##### 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, 2009oro

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

31-1274091(State or other jurisdiction
    of incorporation or organization)

IRS 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-T o o
  Regulation S-K Form 10-K Form 10-K. o
  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, 2009
  Table of
    Contents
   
 PagePART IItem 1  Business


3Item 1A  Risk Factors


6Item 1B  Unresolved Staff
    Comments


13Item 2  Properties


13Item 3  Legal Proceedings


14Item 4  Removed and Reserved


14PART 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


38Item 8  Financial Statements and
    Supplementary Data


40Item 9  Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


40Item 9A  Controls and
    Procedures


40Item 9B  Other Information


43PART IIIItem 10  Directors, Executive
    Officers and Corporate Governance


43Item 11  Executive
    Compensation


44Item 12  Security Ownership of
    Certain Beneficial Owners and Management and Related Stockholder
    Matters


44Item 13  Certain Relationships
    and Related Transactions, and Director Independence


45Item 14  Principal Accountant
    Fees and Services


45PART IVItem 15  Exhibits and Financial
    Statement Schedules


46SignaturesEX-10.14EX-10.15EX-10.16EX-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 proof-of-concept
  Late
    Stage
         3




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##### 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 Latin America, Africa and
    Asia/Pacific.
    Setting the stage for business mix expansion, such as expansion
    in support of Early Stage.
    Building infrastructure (i.e. Enterprise Resource Planning) to
    support the continued expansion and growth of the Company.  Customers
    and Marketing
      Backlog
   4




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Competition
      Government
    Regulation
     5




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##### Table of Contents



Employees
  non-U.S. locations
  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 Industry
  The
    Company depends on the biopharmaceutical industry for most of
    its revenue.
   6




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The
    CRO industry is highly competitive.
    Revenue
    and earnings growth rates in the future may not be as robust as
    in the past.
    Change
    in government regulation or healthcare reform could adversely
    affect the Company.
      Changes
    in tax legislation could adversely affect the
    Company.
  non-U.S. earnings
  Risks
    Related to Our Business
  The
    current economic climate has caused the Company to rapidly
    adjust from a robust growth strategy to a cost containment
    strategy in a short period of time, which has placed, and is
    expected to continue to place, significant demands on
    it.
   7




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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 may not be indicative of future
    results.
  non-U.S. subsidiaries
  If the
    Company is unable to attract suitable investigators and
    volunteers for clinical trials, the Companys business may
    suffer.
    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.
   8




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##### Table of Contents



The
    Companys indebtedness could adversely affect its business
    and financial condition.
        
    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.
   9




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The
    Companys international operations are subject to numerous
    risks.
    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 limit its
    operations.
   10




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The
    Companys business depends on the successful implementation
    and deployment of its enterprise wide reporting solution and
    failure could harm the Companys ability to manage its
    business and obtain accurate financial reporting.
    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.
    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
 11




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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 that may materially differ from actual
    results.
  and/or
    Risks
    related to our Common Stock
  Market
    conditions have caused significant volatility in the
    Companys stock price.
    
    The Companys number of shares outstanding is significantly
    less than that of its peers, causing relatively small
    adjustments to have a substantial impact on earnings per share
    and relatively small market activity to cause substantial
    volatility.
    General conditions in the economy and financial markets and
    other developments affecting the Company or its competitors have
    caused the market value of the Companys common stock to
    decline.    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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##### Table of Contents



over-the-counter over-the-counter
    Anti-takeover
    provisions in the Companys charter documents and under
    Ohio law may make an acquisition of the Company, which may be
    beneficial to its stockholders, more difficult, which could
    depress its stock price.
  
