784



5
%


88
%Europe


189,528



40
%


165,195



42
%


15
%Asia-Pacific


17,222



4
%


13,363



3
%


29
%Total

$
475,092






$
397,584







19
%     Reimbursable
    Out-of-Pocket Revenues/Expenses
    Operating
    Expenses
      Phase II-IV
 21




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##### Table of Contents



Other
    Income/(Expense)
      For the Year Ended December 31,2008


2007(In thousands)Interest expense

$
(9,637
)

$
(14,870
)Interest income


760



1,466Write-off of deferred financing costs






(4,152
)Foreign currency gains/(losses)


(1,006
)


(4,513
)Other


(1,037
)


(303
)Total

$
(10,920
)

$
(22,372
)      22




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##### Table of Contents



and/or
  Income
    Taxes
  non-U.S. subsidiaries.
  Net
    Income
      Year
    Ended December 31, 2007 Compared with Year Ended
    December 31, 2006 (2006)
  Net
    Service Revenues
   23




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##### Table of Contents



For the Year Ended December 31,2007


2006Net Service





Net ServiceRevenues


% of Revenue


Revenues


% of Revenue


% of Growth(In thousands)North America

$
198,242



50
%

$
155,469



55
%


28
%Latin America


20,784



5
%


10,240



3
%


103
%Europe


165,195



42
%


109,808



39
%


50
%Asia-Pacific


13,363



3
%


7,954



3
%


68
%Total

$
397,584






$
283,471







40
%     Reimbursable
    Out-of-Pocket Revenues/Expenses
    Operating
    Expenses
   24




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##### Table of Contents



23-year
        Other
    Income/(Expense
   25




---



##### Table of Contents



For the Year Ended December 31,2007


2006(In thousands)Interest expense

$
(14,870
)

$
(6,781
)Interest income


1,466



1,939Write-off of deferred financing costs


(4,152
)


Foreign currency gains/(losses)


(4,513
)


(1,562
)Other


(303
)


(233
)Total

$
(22,372
)

$
(6,637
)               and/or
 26




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##### Table of Contents



Income
    Taxes
  non-U.S. subsidiaries.
  Net
    Income
      Liquidity
    and Capital Resources
         27




---



##### Table of Contents



Form S-3. 5-year
   28




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##### Table of Contents



90-19, Convertible Bonds with Issuer Option to Settle for Cash upon
    Conversion EITF 00-19, Accounting for Derivative Financial Instruments Indexed to,
    and Potentially Settled in, a Companys Own Stock (EITF 00-19), EITF 01-6, The Meaning of Indexed to a Companys Own Stock (EITF 01-6),
  14-1.
        EITF 00-19 EITF 01-6,
 29




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##### Table of Contents



Contractual
    Obligations
    Year


Years


Years


Years2009


2010-2011


2012-2013


After 2013


Total(In thousands)Capital lease obligations (including interest)

$
197


$
127


$



$



$
324Operating Leases


17,653



27,337



17,531



27,505



90,026Debt payments(1)










200,000







200,000Interest on debt(2)


6,750



13,500



3,656







23,906Foreign currency hedge arrangements(3)










17,853







17,853FIN 48 obligation, including interest and penalties(4)


















Total

$
24,600


$
40,964


$
239,040


$
27,505


$
332,109       (1)
    
    Under the terms of the Convertible Notes, the Convertible Notes
    are convertible into shares of the Common Stock upon the
    occurrence of various factors described in the Liquidity and
    Capital Resources section of Managements Discussion and
    Analysis. The above table assumes no conversion with the
    principal amount of the Convertible Notes paid at the maturity
    date of July 15, 2012.(2)
    
    The interest rate used in the calculation of interest was 3.375%
    which represents the cash coupon obligation. 30




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##### Table of Contents



(3)
    
    Based on December 31, 2008 fair value of foreign currency
    hedge arrangements maturing in 2012. See MD&A Recent
    Developments and CRO Activity for recent activity related to
    this hedge.(4)
    
    FIN 48 obligations of $1.8 million have not been
    reflected in the above table due to the inherent uncertainty as
    to the amount and timing of settlement, which is contingent upon
    the occurrence of possible future events, such as examinations
    and determinations by various tax authorities.  Critical
    Accounting Policies and Estimates
    Revenue
    Recognition
  per-unit time-and-materials
  Percentage-of-Completion
      
    Actual costs incurred to date and the work completed as a result
    of incurring the actual costs;
    The remaining work to be completed based on the timeline of the
    contract as well as the number of incomplete tasks in the
    contract; and
    Factors that could change the rate of progress of future
    contract performance.       31




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##### Table of Contents



Units-Based
           32




---



##### Table of Contents



Direct
    Costs
      
    Higher utilization rates for billable employees; and
    The ability to complete contracted work more efficiently than
    estimated by the Company.    
    The occurrence of cost overruns from increased time to complete
    contract performance;
    Lower utilization rates for billable employees;
    Increased costs due to higher-paid employees or contractors
    performing contract services; and
    Pricing pressure from increased competition.    Other
    Costs
      Accounts
    Receivable/Allowance for Doubtful Accounts
     33




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##### Table of Contents



Long-Lived
    Assets
        Internally
    Developed Software
  98-1,
  Tax
    Valuation Allowance and Tax Liabilities
   34




---



##### Table of Contents



Stock-based
    Compensation
      New
    Accounting Pronouncements
    Cautionary
    Statement for Forward-Looking Information
  Form 10-K
    Form 10-K.
  ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest
    Rates
   35




---



##### Table of Contents



Foreign
    Currency
           36




---



##### Table of Contents



Foreign
    Currency Hedges
      Fair
    Value of Derivative Transactions
    As of December 31, 2008


As of December 31, 2007Notional


Fair


Notional


FairAmount


Value


Amount


ValueInterest rate collar

$



$



$
52,000


$
(382
)Foreign currency hedges


77,955



17,853



81,098



(1,617
)$
17,853






$
(1,999
)  37




---



##### 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  Managements
    Evaluation of Disclosure Controls and Procedures
  Form 10-K, Rules 13a-15(e) 15d-15(e)
  (a)
    Managements Report on Internal Control over Financial
    Reporting
               38




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##### Table of Contents



(b)
    Changes in Internal Control Over Financial
    Reporting
    /s/  Candace
    KendleCandace
    Kendle, PharmD

Chairman of the Board of Directors, Chief Executive Officer and
    Principal Executive Officer

March 16, 2009/s/  Karl
    Brenkert IIIKarl
    Brenkert III

Senior Vice President, Chief Financial Officer and Principal
    Financial Accounting Officer

March 16, 2009  39




---



##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                  DELOITTE &
    TOUCHE LLP
     40




---



##### Table of Contents



ITEM 9B
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT  DIRECTORS
    OF THE COMPANY
    AUDIT
    COMMITTEE
    EXECUTIVE
    OFFICERS OF THE COMPANY
    ExecutiveName

Age

Position

Officer SinceCandace Kendle, PharmD

62

Chief Executive Officer and Chairman of the Board of Directors

1989Christopher C. Bergen

58

Chief Operating Officer and Director

1989Karl Brenkert III

61

Senior Vice President, Chief Financial Officer and Secretary

2002Simon S. Higginbotham

48

President

2004     SECTION 16(A)
    BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
    CODE OF
    ETHICS
  www.kendle.com
 41




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##### Table of Contents



ITEM 11.
    EXECUTIVE
    COMPENSATION    
    Compensation Committee Interlocks and Insider
    Participation; and
    Compensation of Directors.    
    Compensation Discussion and Analysis:;
    Compensation Committee Report;
    Summary Compensation Table;
    Grants of Plan-Based Awards;
    Outstanding Equity Awards at Fiscal Year End:;
    Option Exercises and Stock Vested; and
    Potential Payments Upon Termination or
    Change-in-Control.  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS     42




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##### Table of Contents



Equity
    Compensation Plan Information
  (c)Number ofSecurities(a)



Remaining AvailableNumber of



for Future IssuanceSecurities to be

(b)

Under EquityIssued upon

Weighted-Average

Compensation PlansExercise of

Exercise Price

(ExcludingOutstanding

of Outstanding

SecuritiesOptions, Warrants

Options, Warrants

Reflected in ColumnPlan Category

and Rights(1)

and Rights(1)