    Certain provisions of the Companys Articles of
    Incorporation and Code of Regulations and of Ohio law make it
    difficult for a third party to acquire control of it without the
    consent of its Board of Directors (Board). These anti-takeover
    defenses may discourage, delay or prevent a transaction
    involving a change in control of the Company, and, accordingly,
    could limit the price that investors may be willing to pay for
    its common stock, including transactions in which holders of
    common stock might receive a premium for their shares over the
    market price. In cases where Board approval is not obtained,
    these provisions could also discourage proxy contests and make
    it more difficult for existing shareholders to elect directors
    of their choosing and cause the Company to take other corporate
    actions they desire. These provisions include: 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     13




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##### Table of Contents



ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    REMOVED
    AND RESERVED PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  ®
  2009 Quarterly

First


Second


Third


FourthRanges of stock priceHigh

$
25.66


$
23.13


$
17.33


$
18.88Low


15.05



8.28



9.57



14.71   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    14




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##### Table of Contents



Performance
    Graph
    COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN* Among
    Kendle International Inc., The NASDAQ Composite Index
    And The NASDAQ Health Services Index
  
   *
    
    $100 invested on
    12/31/04 in
    stock or index, including reinvestment of dividends.   Dollar Value of $100 Investment at December 31,2004

2005

2006

2007

2008

2009Kendle International Inc.


100.00



292.50



357.39



555.91



292.27



208.07NASDAQ Composite


100.00



101.33



114.01



123.71



73.11



105.61NASDAQ Health Services


100.00



106.30



112.25



113.33



79.24



91.44   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 31,2009


2008(3)


2007(1)(3)


2006(2)


2005(In thousands except per share data)Net service revenues

$
416,688


$
475,092


$
397,584


$
283,471


$
202,032Reimbursable
    out-of-pocket
    revenues


135,224



203,489



171,234



90,465



48,607Total revenues


551,912



678,581



568,818



373,936



250,639Cost and expenses:Direct costs


210,586



247,436



204,161



152,826



108,582Reimbursable
    out-of-pocket
    costs


135,224



203,489



171,234



90,465



48,607Selling, general and administrative


144,659



155,577



125,744



91,796



68,216Depreciation and amortization


15,712



15,253



14,865



10,403



7,991Restructuring expenses


10,157











236



Intangible impairment charge














8,200



Total costs and expenses


516,338



621,755



516,004



353,926



233,396Income from operations


35,574



56,826



52,814



20,010



17,243Other income (expense):Interest income


579



760



1,466



1,939



1,019Interest expense


(14,403
)


(15,891
)


(17,547
)


(6,781
)


(460
)Write-off of deferred financing costs










(4,152
)






Other


4,034



(2,043
)


(4,816
)


(1,795
)


(287
)Gain on debt extinguishment


2,887















300Total other income (expenses)


(6,903
)


(17,174
)


(25,049
)


(6,637
)


572Income before income taxes


28,671



39,652



27,765



13,373



17,815Income taxes


13,434



16,509



11,755



4,843



7,141Net income

$
15,237


$
23,143


$
16,010


$
8,530


$
10,674INCOME PER SHARE DATABasic:Net income per share

$
1.03


$
1.57


$
1.10


$
0.60


$
0.79Weighted average shares


14,862



14,751



14,520



14,323



13,572Diluted:Net income per share

$
1.02


$
1.54


$
1.08


$
0.58


$
0.76Weighted average shares


14,992



14,993



14,889



14,762



14,120   CONSOLIDATED
    BALANCE SHEET DATA(4)
  As of December 31,2009


2008(3)


2007(3)


2006


2005Working capital

$
56,476


$
68,595


$
60,084


$
56,404


$
63,992Total assets


539,723



554,888



498,675



455,072



184,759Total short and long-term debt, including capital leases


138,394



172,159



165,673



200,099



4,572Total shareholders equity


236,047



212,624



175,257



140,112



122,504     (1)
    
    Includes the effects of the January 1, 2007 adoption of
    guidance for accounting for uncertainty in income taxes.(2)
    
    Includes the effects of the January 1, 2006 adoption of
    accounting guidance related to share-based payments.(3)
    
    As adjusted due to the implementation of accounting guidance
    related to convertible debt. See Note 2: Accounting Changes(4)
    
    From 2005 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 17




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##### Table of Contents




    The Company may discover that, for a particular contract, the
    assumptions are incorrect or insufficient to permit completion
    of the contract.        dollar-for-dollar out-of-pocket out-of-pocket
  out-of-pocket
      Early
    Stage Segment Contracts
  per-unit
 18




---



##### Table of Contents



Acquisitions
      Recent
    Developments and CRO Marketplace
  and/or
    Results
    of Operations
  Year
    Ended December 31, 2009 (2009) Compared with Year
    Ended December 31, 2008 (2008)
  Net
    Service Revenues
    Year Ended December 31,$ Increase


% Increase2009


2008


(Decrease)


(Decrease)Net service revenuesLate stage

$
370,178


$
430,317


$
(60,139
)


(14.0
)%Early stage(a)


37,473



35,199



2,274



6.5
%Support & other(b)


9,037



9,576



(539
)


(5.6
)%Total net service revenues

$
416,688


$
475,092


$
(58,404
)


(12.3
)%     (a)
    
    The Early Stage segment results for the twelve months ended
    December 31, 2008 include the June (acquisition date)
    through December operating results of DecisionLine.(b)
    
    Support and Other consists of revenues performed for
    administrative services. 19




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For the Year Ended December 31$ Increase


% Increase2009


2008


(Decrease)


(Decrease)North America

$
200,866


$
229,346


$
(28,480
)


(12.4
)%Europe


157,628



189,528



(31,900
)


(16.8
)%Latin America


40,830



38,996



1,834



4.7
%Asia-Pacific


17,364



17,222



142



0.8
%Total net service revenues

$
416,688


$
475,092


$
(58,404
)


(12.3
)%       Reimbursable
    Out-of-Pocket
    Revenues/Expenses
  out-of-pocket out-of-pocket
 20




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##### Table of Contents



Operating
    Expenses
  For the Year Ended December 31,$ Increase


% Increase2009


2008


(Decrease)


(Decrease)Direct costs

$
210,586


$
247,436


$
(36,850
)


(14.9
)%Reimbursable
    out-of-pocket
    costs


135,224



203,489



(68,265
)


(33.5
)%SG&A expenses


144,659



155,577



(10,918
)


(7.0
)%Restructuring expenses


10,157







10,157Depreciation and amortization


15,712



15,253



459



3.0
%Total operating expenses

$
516,338


$
621,755


$
(105,417
)


(17.0
)%                21




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##### Table of Contents



Year Ended December 31,Increase


% Increase2009


2008


(Decrease)


(Decrease)Operating Income/(Loss):Late stage

$
81,109


$
105,140


$
(24,031
)


(22.9
)%Early stage(a)


4,187



6,177



(1,990
)


(32.2
)%Support & other(b)


(49,722
)


(54,491
)


4,769



8.8
%Total operating income

$
35,574


$
56,826


$
(21,252
)


(37.4
)%     (a)
    
    The Early Stage segment results for the twelve months ended
    December 31, 2008 include the June (acquisition date)
    through December operating results of DecisionLine.(b)
    
    Support and Other consists of unallocated corporate expenses,
    primarily information technology, marketing and communications,
    human resources, finance and legal, net of revenues earned.        Other
    Income/(Expense)
      For the Year Ended December 31,2009


2008


ChangeOther income (expense)Interest income

$
579


$
760


$
(181
)Interest expense


(14,403
)


(15,891
)


1,488Gain on extinguishment of debt


2,887







2,887Foreign currency gains/(losses)


5,350



(1,006
)


6,356Other expenses


(1,316
)


(1,037
)


(279
)Total other income (expense)

$
(6,903
)

$
(17,174
)

$
10,271  22




---



##### Table of Contents



Interest
    Income
    Interest
    Expense
      Gain
    on Extinguishment of Debt
      Foreign
    Currency
         23




---



##### Table of Contents



and/or
  Income
    Taxes
    Net
    Income
      Non-GAAP Net
    Service Revenue, Operating Income and EPS
   24




---



##### Table of Contents



For the Years Ended December 31,2009


2008


2007(In thousands except per share data)Reconciliation of non-GAAP net service revenues:Net service revenues, as reported