(a))(2)Equity compensation plans approved by security holders


414,677


$
17.35



912,800Equity compensation plans not approved by security holders










Total


414,677


$
17.35



912,800     (1)
    
    Excludes the 2003 Directors Compensation Plan under
    which no options, warrants or rights are granted. This plan has
    been approved by shareholders for up to 75,000 shares.(2)
    
    Represents shares available for issuance under the 2007 Stock
    Incentive Plan.  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  TRANSACTIONS
    WITH RELATED PERSONS
    REVIEW,
    APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED
    PERSONS
    PROMOTERS
    AND CERTAIN CONTROL PERSONS
    DIRECTOR
    INDEPENDENCE
    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   43




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##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Form 10-K page F-1.
    ExhibitNumber

Description of Exhibit2
.1

Stock Purchase Agreement dated July 1, 1997 by and among
    the Company and Shareholders of U-Gene Research B.V
    (Incorporated by reference to the Companys Registration
    Statement
    No. 333-30581
    filed under the Securities Act of 1933)2
.2

Escrow Agreement dated June 27, 1997 among the Company,
    Keating, Muething & Klekamp, P.L.L., Bio-Medical
    Research Holdings, B.V., Utrechtse Particatiemaatschappij B.V.,
    P.J. Morrison, T.S. Schwarz, I.M. Hoepelman, Ph.K. Peterson, J.
    Remington, M. Rozenberg-Arska and L.G.W. Sterkman (Incorporated
    by reference to the Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 1933)2
.3

Share Purchase Agreement dated July 2, 1997 by and among
    the Company and the Shareholders of GMI Gescellschaft für
    Angewandte Mathematick und Informatik mbH (Incorporated by
    reference to the Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 1933)2
.4

Stock Purchase Agreement dated February 11, 1998 by and
    among the Company and the Shareholders of ACER/EXCEL Inc.
    (Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed with the Commission on November 12, 1997)2
.5

Escrow Agreement dated February 11, 1998 among the Company,
    Tzuo-Yan Lee, Jean C. Lee, Michael Minor, Conway Lee, Steven
    Lee, Jean C. Lee, as Trustee under a Trust dated March 8,
    1991 fbo Jennifer Lee, Citicorp Trust-South Dakota and The Fifth
    Third Bank (Incorporated by reference to the Companys
    Annual Report on
    Form 10-K
    for the year ended December 31, 1997)2
.6

Registration Rights Agreement dated February 11, 1998 among
    the Company and Tzuo-Yan Lee, Jean C. Lee, Michael Minor, Conway
    Lee, Steven Lee, Jean C. Lee, as Trustee under a Trust dated
    March 8, 1991 fbo Jennifer Lee, Citicorp Trust-South Dakota
    (Incorporated by reference to the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 1997)2
.7

Share Purchase Agreement dated December 23, 1998 by and
    among the Company and the Shareholders of Research Consultants
    (International) Holdings Limited (Incorporated by reference to
    the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1998)2
.8

Escrow Agreement dated January 5, 1999 among the Company,
    John Glasby, Gillian Gregory, Michael Roy Broomby and Peter
    Nightingale (Incorporated by reference to the Companys
    Annual Report on
    Form 10-K
    for the year ended December 31, 1998)2
.9

Option Agreement dated September 9, 1998 by and between the
    Company and Component Software International, Inc. (Incorporated
    by reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1998)2
.10

Notice of Option Exercise dated January 11, 1999 of the
    Option Agreement dated September 9, 1998 (Incorporated by
    reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1998)2
.11

Multi-Year Strategic Services Agreement dated January 20,
    1999 by and between the Company and Component Software
    International, Inc. (Incorporated by reference to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1998)2
.12

Asset Purchase Agreement dated June 27, 1999 by and among
    the Company and the Shareholders of Health Care Communications,
    Inc. (Incorporated by reference to the Companys Quarterly
    Report on
    Form 10-Q
    for the quarterly period ended June 30, 1999) 44




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##### Table of Contents



ExhibitNumber

Description of Exhibit2
.13

Stock Purchase Agreement dated June 4, 1999 by and among
    the Company and the Shareholders of ESCLI S.A. (Incorporated by
    reference to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 1999)2
.14

Asset Purchase Agreement dated July 13, 1999 by and among
    the Company and the Shareholders of HCC Health Care
    Communications (1991), Ltd. (Incorporated by reference to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 1999)2
.15

Share Purchase Agreement dated August 31, 1999 by and among
    the Company and the Shareholder of Specialist Monitoring
    Services Limited (Incorporated by reference to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 1999)2
.16

Escrow Agreement dated July 13, 1999 by and among the
    Company, Geoffrey H. Kalish, M.D., Bradley D. Kalish, Jill
    Kalish, and The Fifth Third Bank, as Escrow Agent (Incorporated
    by reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1999)2
.17

Escrow Agreement dated August 31, 1999 by and among the
    Company, Paul Martin, and The Fifth Third Bank, as Escrow Agent
    (Incorporated by reference to the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 1999)2
.18

Units Purchase Agreement dated April 7, 2000 by and among
    the Company and the Shareholders of SYNERmedicaPTY
    Limited and SYNERmedicaUnit Trust (Incorporated by
    reference to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March 31, 2000)2
.19

Stock Purchase Agreement dated February 27, 2001 by and
    among the Company and the Shareholders of AAC Consulting Group,
    Inc. (Incorporated by reference to the Companys Annual
    Report on
    Form 10-K
    for the year ended December 31, 2000)2
.20

Form of Note Prepayment Agreement (Incorporated by reference to
    the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2003)2
(a)

Asset Purchase Agreement dated January 29, 2002 among
    Kendle International Inc., Clinical and Pharmacologic Research,
    Inc., Thomas S. Clark, M.D., Charles T. Clark, and E.
    Stuart Clark (Incorporated by reference to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on January 29, 2002)2
(b)

Convertible Subordinated Note, dated January 29, 2002
    issued by Kendle International Inc. to Clinical and
    Pharmacologic Research, Inc. (Incorporated by reference to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on January 29, 2002)2
.21

Stock Purchase Agreement between the Company and Charles River
    Laboratories International, Inc. dated as of May 9, 2006
    (Incorporated by reference to the
    Form 8-K
    filed with the Commission on May 12, 2006)3
.1

Restated and Amended Articles of Incorporation. Incorporated by
    reference to the Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 19333
.2

Amended and Restated Code of Regulations (Incorporated by
    reference to the Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 1933)3
.3

Amendment of the Restated and Amended Articles of Incorporation
    to Increase the Authorized Shares (Incorporated by reference to
    the Companys definitive Proxy Statement on
    Schedule 14A filed with the Commission on April 14,
    1999)4


Specimen Common Stock Certificate (Incorporated by reference to
    the Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 1933)4
.1

Shareholder Rights Agreement dated August 13, 1999 between
    the Company and The Fifth Third Bank, as Rights Agent
    (Incorporated by reference to the Companys filing on
    Form 8-A
    filed with the Commission on September 7, 1999)4
.2

Indenture dated March 31, 2007 between the Company and
    LaSalle Bank National Association (Incorporated by reference to
    the Companys
    Form S-3
    filed with the Commission on April 9, 2007)4
.3

Supplemental Indenture No. 1 dated July 16, 2007
    between the Company and LaSalle Bank National Association
    (Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed with the Commission on July 16, 2007) 45




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##### Table of Contents



ExhibitNumber

Description of Exhibit10
.1

Amended and Restated Shareholders Agreement dated
    June 26, 1997 (Incorporated by reference to the
    Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 1933)10
.2

Master Lease Agreement dated November 27, 1996 by and
    between the Company and Bank One Leasing Corporation, as amended
    on April 18, 1997 (Incorporated by reference to the
    Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 1933)10
.6

Master Equipment Lease dated August 16, 1996 by and between
    the Company and The Fifth Third Leasing Company (Incorporated by
    reference to the Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 1933)10
.7

Lease Agreement dated December 9, 1991 by and between the
    Company and Carew Realty, Inc., as amended on December 30,
    1991, March 18, 1996, October 8, 1996,
    January 29, 1997, and February 16, 1999 (Incorporated
    by reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1998)10
.8

Indemnity Agreement dated June 21, 1996 by and between the
    Company and Candace Kendle Bryan (Incorporated by reference to
    the Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 1933)10
.9

Indemnity Agreement dated June 21, 1996 by and between the
    Company and Christopher C. Bergen (Incorporated by reference to
    the Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 1933)10
.10

Indemnity Agreement dated June 21, 1996 by and between the
    Company and Timothy M. Mooney (Incorporated by reference to the
    Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 1933)10
.11

Indemnity Agreement dated May 14, 1997 by and between the
    Company and Charles A. Sanders (Incorporated by reference to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1997)10
.12

Indemnity Agreement dated May 14, 1997 by and between the
    Company and Philip E. Beekman (Incorporated by reference to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1997)10
.13

Indemnity Agreement dated December 10, 1998 by and between
    the Company and Robert Buck (Incorporated by reference to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1998)10
.14

Indemnity Agreement dated December 10, 1998 by and between
    the Company and Mary Beth Price (Incorporated by reference to
    the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1998)10
.15

Form of Indemnity Agreement by and between the Company and each
    member of the Companys Board of Directors, except for
    those Indemnity Agreements noted above (Incorporated by
    reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2003)10
.16

Credit Agreement dated as of August 16, 2006 by and among
    the Company, certain subsidiary Guarantors, various Lenders, UBS
    Securities LLC, as Sole Lead Arranger and Sole Bookrunner, UBS
    AG, Stamford Branch, as Issuing Bank, Administrative Agent and
    Collateral Agent, UBS Loan Finance LLC, as Swingline Lender,
    JPMorgan Chase Bank, N.A., as Syndication Agent, and KeyBank
    National Association, LaSalle Bank N.A. and National City Bank,
    as Co-Documentation Agents (Incorporated by reference to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on August 18, 2006)(a) First Amended and Restated Credit Agreement dated as of
    December 11, 2006 among Kendle International Inc., the
    several lenders from time to time party thereto and UBS AG,
    Stamford Branch, as administrative agent (Incorporated by
    reference to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2007)10
.17

First Amendment to the Stock Purchase Agreement dated as of
    August 16, 2006 between the Company and Charles River
    Laboratories, Inc. (Incorporated by reference to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on August 18, 2006) 46




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##### Table of Contents



ExhibitNumber

Description of Exhibit10
.18

Second Amended and Restated Credit Agreement dated as of
    April 13, 2007 among Kendle International Inc., the several
    lenders from time to time party thereto and UBS AG, Stamford
    Branch, as administrative agent (Incorporated by reference to
    the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March 31, 2007)10
.19

Increase Joinder Agreement dated June 27, 2007 among the
    Company, certain of its subsidiaries, various Lenders, and UBS
    AG, Stamford Branch as administrative agent for the lenders
    (Incorporated by reference to the Companys Quarterly
    Report on
    Form 10-Q
    for the quarterly period ended June 30, 2007)10
.20

Confirmation of Convertible Bond Hedge Transaction, dated
    July 10, 2007, by and between the Company and UBS AG,
    London Branch (Incorporated by reference to the Companys
    Current Report on
    Form 8-K
    filed with the Commission on July 10, 2007)10
.21

Confirmation of Convertible Bond Hedge Transaction, dated
    July 10, 2007, by and between the Company and JPMorgan
    Chase Bank, National Association, London Branch (Incorporated by
    reference to the Companys Current Report on
    Form 8-k
    filed with the Commission on July 10, 2007)10
.22

Confirmation of Issuer Warrant Transaction, dated July 10,
    2007, by and between the Company and UBS AG, London Branch
    (Incorporated by reference to the Companys Current Report
    on
    Form 8-k
    filed with the Commission on July 10, 2007)10
.23

Confirmation of Issuer Warrant Transaction, dated July 10,
    2007, by and between the Company and JPMorgan Chase Bank,
    National Association, London Branch (Incorporated by reference
    to the Companys Current Report on
    Form 8-k
    filed with the Commission on July 10, 2007)10
.24

Third Amended and Restated Credit Agreement dated as of
    December 18, 2007 among Kendle International Inc., the
    several lenders from time to time party thereto and UBS AG,
    Stamford Branch, as administrative agent (Incorporated by
    reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2007)10
.25

Lease Agreement dated February 27, 2008 by and between the
    Company and Carew Realty, Inc. (Incorporated by reference to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March 31, 2008)10
.26

Fourth Amended and Restated Credit Agreement dated as of
    June 20, 2008 among the Company, the several lenders from
    time to time parties thereto and UBS AG, Stamford Branch, as
    administrative agent (Incorporated by reference to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2008)10
.30

MANAGEMENT CONTRACTS AND COMPENSATION PLANS(a) 1995 Stock Option and Stock Incentive Plan
    (Incorporated by reference to the Companys Registration
    Statement
    No. 333-30581
    filed under the Securities Act of 1933)(b) 1995 Stock Option and Stock Incentive Plan 
    Individual Stock Option Agreement for Incentive Stock Option
    (contained in Exhibit 10.20(a)) (Incorporated by reference
    to the Companys Registration Statement
    No. 333-30581
    filed under the Securities Act of 1933)(c) 1997 Stock Option and Stock Incentive Plan
    (Incorporated by reference to the Companys Registration
    Statement
    No. 333-30581
    filed under the Securities Act of 1933)(c)(1) Amendment No. 1 to 1997 Stock Option and Stock
    Incentive Plan (Incorporated by reference to the Companys
    Annual Report on
    Form 10-K
    for the year ended December 31, 2002)(c)(2) Amendment No. 2 to 1997 Stock Option and Stock
    Incentive Plan (Incorporated by reference to the Companys
    definitive Proxy Statement on Schedule 14A filed with the
    Commission on April 12, 2000)(c)(3) Amendment No. 3 to 1997 Stock Option and Stock
    Incentive Plan (Incorporated by reference to the Companys
    Annual Report on
    Form 10-K
    for the year ended December 31, 2002)(c)(4) Form of Restricted Stock Award Agreement (Incorporated by
    reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2004)(d) Form of Protective Compensation and Benefit Agreement.
    Incorporated by reference to the Companys Registration
    Statement
    No. 333-30581
    filed under the Securities Act of 1933)(e) 1998 Employee Stock Purchase Plan (Incorporated by
    reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1998) 47




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##### Table of Contents



ExhibitNumber

Description of Exhibit(e)(1) Amendment No. 1 to 1998 Employee Stock Purchase Plan
    (Incorporated by reference to the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 2002)(e)(2) Amendment No. 2 to 1998 Employee Stock Purchase Plan
    (Incorporated by reference to the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 2002)(e)(3) Amendment No. 3 to 1998 Employee Stock Purchase Plan
    (Incorporated by reference to the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 2002)(e)(4) Amendment No. 4 to 1998 Employee Stock Purchase Plan
    (Incorporated by reference to the Companys Quarterly
    Report on
    Form 10-Q
    for the quarterly period ended March 31, 2005)(e)(5) Amendment No. 5 to 1998 Employee Stock Purchase Plan
    (Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed with the Commission on June 3, 2005)(f) 2007 Stock Incentive Plan (Incorporated by reference to
    the Companys definitive Proxy Statement on
    Schedule 14A filed with the Commission on April 9,
    2007)(f)(1) Form of Performance based Stock Unit Agreement
    (Incorporated by reference to the Companys Quarterly
    Report on
    Form 10-Q
    for the quarterly period ended March 31, 2008)(g) Annual Incentive Plan (Incorporated by reference to the
    Companys Current Report on From
    8-K filed
    with the Commission on May 20, 2008)(h) Nonqualified Deferred Compensation Plan (Incorporated
    by reference to the Companys Current Report on From
    8-K filed
    with the Commission on May 20, 2008)(n) 2003 Directors Compensation Plan (Incorporated by
    reference to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2003)12
.1

Computation of Ratio of Earnings to Fixed Charges (Filed
    herewith)14


Code of Ethics (Available on the Companys Web site at
    www.kendle.com)21


List of Subsidiaries (Filed herewith)23
.1

Consent of Deloitte & Touche LLP (Filed herewith)24


Powers of Attorney (Filed herewith)31
.1

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

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

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

Certification Pursuant to 18 U.S.C Section 1350 as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002  Chief Financial Officer (Filed herewith)  48




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##### Table of Contents



Kendle
    International Inc.
  Index to
    Consolidated Financial Statements
  PageReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Statements of Operations for the
    years ended December 31, 2008, 2007 and 2006