$
416,688


$
475,092



397,584Constant currency adjustment


27,617



(910
)


(19,051
)Non-GAAP net service revenues

$
444,305


$
474,182


$
378,533Reconciliation of non-GAAP income from operations:Income from operations, as reported

$
35,574


$
56,826


$
52,814Restructuring charge, as reported


10,157







Subtotal


45,731



56,826



52,814Constant currency adjustment


7,086



(2,693
)


(2,228
)Non-GAAP income from operations

$
52,817


$
54,133


$
50,586Reconciliation of non-GAAP net income:Net income, as reported

$
15,237


$
23,143


$
16,010Additional interest expense related to convertible debt


6,456



6,630



2,873Restructuring expense, net of tax


6,799







Gain on extinguishment of debt, net of tax


(1,887
)






Write-off of deferred financing costs, net of tax










2,636Discrete tax item related to foreign currency hedge


4,441







Non-GAAP net income

$
31,046


$
29,773


$
21,519Net income per share, as reported:Basic

$
1.03


$
1.57


$
1.10Diluted

$
1.02


$
1.54


$
1.08Weighted Average Shares Outstanding:Basic


14,862



14,751



14,520Diluted


14,992



14,993



14,889Non-GAAP net income per share:Basic

$
2.09


$
2.02


$
1.48Diluted

$
2.07


$
1.99


$
1.45   Constant
    Currency Adjustments
    Restructuring
    Costs
   25




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##### Table of Contents



Additional
    Interest Expense Related to Convertible Debt
    Gain
    on Extinguishment of Debt
    Write-off
    of deferred financing costs
    Discrete
    tax item related to foreign currency hedge
    Year
    Ended December 31, 2008 (2008) Compared with Year
    Ended December 31, 2007 (2007)
  Net
    Service Revenues
    Revenues
  Year Ended December 31,Increase


% Increase2008


2007


(Decrease)


(Decrease)Net service revenuesLate stage

$
430,317


$
366,379


$
63,938



17.5
%Early stage(a)


35,199



21,373



13,826



64.7
%Support & other(b)


9,576



9,832



(256
)


(2.6
)%Total net service revenues

$
475,092


$
397,584



77,508



19.5
%     (a)
    
    The Early Stage segment results for the twelve months ended
    December 31, 2008 include the June (acquisition date)
    through December operating results of DecisionLine.(b)
    
    Support and Other consists of primarily of revenues for
    administrative services.       26




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##### Table of Contents



For the Year Ended December 31,$ Increase


% Increase2008


2007


(Decrease)


(Decrease)North America

$
229,346


$
198,242


$
31,104



15.7%Europe


189,528



165,195



24,333



14.7%Latin America


38,996



20,784



18,212



87.6%Asia-Pacific


17,222



13,363



3,859



28.9%Total net service revenues

$
475,092


$
397,584


$
77,508



19.5%       Reimbursable
    Out-of-Pocket
    Revenues/Expenses
  out-of-pocket out-of-pocket
  Operating
    Expenses
  For the Year Ended December 31,Increase


% Increase2008


2007


(Decrease)


(Decrease)Direct costs

$
247,436


$
204,161


$
43,275



21.2%Reimbursable
    out-of-pocket
    costs


203,489



171,234



32,255



18.8%SG&A expenses


155,577



125,744



29,833



23.7%Depreciation and amortization


15,253



14,865



388



2.6%Total operating expenses

$
621,755


$
516,004


$
105,751



20.5%      27




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##### Table of Contents



Year Ended December 31,Increase


% Increase2008


2007


(Decrease)


(Decrease)Operating Income/(Loss):Late stage

$
105,140


$
85,971


$
19,169



22.3
%Early stage(a)


6,177



2,941



3,236



110.0
%Support & other(b)


(54,491
)


(36,098
)


(18,393
)


(51.0
)%Total operating income

$
56,826


$
52,814



4,012



7.6
%     (a)
    
    The Early Stage segment results for the twelve months ended
    December 31, 2008 include the June (acquisition date)
    through December operating results of DecisionLine.(b)
    