F-3Consolidated Balance Sheets as of
    December 31, 2008 and 2007


F-4Consolidated Statements of Shareholders
    Equity for the years ended December 31, 2008, 2007 and
    2006


F-5Consolidated Statements of Cash Flows for the
    years ended December 31, 2008, 2007 and 2006


F-6Notes to Consolidated Financial Statements


F-7  F-1




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##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board
    of Directors and Shareholders of
    Kendle International Inc.
    Cincinnati, Ohio
            DELOITTE &
    TOUCHE LLP
    F-2




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##### Table of Contents



CONSOLIDATED
    STATEMENTS OF OPERATIONS  For the Years Ended December 31,2008


2007


2006(In thousands except per share data)Net service revenues

$
475,092


$
397,584


$
283,471Reimbursable out-of-pocket revenues


203,489



171,234



90,465Total revenues


678,581



568,818



373,936Costs and expenses:Direct costs


247,436



204,161



152,826Reimbursable out-of-pocket costs


203,489



171,234



90,465Selling, general and administrative


155,577



125,744



91,796Depreciation and amortization


15,253



14,865



10,403Employee severance and office consolidation costs










236Intangible impairment charge










8,200Total costs and expenses


621,755



516,004



353,926Income from operations


56,826



52,814



20,010Other income (expense):Interest income


760



1,466



1,939Interest expense


(9,637
)


(14,870
)


(6,781
)Write-off of deferred financing costs






(4,152
)


Other


(2,043
)


(4,816
)


(1,795
)Total other income (expenses)


(10,920
)


(22,372
)


(6,637
)Income before income taxes


45,906



30,442



13,373Income taxes


16,509



11,755



4,843Net income

$
29,397


$
18,687


$
8,530Income per share data:Basic:Net income per share

$
1.99


$
1.29


$
0.60Weighted average shares


14,751



14,520



14,323Diluted:Net income per share

$
1.96


$
1.26


$
0.58Weighted average shares


14,993



14,889



14,762    F-3




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##### Table of Contents



CONSOLIDATED
    BALANCE SHEETS  As of December 31,

2008


2007(In thousands except share data)ASSETSCurrent assets:Cash and cash equivalents

$
35,169


$
45,512Restricted cash


884



844Accounts receivable, net


157,971



135,550Deferred tax asset  current


14,077



11,403Other current assets


18,439



13,476Total current assets


226,540



206,785Property and equipment, net


44,578



32,021Goodwill


236,329



230,168Other finite-lived intangible assets, net


19,031



19,464Long-term deferred tax asset


1,346



1,171Other assets


27,735



10,114Total assets

$
555,559


$
499,723LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of obligations under capital leases

$
188


$
199Trade payables


19,015



20,993Advance billings


94,561



78,402Other accrued liabilities


44,181



47,107Total current liabilities


157,945



146,701Obligations under capital leases, less current portion


123



256Convertible notes


200,000



200,000Deferred income tax liabilities


4,424



2,322Non-current income taxes payable


2,123



3,582Other liabilities


5,801



5,339Total liabilities


370,416



358,200Commitments and contingenciesShareholders equity:Preferred stock  no par value; 100,000 shares
    authorized; none issued and outstandingCommon stock  no par value; 45,000,000 shares
    authorized; 14,861,518 and 14,681,029 shares issued and
    14,838,466 and 14,657,977 outstanding at December 31, 2008
    and 2007, respectively


75



75Additional paid-in capital


143,608



140,109Accumulated earnings (deficit)


27,430



(1,967
)Accumulated other comprehensive income:Foreign currency translation adjustment


14,522



3,798Less: Cost of common stock held in treasury, 23,052 shares
    at December 31, 2008 and 2007, respectively


(492
)


(492
)Total shareholders equity


185,143



141,523Total liabilities and shareholders equity

$
555,559


$
499,723    F-4




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##### Table of Contents



CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY  AccumulatedCommon Stock


Common


Additional





Accumulated


Other


TotalNumber of


Stock


Paid-in


Treasury


Earnings


Comprehensive


Shareholders


ComprehensiveShares


Amount


Capital


Stock


(Deficit)


Income


Equity


Income(In thousands except share data)Balance at January 1, 2006


14,085,756


$
75


$
147,712


$
(393
)

$
(24,922
)

$
32


$
122,504Net income


















8,530







8,530



8,530Other comprehensive income:Foreign currency translation adjustment






















2,217



2,217



2,217Portion of prior year unrealized loss recognized in current
    year, net of tax






















34



34



34Realized holding loss on available-for-sale securities, net of
    tax






















5



5



5Net unrealized holding gains on interest rate swap agreement






















(8
)


(8
)


(8
)Comprehensive income






























10,778Shares issued under stock plans


336,585







4,271















4,271Stock option expense










1,490















1,490Deferred compensation  restricted stock










(19
)














(19
)Income tax benefit from exercise of stock options










1,187















1,187Treasury stock transaction














(99
)










(99
)Balance at December 31, 2006


14,422,341


$
75


$
154,641


$
(492
)

$
(16,392
)

$
2,280


$
140,112Net income


















18,687







18,687



18,687Other comprehensive income:Foreign currency translation adjustment






















1,518



1,518



1,518Comprehensive income






























20,205Shares issued under stock plans


235,636







2,560















2,560Stock option expense










860















860Income tax benefit from exercise of stock options










188















188Note hedge transaction










(42,880
)














(42,880
)Issuance of warrants










24,740















24,740FIN 48 adoption


















(4,262
)






(4,262
)Balance at December 31, 2007


14,657,977


$
75


$
140,109


$
(492
)

$
(1,967
)

$
3,798


$
141,523Net income


















29,397







29,397



29,397Other comprehensive income:Foreign currency translation adjustment






















10,724



10,724



10,724Comprehensive income






























40,121Shares issued under stock plans


180,489







2,294















2,538Stock compensation expense










1,030















786Income tax benefit from exercise of stock options










175















175Balance at December 31, 2008


14,838,466


$
75


$
143,608


$
(492
)

$
27,430


$
14,522


$
185,143    F-5




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  For the Years EndedDecember 31,2008


2007


2006(In thousands)Cash flows from operating activitiesNet income

$
29,397


$
18,687


$
8,530Adjustments to reconcile net income to cash provided by
    operating activities:Depreciation and amortization


15,253



14,865



10,403Intangible impairment charge










8,200Deferred income taxes


(6,745
)


(5,234
)


(3,967
)Income tax benefit from stock option exercises


(175
)


(188
)


(898
)Compensation expense on stock grants


1,030



879



1,879Debt issue cost amortization


1,529



5,404



Foreign currency exchange loss


4,321



3,770



184Other


(1,564
)


172



338Changes in operating assets and liabilities, net of effects from
    acquisitions:Restricted cash


(85
)


1,587



(441
)Accounts receivable


(28,036
)


(16,138
)


(27,559
)Other current assets


(3,493
)


1,507



(1,262
)Other assets


(317
)


(486
)


(207
)Trade payables


1,010



2,632



2,806Advance billings


19,613



18,814



15,895Accrued liabilities and other


5,318



14,712



3,650Net cash provided by operating activities


37,056



60,983



17,551Cash flows from investing activitiesPurchase of available-for-sale securities










(7,027
)Proceeds from sale and maturity of available-for-sale securities










17,868Acquisitions of property and equipment


(25,911
)


(14,724
)


(8,725
)Additions to internally developed software


(1,186
)


(531
)


(91
)Acquisitions of businesses, less cash acquired


(18,053
)


2,154



(231,879
)Other


(1,143
)


(722
)


(153
)Net cash used in investing activities


(46,293
)


(13,823
)


(230,007
)Cash flows from financing activitiesProceeds from issuance of long-term debt


37,500



200,000



200,000Payments of long-term debt


(37,500
)


(199,500
)


(4,250
)Purchase of note hedges






(42,880
)


Proceeds from the issuance of warrants






24,740



Proceeds from issuance of common stock


2,241



2,623



3,505Income tax benefit from stock option exercises


175



188



898Amounts payable  book overdraft


465



(22
)


(65
)Payments on capital lease obligations


(234
)


(196
)


(382
)Purchase of treasury stock










(99
)Debt issue costs






(6,946
)


(5,568
)Net cash provided by (used in) financing activities


2,647



(21,993
)


194,039Effects of exchange rates on cash and cash equivalents


(3,753
)


428



897Net increase (decrease) in cash and cash equivalents


(10,343
)


25,595



(17,520
)Cash and cash equivalentsBeginning of year


45,512



19,917



37,437End of year

$
35,169


$
45,512


$
19,917Supplemental disclosure of cash flow informationCash paid during the year for interest

$
8,087


$
10,107


$
6,198Cash paid during the year for income taxes

$
25,931


$
4,870


$
7,698Supplemental schedule of noncash investing and financing
    activitiesAcquisition of equipment under capital leases

$



$
173


$
184Accrued equipment purchases

$
(1,090
)

$
(3,574
)

$
Acquisitions of businesses:Fair value of assets acquired via cash

$
25,432


$
(2,154
)

$
266,850Fair value of liabilities assumed or incurred

$
(7,379
)

$



$
(34,971
)Net cash payments / (inflows)

$
18,053


$
(2,154
)

$
231,879    F-6




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  1.
    NATURE OF
    BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:  Nature
    of Business
    Principles
    of Consolidation and Organization
      Business
    Combinations
       F-7




---



##### Table of Contents



Foreign
    Currency Translation
    Cash
    and Cash Equivalents, Including Restricted Cash
        Revenue
    Recognition
  per-unit time-and-materials
  Percentage-of-Completion
      
    Actual costs incurred to date and the work completed as a result
    of incurring the actual costs;
    The remaining work to be completed based on the timeline of the
    contract as well as the number of incomplete tasks in the
    contract; and
    Factors that could change the rate of progress of future
    contract performance.     F-8




---



##### Table of Contents



Units-Based
           F-9




---



##### Table of Contents



Concentration
    of Credit Risk
    Long-Lived
    Assets
      Furniture and Fixtures

10 yearsComputer and Software

5 yearsLeasehold Improvements

Lesser of estimated life of asset or lease termBuildings

50 yearsCapital Lease Assets

Lesser of estimated life of asset or lease term         Goodwill
   F-10




---



##### Table of Contents



Derivatives
       F-11




---



##### Table of Contents



Marketing
    and Advertising Costs
    Investigator
    and Project Costs
  01-14,
  Net
    Income Per Share Data
      Net
    Income Per Share Data
  2008


2007


2006(In thousands)Weighted average common shares outstanding


14,751



14,520



14,323Stock options and non-vested restricted shares


242



369



439Weighted average shares


14,993



14,889



14,762     EITF 04-8, EITF 90-19,
 F-12




---



##### Table of Contents



Incremental SharesTotal Treasury

Shares Due to the

Issued by theConvertible Notes



Method Incremental

Company Under Note

Company UponShare Price

Shares

Warrant Shares

Share(1)

Hedges

Conversion(2)$40.00


















$45.00


















$50.00


191,993







191,993



(191,993
)


$55.00


555,630







555,630



(555,630
)


$60.00


858,660







858,660



(858,660
)


$65.00


1,115,070



245,070



1,360,140



(1,115,070
)


245,070$70.00


1,334,850



526,993



1,861,843



(1,334,850
)


526,993     (1)
    
    Represents the number of incremental shares that must be
    included in the calculation of fully diluted shares under U.S.
    Generally Accepted Accounting Principles.(2)
    
    Represents the number of incremental shares to be issued by the
    Company upon conversion of the Convertible Notes, assuming
    concurrent settlement of the bond hedges and warrants.  Income
    Taxes
           F-13




---



##### Table of Contents



Stock
    Options
    Restricted/Unrestricted
    Stock
    Use of
    Estimates
    New
    Accounting Pronouncements
   F-14




---



##### Table of Contents



142-3, FSP 142-3 FSP 142-3, FSP 142-3 FSP 142-3
  14-1, 14-1). 14-1 14-1 14-1
  EITF 07-5, EITF 07-5 EITF 01-6 EITF 01-6. EITF 07-5 EITF 07-5
  No. EITF 03-6-1, EITF 03-6-01 EITF 03-6-1
  2.
    FAIR
    VALUE OF FINANCIAL INSTRUMENTS:   F-15




---



##### Table of Contents



Level 1:
  Level 2:
  Level 3:
      Quoted Prices inActive Markets for

Significant Other

SignificantCarrying

Identical Assets

Observable Inputs

Unobservable InputsAmount

(Level 1)

(Level 2)

(Level 3)(In thousands)Foreign Currency Hedges

$
17,853


$



$
17,853


$
Money Market Accounts

$
16,937


$
16,937


$



$
       3.
    ACCOUNTS
    RECEIVABLE:    December 31,2008


2007(In thousands)Billed (net of allowance)

$
94,860


$
62,993Unbilled


63,111



72,557$
157,971


$
135,550  F-16




---



##### Table of Contents



(In thousands)Balance at December 31, 2005

$
2,057Invoice write-offs


(1,754
)Allowance acquired via acquisition


199Additional expense


250Balance at December 31, 2006

$
752Invoice write-offs


(34
)Additional expense


236Balance at December 31, 2007

$
954Invoice write-offs


(896
)Additional expense


3,150Foreign currency adjustments


(141
)Balance at December 31, 2008

$
3,067     4.
    PROPERTY
    AND EQUIPMENT:    December 31,2008


2007(In thousands)Furnishings, equipment and other

$
85,628


$
77,553Construction in process


9,862



2,815Equipment under capital leases


1,616



2,068Less: accumulated depreciation and amortization


(52,528
)


(50,415
)Property and equipment, net

$
44,578


$
32,021    F-17




---



##### Table of Contents



5.
    GOODWILL
    AND OTHER INTANGIBLE ASSETS:  Non-amortizable
  Goodwill(In thousands)Balance at December 31, 2006

$
229,598Additional adjustments


(383
)Foreign currency fluctuations


1,291Tax benefit to reduce goodwill


(338
)Balance at December 31, 2007

$
230,168Additional amounts acquired


9,073Additional adjustments


81Foreign currency fluctuations


(2,655
)Tax benefit to reduce goodwill


(338
)Balance at December 31, 2008

$
236,329     23-year
 F-18




---



##### Table of Contents



As of December 31,


As of December 31,2008


2007(In thousands)Goodwill

$
236,329


$
230,168Amortizable intangible assets:Carrying amount:Customer relationships

$
22,007


$
18,000Non-compete agreements


460



460Completed technology


2,600



2,600Backlog


6,200



6,200Internally developed software(a)


17,427



16,256Total carrying amount

$
48,694


$
43,516Accumulated Amortization:Customer relationships

$
(5,003
)

$
(1,975
)Non-compete agreements


(460
)


(460
)Completed technology


(1,252
)


(736
)Backlog


(5,521
)


(4,625
)Internally developed software(a)


(15,569
)


(14,896
)Total accumulated amortization

$
(27,805
)

$
(22,692
)Net amortizable intangible assets

$
20,889


$
20,824Total goodwill and intangible assets

$
257,218


$
250,992     (a)
    
    Internally developed software is included in Other Assets in the
    Companys Consolidated Balance Sheets.    (a)InternallyCustomer


Non-Compete


Completed





DevelopedRelationships


Agreements


Technology


Backlog


Software(In thousands)Balance at December 31, 2006

$
17,317


$
87


$
2,395


$
4,428


$
1,811Additional amounts acquired


















5312007 amortization


(1,292
)


(87
)


(531
)


(2,853
)


(982
)Balance at December 31, 2007

$
16,025


$



$
1,864


$
1,575


$
1,360Additional amounts acquired


4,930















1,187Foreign currency fluctuations


(923
)














2008 amortization


(3,028
)






(516
)


(896
)


(689
)Balance at December 31, 2008

$
17,004


$



$
1,348


$
679


$
1,858     (a)
    
    Internally developed software is included in Other Assets in the
    Companys Consolidated Balance Sheets.       F-19




---



##### Table of Contents



(In thousands)2009:

$
4,7412010:


3,6782011:


3,1462012:


2,0942013:


1,318Thereafter:


5,912Total

$
20,889     6.
    OTHER
    ACCRUED LIABILITIES:    December 31,

2008


2007(In thousands)Accrued compensation and related payroll withholdings and taxes

$
16,640


$
16,354Income tax payable


2,895



9,078Interest payable


3,113



3,102Other


21,533



18,573$
44,181


$
47,107   7.
    DEBT:     F-20




---



##### Table of Contents



Form S-3. 5-year
        EITF 90-19, EITF 00-19, (EITF 00-19), EITF 01-6, (EITF 01-6),
 F-21