    Support and Other consists of unallocated corporate expenses,
    primarily information technology, marketing and communications,
    human resources, finance and legal, net of revenues.       28




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##### Table of Contents



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


2007


ChangeOther income (expense)Interest income

$
760


$
1,466


$
(706
)Interest expense


(15,891
)


(17,547
)


1,656Write-off of deferred financing costs






(4,152
)


4,152Foreign currency (losses)


(1,006
)


(4,513
)


3,507Other expenses


(1,037
)


(303
)


(734
)Total other income (expense)

$
(17,174
)

$
(25,049
)

$
7,875   Interest
    Income
    Interest
    Expense
        Write-off
    of deferred financing costs
   29




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##### Table of Contents



Foreign
    Currency
      and/or
  Income
    Taxes
  non-U.S. subsidiaries.
  Net
    Income
      Liquidity
    and Capital Resources
     30




---



##### Table of Contents



5-year
 31




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##### Table of Contents



32




---



##### Table of Contents



Contractual
    Obligations
    Year


Years


Years


Years2010


2011-2012


2013-2014


After 2015


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

$
55


$
35


$



$



$
90Operating Leases


18,476



28,736



16,695



25,091



88,998Debt payments(1)






154,500











154,500Interest on debt(2)


5,214



8,039











13,253Reserve for uncertain tax positions, including interest and
    penalties(3)


















Total

$
23,745


$
191,310


$
16,695


$
25,091


$
256,841       (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
    remaining 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.(3)
    
    Reserves for uncertain tax positions 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
  percentage-of-completion) per-unit time-and-materials
  Percentage-of-Completion
     33




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##### Table of Contents




    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.      percentage-of-completion
      Units-Based
     34




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##### Table of Contents



out-of-pocket out-of-pocket
  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
     35




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##### Table of Contents



Accounts
    Receivable/Allowance for Doubtful Accounts
      Goodwill
    and Intangible Assets
      Goodwill


Fair Value in Excess ofAllocated


Carrying Value(In thousands)Clinical and Data Monitoring

$
160,229



80
%Project Management & Late Phase


24,124



65
%Regulatory, Site and Medical Affairs


27,984



50
%Biostatistics and Statistical Programming


12,939



80
%Early Stage


18,313



40
%Total

$
243,589    36




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##### Table of Contents



Internally
    Developed Software
    Tax
    Valuation Allowance and Tax Liabilities
      Stock-based
    Compensation
   37




---



##### Table of Contents



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
  Form 10-K,
  Foreign
    Currency
     38




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##### Table of Contents



Foreign
    Currency Hedges
       39




---



##### Table of Contents



Fair
    Value of Derivative Transactions
    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
             40




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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, 2010/s/  Keith
    A. CheesmanKeith
    A. Cheesman

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

March 16, 2010  41




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##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                  DELOITTE &
    TOUCHE LLP
     42




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##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION    Form 10-K Form 10-K
 PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  DIRECTORS
    OF THE COMPANY
    AUDIT
    COMMITTEE
    EXECUTIVE
    OFFICERS OF THE COMPANY
    ExecutiveName

Age

Position

Officer SinceCandace Kendle, PharmD

63

Chief Executive Officer and Chairman of the Board of Directors

1989Christopher C. Bergen

59

Executive Vice President and Chief Administrative Officer

1989Keith A. Cheesman

50

Senior Vice President and Chief Financial Officer

2009Simon S. Higginbotham

49

Senior Vice President and Chief Marketing Officer

2004Stephen A. Cutler, PhD

50

Senior Vice President and Chief Operating Officer

2009    43




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##### Table of Contents



SECTION 16(A)
    BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
    CODE OF
    ETHICS
  www.kendle.com
  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;
    Nonqualified Deferred Compensation; and
    Potential Payments Upon Termination or
    Change-in-Control.  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS     44




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##### Table of Contents



Equity
    Compensation Plan Information
  (c)Number of Securities(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