---



##### Table of Contents



EITF 00-19 EITF 01-6,
      8.
    EMPLOYEE
    BENEFIT PLANS:  401(k)
    Plan
   F-22




---



##### Table of Contents



Stock
    Option and Stock Incentive Plan
          12-month
     F-23




---



##### Table of Contents



2008

2007

2006Expected dividend yield


0
%


0
%


0
%Risk-free interest rate


3.6
%


4.7
%


4.9
%Expected volatility


52.0
%


41.9
%


56.2
%Expected holding period


5.0years



4.5years



5.9years        F-24




---



##### Table of Contents



WeightedWeighted


Average


AggregateAverage


Remaining


IntrinsicShares


Exercise Price


Contractual Life


Value($ in thousands)Options outstanding at Dec. 31, 2005


1,115,329


$
10.60Granted


46,000



32.66Canceled


(77,649
)


8.89Exercised


(286,083
)


12.32Options outstanding at Dec. 31, 2006


797,597



11.55Granted


40,000



32.50Canceled


(55,056
)


10.23Exercised


(239,534
)


10.98Options outstanding at Dec. 31, 2007


543,007



13.33Granted


68,000



38.32Canceled


(17,290
)


24.94Exercised


(179,040
)


12.52Options outstanding at Dec. 31, 2008


414,677



17.35



5.43


$
4,373Exercisable at Dec. 31, 2008


325,977



14.93



4.77


$
3,834         Weighted Average


WeightedRange of

Outstanding at


Remaining


AverageExercise Price

December 31, 2008


Contractual Life


Exercise Price$3.46 - $6.92


57,715



4.57


$
5.61$6.93 - $10.38


150,310



4.35



8.08$10.39 - $13.83


31,175



3.99



11.41$13.84 - $17.29


5,000



2.86



16.95$17.30 - $20.75


48,477



2.72



19.75$20.76 - $24.21


5,000



9.91



22.26$24.22 - $27.67










$27.68 - $31.13


14,000



7.98



30.06$31.14 - $34.59


50,000



8.07



32.98$34.60 - $60.00


53,000



9.41



39.24414,677



5.43



17.35  F-25




---



##### Table of Contents



Exercisable at


Weighted AverageRange of Exercise Price

December 31, 2008


Exercise Price$ 3.46 - $ 6.92


51,915


$
5.52$ 6.93 - $10.38


128,210



8.17$10.39 - $13.83


28,775



11.45$13.84 - $17.29


5,000



16.95$17.30 - $20.75


48,477



19.75$20.76 - $24.21






$24.22 - $27.67






$27.68 - $31.13


5,600



30.06$31.14 - $34.59


38,000



32.74$34.60 - $60.00


20,000



37.42325,977


$
14.93     Restricted/Unrestricted
    Stock
        Year Ended December 31,2008


2007


2006(In thousands)Restricted stock

$
244


$
19


$
57Unrestricted stock










336Total stock based compensation

$
244


$
19


$
393  F-26




---



##### Table of Contents



SharesOutstanding at December 31, 2005


12,000Granted


250Vested


(6,000
)Canceled


Outstanding at December 31, 2006


6,250Granted


Vested


(6,125
)Canceled


Outstanding at December 31, 2007


125Granted


24,200Vested


(125
)Canceled


(15,250
)Outstanding at December 31, 2008


8,950     9.
    COMMITMENTS
    AND CONTINGENCIES:  Leases:
    Capital


OperatingLeases


Leases(In thousands)2009

$
197


$
17,6532010


92



15,5112011


35



11,8262012






10,1532013






7,378thereafter






27,505Total minimum lease payments


324


$
90,026Amounts representing interest


(13
)Present value of net minimum lease payments


311Current portion


188Obligations under capital leases, less current portion

$
123    F-27




---



##### Table of Contents



Protective
    Compensation and Benefit Agreements:
    Other:
  non-U.S. subsidiaries.
    Legal
    Proceedings:
    Anti-takeover
    Provisions:
   F-28




---



##### Table of Contents



10.
    INCOME
    TAXES:      2008


2007


2006(In thousands)Current:Federal

$
2,908


$
1,946


$
2,131State and local


324



510



314Foreign


19,702



14,195



6,012Subtotal


22,934



16,651



8,457Deferred:Federal


(3,394
)


(3,091
)


(4,252
)State and local


(828
)


(755
)


(336
)Foreign


(2,523
)


(1,388
)


621Subtotal


(6,745
)


(5,234
)


(3,967
)Benefit applied to reduce goodwill


320



338



353Total provision

$
16,509


$
11,755


$
4,843     2008


2007


2006(In thousands)United States

$
10,660


$
520


$
(7,062
)Foreign


35,246



29,922



20,435Income before income taxes

$
45,906


$
30,442


$
13,373     2008

2007

2006Income tax expense at the U.S. Federal statutory rate


34.0
%


34.0
%


35.0
%Effects of foreign taxes, net of foreign tax credits and
    deductions


2.0



3.3



(6.5
)State and local income taxes, net of Federal benefit


(1.8
)


(0.7
)


0.1Original issue discount-Convertible Notes


(5.5
)


(3.6
)


Effects of repatriated foreign dividend










6.9Effects of deemed foreign dividend


8.3



2.6



Other


(1.0
)


3.0



0.7Total


36.0
%


38.6
%


36.2
%    F-29




---



##### Table of Contents



2008


2007(In thousands)Deferred tax assets:Compensation and employee benefits

$
3,221


$
1,884Accrued expenses and other future deductible items


4,833



4,633Foreign operating loss carryforward


17,256



14,903State and local operating loss carryforward


1,616



1,592Federal operating loss carryforward


737



871Deferred state income taxes


279



13Contributions carryforward


67



31Capital loss carryforward


18



726Foreign tax credit carryforward


3,678



2,081Unrealized foreign exchange losses


533



501Depreciation and software costs






2,216Stock option expense






458Other


2,956



816Total deferred tax assets


35,194



30,725Deferred tax liabilities:Intangible assets


1,247



1,216Depreciation and software costs


521



Total deferred tax liability


1,768



1,216Valuation allowance


22,368



19,341Total net deferred tax (asset)/liability

$
(11,058
)

$
(10,168
)            F-30




---



##### Table of Contents



2008


2007


2006(In thousands)Beginning balance

$
19,341


$
18,118


$
4,548Additions charged to expense


9,080



3,050



1,357Additions attributable to acquisitions










12,739Reductions from utilization, reassessments and expirations


(6,053
)


(1,827
)


(526
)Ending balance

$
22,368


$
19,341


$
18,118             2008


2007(In thousands)Beginning Balance

$
5,447


$
Unrecognized tax benefit  adoption






6,828Gross increases  tax positions in prior period


230



167Gross decreases  tax positions in prior period


(2,747
)


(352
)Gross increases  tax positions in current period


384



1,663Gross decreases  tax positions in current period






(71
)Settlements






Lapse of statute of limitations


(1,550
)


(2,788
)Unrecognized tax benefit balance at December 31,

$
1,764


$
5,447  F-31




---



##### Table of Contents



Jurisdiction

Open YearsUnited States


2005 - 2008Germany


2007 - 2008United Kingdom


2006 - 2008Netherlands


2005 - 2008     11.
    ACQUISITION:    Acquisition
    of DecisionLine Clinical Research Corporation and related
    company:
     F-32




---



##### Table of Contents



(In thousands at theprevailing exchange ratePurchase Price Allocation

at June 2, 2008)Cash

$
1,562Accounts receivable


5,922Other current assets


1,398Property, plant and equipment


2,913Other long-term assets


1,196Intangible assets


4,930Goodwill


9,073Total assets acquired


26,994Advance billings


(3,503
)Other current liabilities


(2,978
)Other long-term liabilities


(898
)Total liabilities assumed


(7,379
)Net assets acquired

$
19,615      Twelve Months Ended


Twelve Months EndedDecember 31,


December 31,2008


2007(In thousands, except per share data)Net service revenues

$
485,778


$
412,823Income before income taxes

$
48,385


$
29,657Net income

$
30,822


$
17,588Net income per diluted share

$
2.06


$
1.18Weighted average shares


14,993



14,889         12.
    INVESTMENTS:   F-33




---



##### Table of Contents



13.
    RELATED
    PARTY TRANSACTIONS:      14.
    SEGMENT
    INFORMATION:      Early


Late


SupportStage(b)