379,875


$
16.44



769,300Equity compensation plans not approved by security holders










Total


379,875


$
16.44



769,300     (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   45




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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 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)2
.2

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)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 1933.3
.2

Amended and Restated Code of Regulations (Incorporated by
    reference to the Companys Current Report on
    Form 8-K
    filed with the Commission on November 16, 2009)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 14, 2009 between
    the Company and American Stock Transfer &
    Trust Company LLC, as Rights Agent (Incorporated by
    reference to the Companys filing on
    Form 8-A
    filed with the Commission on August 20, 2009)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)10
.1

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
.2

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
.3

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
.4

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
.5

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
.6

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) 46




---



##### Table of Contents



ExhibitNumber

Description of Exhibit10
.7

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
.8

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
.9

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
.10

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
.11

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
.12

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
.13

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
.14

Credit Agreement dated as of March 15, 2010 by and among
    the Company, various Lenders and JPMorgan Chase Bank, N.A., as
    Administrative Agent (Filed herewith)10
.15

Guaranty dated as of March 15, 2010 by and among various
    Subsidiaries of the Company in favor of JPMorgan Chase Bank,
    N.A., as Administrative Agent (Filed herewith)10
.16

Pledge and Security Agreement dated as of March 15, 2010 by
    and among the Company, various Subsidiaries of the Company and
    JPMorgan Chase Bank. N.A., as Administrative Agent (Filed
    herewith)10
.17

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) 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)(e)(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) 47




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##### Table of Contents



ExhibitNumber

Description of Exhibit(f) Annual Incentive Plan (Incorporated by reference to the
    Companys Current Report on
    Form 8-K
    filed with the Commission on May 20, 2008)(g) Nonqualified Deferred Compensation Plan (Incorporated
    by reference to the Companys Current Report on
    Form 8-K
    filed with the Commission on May 20, 2008)(h) 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, 2009, 2008 and 2007


F-3Consolidated Balance Sheets as of
    December 31, 2009 and 2008


F-4Consolidated Statements of Shareholders
    Equity for the years ended December 31, 2009, 2008 and
    2007


F-5Consolidated Statements of Cash Flows for the
    years ended December 31, 2009, 2008 and 2007


F-6Notes to Consolidated Financial Statements


F-7  F-1




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##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                DELOITTE &
    TOUCHE LLP
    F-2




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##### Table of Contents



CONSOLIDATED
    STATEMENTS OF OPERATIONS  For the Years Ended December 31,2009


2008(1)


2007(1)(In thousands except per share data)Net service revenues

$
416,688


$
475,092


$
397,584Reimbursable
    out-of-pocket
    revenues


135,224



203,489



171,234Total revenues


551,912



678,581



568,818Costs and expenses:Direct costs


210,586



247,436



204,161Reimbursable
    out-of-pocket
    costs


135,224



203,489



171,234Selling, general and administrative


144,659



155,577



125,744Depreciation and amortization


15,712



15,253



14,865Restructuring expenses


10,157







Total costs and expenses


516,338



621,755



516,004Income from operations


35,574



56,826



52,814Other income (expense):Interest income


579



760



1,466Interest expense


(14,403
)


(15,891
)


(17,547
)Write-off of deferred financing costs










(4,152
)Gain on extinguishment of debt


2,887







Other


4,034



(2,043
)


(4,816
)Total other income (expenses)


(6,903
)


(17,174
)


(25,049
)Income before income taxes


28,671



39,652



27,765Income taxes


13,434



16,509



11,755Net income

$
15,237


$
23,143


$
16,010Income per share data:Basic:Net income per share

$
1.03


$
1.57


$
1.10Weighted average shares


14,862



14,751



14,520Diluted:Net income per share

$
1.02


$
1.54


$
1.08Weighted average shares


14,992



14,993



14,889     (1)
    
    As adjusted due to the implementation of accounting guidance
    related to convertible debt. See Note 2: Accounting Changes.   F-3




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##### Table of Contents



CONSOLIDATED
    BALANCE SHEETS  As of December 31,

2009


2008(1)(In thousands except share data)ASSETSCurrent assets:Cash and cash equivalents