Stage


& Other


Total(In thousands)Twelve months ended December 31, 2008Net service revenues

$
35,199


$
430,317


$
9,576


$
475,092Reimbursable out-of-pocket revenues

$



$
203,489


$



$
203,489Total revenues

$
35,199


$
633,806


$
9,576


$
678,581Operating Income (loss)

$
6,177


$
105,140


$
(54,491
)

$
56,826Total assets

$
46,431


$
424,456


$
84,672
(a)

$
555,559   Early


Late


SupportStage


Stage


& Other


Total(In thousands)Twelve months ended December 31, 2007Net service revenues

$
21,373


$
366,379


$
9,832


$
397,584Reimbursable out-of-pocket revenues

$



$
171,234


$



$
171,234Total revenues

$
21,373


$
537,613


$
9,832


$
568,818Operating Income (loss)

$
2,941


$
85,971


$
(36,098
)

$
52,814Total assets

$
33,258


$
388,680


$
77,785
(a)

$
499,723   Early


Late


SupportStage


Stage(c)


& Other


Total(In thousands)Twelve months ended December 31, 2006Net service revenues

$
23,328


$
254,954


$
5,189


$
283,471Reimbursable out-of-pocket revenues

$



$
90,465


$



$
90,465Total revenues

$
23,328


$
345,419


$
5,189


$
373,936Operating Income (loss)

$
(2,855
)

$
66,631


$
(43,766
)

$
20,010     (a)
    
    Primarily comprised of cash and tax-related assets.(b)
    
    The Early Stage segment results for the twelve months ended
    December 31, 2008 include the June (acquisition date)
    through December operating results of DecisionLine.(c)
    
    The Late Stage segment results for the twelve months ended
    December 31, 2006 include the April (acquisition date)
    through December operating results of IC-Research and the August
    (acquisition date) through December operating results of CRL
    Clinical Services. F-34




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##### Table of Contents



For The Years Ended December 31,Net Service Revenues

2008


2007


2006(In thousands)North American Region:United States

$
214,935


$
196,588


$
154,990Other


14,411



1,654



479$
229,346


$
198,242


$
155,469European Region:Germany

$
56,661


$
41,822


$
29,724United Kingdom


42,303



44,145



28,487Other


90,564



79,228



51,597$
189,528


$
165,195


$
109,808Latin American Region:(1)

$
38,996


$
20,784


$
10,240Asia / Pacific Region:

$
17,222


$
13,363


$
7,954Total Net Service Revenues

$
475,092


$
397,584


$
283,471     (1)
    
    Latin American region includes Mexico  For The Years Ended December 31,Identifiable Long-Lived Assets

2008


2007(In thousands)North American Region:United States

$
33,119


$
21,163Other


2,275



1$
35,394


$
21,164European Region:Germany

$
780


$
1,011United Kingdom


3,344



4,719Other


3,332



3,890$
7,456


$
9,620Latin American Region:(1)

$
2,507


$
1,780Asia / Pacific Region:

$
1,079


$
816Total long-lived assets

$
46,436


$
33,380     (1)
    
    Latin American region includes Mexico      2006Sponsor A

12%
    F-35




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##### Table of Contents



15.
    QUARTERLY
    FINANCIAL DATA (unaudited):      Quarter

First


Second


Third


Fourth(In thousands, except per share data)2008Net service revenues

$
114,124


$
126,989


$
124,828


$
109,151Gross profit


54,954



63,466



60,758



48,478Income from operations


13,975



16,080



15,869



10,902Net income


5,624



7,835



10,976



4,962Net income per diluted share


0.38



0.52



0.73



0.33Net income per basic share


0.38



0.53



0.74



0.33   Quarter

First


Second


Third


Fourth2007Net service revenues

$
95,439


$
97,802


$
100,070


$
104,273Gross profit


46,040



46,258



50,951



50,174Income from operations


12,489



10,879



14,245



15,201Net income


4,203



4,332



3,786



6,366Net income per diluted share


0.28



0.29



0.25



0.43Net income per basic share


0.29



0.30



0.26



0.44  F-36




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##### Table of Contents



SIGNATURES    KENDLE INTERNATIONAL INC.
  
         Signature

Capacity

Date/s/  Candace
    KendleCandace
    Kendle, PharmD

Chairman of the Board of Directors, Chief Executive Officer and
    Principal Executive Officer

March 16, 2009*Christopher
    C. Bergen

Chief Operating Officer and Director

March 16, 2009/s/  Karl
    Brenkert IIIKarl
    Brenkert III

Senior Vice President, Chief Financial Officer and Principal
    Financial Accounting Officer

March 16, 2009*
    G. Steven Geis, Ph.D., M.D.

Director

March 16, 2009*
    Donald C. Harrison, M.D.

Director

March 16, 2009*
    Timothy E. Johnson, Ph.D.

Director

March 16, 2009*
    Frederick A. Russ, Ph.D.

Director

March 16, 2009*
    Robert R. Buck

Director

March 16, 2009*
    Timothy M. Mooney

Director

March 16, 2009*/s/  George
    Pisaruk
    George Pisaruk

as Attorney In-Fact

March 16, 2009




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description of Exhibit

Filing Status2
.1

Stock Purchase Agreement dated July 1, 1997 by and among
    the Company and Shareholders of U-Gene Research B.V

*2
.2

Escrow Agreement dated June 27, 1997 among the Company,
    Keating, Muething & Klekamp, P.L.L., Bio-Medical
    Research Holdings, B.V., Utrechtse Particatiemaatschappij B.V.,
    P.J. Morrison, T.S. Schwarz, I.M. Hoepelman , Ph.K. Peterson, J.
    Remington, M. Rozenberg-Arska and L.G.W. Sterkman

*2
.3

Share Purchase Agreement dated July 2, 1997 by and among
    the Company and the Shareholders of GMI Gescellschaft für
    Angewandte Mathematick und Informatik mbH

*2
.4

Stock Purchase Agreement dated February 11, 1998 by and
    among the Company and the Shareholders of ACER/EXCEL Inc.

*2
.5

Escrow Agreement dated February 11, 1998 among the Company,
    Tzuo-Yan Lee, Jean C. Lee, Michael Minor, Conway Lee, Steven
    Lee, Jean C. Lee, as Trustee under a Trust dated March 8,
    1991 fbo Jennifer Lee, Citicorp Trust-South Dakota and The Fifth
    Third Bank

*2
.6

Registration Rights Agreement dated February 11, 1998 among
    the Company and Tzuo-Yan Lee, Jean C. Lee, Michael Minor, Conway
    Lee, Steven Lee, Jean C. Lee, as Trustee under a Trust dated
    March 8, 1991 fbo Jennifer Lee, Citicorp Trust-South Dakota

*2
.7

Share Purchase Agreement dated December 23, 1998 by and
    among the Company and the Shareholders of Research Consultants
    (International) Holdings Limited

*2
.8

Escrow Agreement dated January 5, 1999 among the Company,
    John Glasby, Gillian Gregory, Michael Roy Broomby and Peter
    Nightingale

*2
.9

Option Agreement dated September 9, 1998 by and between the
    Company and Component Software International, Inc.

*2
.10

Notice of Option Exercise dated January 11, 1999 of the
    Option Agreement dated September 9, 1998

*2
.11

Multi-Year Strategic Services Agreement dated January 20,
    1999 by and between the Company and Component Software
    International, Inc.

*2
.12

Asset Purchase Agreement dated June 27, 1999 by and among
    the Company and the Shareholders of Health Care Communications,
    Inc.

*2
.13

Stock Purchase Agreement dated June 4, 1999 by and among
    the Company and the Shareholders of ESCLI S.A.

*2
.14

Asset Purchase Agreement dated July 13, 1999 by and among
    the Company and the Shareholders of HCC Health Care
    Communications (1991), Ltd.

*2
.15

Share Purchase Agreement dated August 31, 1999 by and among
    the Company and the Shareholder of Specialist Monitoring
    Services Limited

*2
.16

Escrow Agreement dated July 13, 1999 by and among the
    Company, Geoffrey H. Kalish, M.D., Bradley D. Kalish, Jill
    Kalish, and The Fifth Third Bank, as Escrow Agent

*2
.17

Escrow Agreement dated August 31, 1999 by and among the
    Company, Paul Martin, and The Fifth Third Bank, as Escrow Agent

*2
.18

Units Purchase Agreement dated April 7, 2000 by and among
    the Company and the Shareholders of SYNERmedicaPTY
    Limited and SYNERmedicaUnit Trust

*2
.19

Stock Purchase Agreement dated February 27, 2001 by and
    among the Company and the Shareholders of AAC Consulting Group,
    Inc.

*2
.20

Form of Note Prepayment Agreement

*2
(a)

Asset Purchase Agreement dated January 29, 2002 among
    Kendle International Inc., Clinical and Pharmacologic Research,
    Inc., Thomas S. Clark, M.D., Charles T. Clark, and E.
    Stuart Clark

*




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##### Table of Contents



ExhibitNumber

Description of Exhibit

Filing Status2
(b)

Convertible Subordinated Note, dated January 29, 2002
    issued by Kendle International Inc. to Clinical and
    Pharmacologic Research, Inc.

*2
.21

Stock Purchase Agreement between the Company and Charles River
    Laboratories International, Inc. dated as of May 9, 2006

*3
.1

Restated and Amended Articles of Incorporation

*3
.2

Amended and Restated Code of Regulations

*3
.3

Amendment of the Restated and Amended Articles of Incorporation
    to Increase the Authorized Shares

*4


Specimen Common Stock Certificate

*4
.1

Shareholder Rights Agreement dated August 13, 1999 between
    the Company and The Fifth Third Bank, as Rights Agent

*4
.2

Indenture dated March 31, 2007 between the Company and
    LaSalle Bank National Association

*4
.3

Supplemental Indenture No. 1 dated July 16, 2007
    between the Company and LaSalle Bank National Association

*10
.1

Amended and Restated Shareholders Agreement dated
    June 26, 1997

*10
.2

Master Lease Agreement dated November 27, 1996 by and
    between the Company and Bank One Leasing Corporation, as amended
    on April 18, 1997

*10
.6

Master Equipment Lease dated August 16, 1996 by and between
    the Company and The Fifth Third Leasing Company

*10
.7

Lease Agreement dated December 9, 1991 by and between the
    Company and Carew Realty, Inc., as amended on December 30,
    1991, March 18, 1996, October 8, 1996,
    January 29, 1997, and February 16, 1999

*10
.8

Indemnity Agreement dated June 21, 1996 by and between the
    Company and Candace Kendle Bryan

*10
.9

Indemnity Agreement dated June 21, 1996 by and between the
    Company and Christopher C. Bergen

*10
.10

Indemnity Agreement dated June 21, 1996 by and between the
    Company and Timothy M. Mooney

*10
.11

Indemnity Agreement dated May 14, 1997 by and between the
    Company and Charles A. Sanders

*10
.12

Indemnity Agreement dated May 14, 1997 by and between the
    Company and Philip E. Beekman

*10
.13

Indemnity Agreement dated December 10, 1998 by and between
    the Company and Robert Buck

*10
.14

Indemnity Agreement dated December 10, 1998 by and between
    the Company and Mary Beth Price

*10
.15

Form of Indemnity Agreement by and between the Company and each
    member of the Companys Board of Directors, except for
    those Indemnity Agreements noted above and filed previously

*10
.16

Credit Agreement dated as of August 16, 2006 by and among
    the Company, certain subsidiary Guarantors, various Lenders, UBS
    Securities LLC, as Sole Lead Arranger and Sole Bookrunner, UBS
    AG, Stamford Branch, as Issuing Bank, Administrative Agent and
    Collateral Agent, UBS Loan Finance LLC, as Swingline Lender,
    JPMorgan Chase Bank, N.A., as Syndication Agent, and KeyBank
    National Association, LaSalle Bank N.A. and National City Bank,
    as Co-Documentation Agents

*(a) First Amended and Restated Credit Agreement dated as of
    December 11, 2006 among Kendle International Inc., the
    several lenders from time to time party thereto and UBS AG,
    Stamford Branch, as administrative agent

*




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##### Table of Contents



ExhibitNumber

Description of Exhibit

Filing Status10
.17

First Amendment to the Stock Purchase Agreement dated as of
    August 16, 2006 between the Company and Charles River
    Laboratories, Inc.

*10
.18

Second Amended and Restated Credit Agreement dated as of
    April 13, 2007 among Kendle International Inc., the several
    lenders from time to time party thereto and UBS AG, Stamford
    Branch, as administrative agent

*10
.19

Increase Joinder Agreement dated June 27, 2007 among the
    Company, certain of its subsidiaries, various Lenders, and UBS
    AG, Stamford Branch as administrative agent for the lenders

*10
.20

Confirmation of Convertible Bond Hedge Transaction, dated
    July 10, 2007, by and between the Company and UBS AG,
    London Branch

*10
.21

Confirmation of Convertible Bond Hedge Transaction, dated
    July 10, 2007, by and between the Company and JPMorgan
    Chase Bank, National Association, London Branch

*10
.22

Confirmation of Issuer Warrant Transaction, dated July 10,
    2007, by and between the Company and UBS AG, London Branch

*10
.23

Confirmation of Issuer Warrant Transaction, dated July 10,
    2007, by and between the Company and JPMorgan Chase Bank,
    National Association, London Branch

*10
.24

Third Amended and Restated Credit Agreement dated as of
    December 18, 2007 among Kendle International Inc., the
    several lenders from time to time party thereto and UBS AG,
    Stamford Branch, as administrative agent

*10
.25

Lease Agreement dated February 27, 2008 by and between the
    Company and Carew Realty, Inc.

*10
.26

Fourth Amended and Restated Credit Agreement dated as of
    June 20, 2008 among the Company, the several lenders from
    time to time party thereto and UBS AG, Stamford Branch, as
    administrative agent

*10
.30

MANAGEMENT CONTRACTS AND COMPENSATION PLANS

*(a) 1995 Stock Option and Stock Incentive Plan

*(b) 1995 Stock Option and Stock Incentive Plan 
    Individual Stock Option Agreement for Incentive Stock Option
    (contained in Exhibit 10.20(a))

*(c) 1997 Stock Option and Stock Incentive Plan

*(c)(1) Amendment No. 1 to 1997 Stock Option and Stock
    Incentive Plan

*(c)(2) Amendment No. 2 to 1997 Stock Option and Stock
    Incentive Plan

*(c)(3) Amendment No. 3 to 1997 Stock Option and Stock
    Incentive Plan

*(c)(4) Form of Restricted Stock Award Agreement

*(d) Form of Protective Compensation and Benefit Agreement

*(e) 1998 Employee Stock Purchase Plan

*(e)(1) Amendment No. 1 to 1998 Employee Stock Purchase Plan

*(e)(2) Amendment No. 2 to 1998 Employee Stock Purchase Plan

*(e)(3) Amendment No. 3 to 1998 Employee Stock Purchase Plan

*(e)(4) Amendment No. 4 to 1998 Employee Stock Purchase Plan

*(e)(5) Amendment No. 5 to 1998 Employee Stock Purchase Plan

*(f) 2007 Stock Incentive Plan

*(f)(1) Form of Performance-Based Stock Unit Agreement

*(g) Annual Incentive Plan

*(h) Nonqualified Deferred Compensation Plan

*(n) 2003 Directors Compensation Plan

*12
.1

Computation of Ratio of Earnings to Fixed Charges

Filed herewith




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##### Table of Contents



ExhibitNumber

Description of Exhibit

Filing Status14


Code of Ethics

Available on 
    the Companys 
    web site at
    www.Kendle.com21


List of Subsidiaries

Filed herewith23
.1

Consent of Deloitte & Touche LLP

Filed herewith24


Powers of Attorney

Filed herewith31
.1

Certification of the Chief Executive Officer pursuant to
    Rule 13a-14(a)

Filed herewith31
.2

Certification of the Chief Financial Officer pursuant to
    Rule 13a-14(a)

Filed herewith32
.1

Certification Pursuant to 18 U.S.C Section 1350 as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002-
    Chief Executive Officer

Filed herewith32
.2

Certification Pursuant to 18 U.S.C Section 1350 as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002  Chief Financial Officer

Filed herewith