$
52,103


$
35,169Restricted cash


1,112



884Accounts receivable, net


125,287



157,971Deferred tax asset  current


8,147



14,077Other current assets


20,676



18,439Total current assets


207,325



226,540Property and equipment, net


53,539



44,578Goodwill


243,589



236,329Other finite-lived intangible assets, net


15,164



19,031Long-term deferred tax asset


12,716



1,346Other assets


7,390



27,064Total assets

$
539,723


$
554,888LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of obligations under capital leases

$
52


$
188Trade payables


14,928



19,015Advance billings


76,202



94,561Other accrued liabilities


59,667



44,181Total current liabilities


150,849



157,945Obligations under capital leases, less current portion


34



123Convertible notes


138,308



171,848Deferred income tax liabilities


7,508



4,424Non-current income taxes payable


1,872



2,123Other liabilities


5,105



5,801Total liabilities


303,676



342,264Commitments 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; 14,912,327 and 14,861,518 shares issued and
    14,889,275 and 14,838,466 outstanding at December 31, 2009
    and 2008, respectively


75



75Additional paid-in capital


180,534



180,020Retained earnings


33,736



18,499Accumulated other comprehensive income:Foreign currency translation adjustment


22,194



14,522Less: Cost of common stock held in treasury, 23,052 shares
    at December 31, 2009 and 2008, respectively


(492
)


(492
)Total shareholders equity


236,047



212,624Total liabilities and shareholders equity

$
539,723


$
554,888     (1)
    
    As adjusted due to the implementation of accounting guidance
    related to convertible debt. See Note 2: Accounting Changes.   F-4




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##### Table of Contents



CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY  AccumulatedCommon Stock


Common


Additional





Retained


Other


TotalNumber of


Stock


Paid-in


Treasury


Earnings


Comprehensive


Shareholders


ComprehensiveShares


Amount


Capital(1)


Stock


(Deficit)(1)


Income


Equity(1)


Income(1)(In thousands except share data)Balance at January 1, 2007


14,422,341


$
75


$
154,641


$
(492
)

$
(16,392
)

$
2,280


$
140,112Net income


















16,010







16,010



16,010Other comprehensive income:Foreign currency translation adjustment






















1,518



1,518



1,518Comprehensive income






























17,528Shares 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















24,740Adoption of new guidance related to tax uncertainties


















(4,262
)






(4,262
)Equity component of convertible notes(1)










36,412















36,412Balance at December 31, 2007


14,657,977


$
75


$
176,521


$
(492
)

$
(4,644
)

$
3,798


$
175,258Net income


















23,143







23,143



23,143Other comprehensive income:Foreign currency translation adjustment






















10,724



10,724



10,724Comprehensive income






























33,867Shares issued under stock plans


180,489







2,294















2,294Stock compensation expense










1,030















1,030Income tax benefit from exercise of stock options










175















175Balance at December 31, 2008


14,838,466


$
75


$
180,020


$
(492
)

$
18,499


$
14,522


$
212,624Net income


















15,237







15,237



15,237Other comprehensive income:Foreign currency translation adjustment






















7,672



7,672



7,672Comprehensive income






























22,909Share based compensation plans and other


50,809







815















815Repurchase of equity component of convertible notes










(204
)














(204
)Partial retirement of note hedges and warrants










(97
)














(97
)Balance at December 31, 2009


14,889,275


$
75


$
180,534


$
(492
)

$
33,736


$
22,194


$
236,047     (1)
    
    As adjusted due to the implementation of accounting guidance
    related to convertible debt. See Note 2: Accounting Changes.   F-5




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##### Table of Contents



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  For the Years Ended December 31,2009


2008(1)


2007(1)(In thousands)Cash flows from operating activitiesNet income

$
15,237


$
23,143


$
16,010Adjustments to reconcile net income to cash provided by
    operating activities:Depreciation and amortization


15,712



15,253



14,865Deferred income taxes


4,138



(6,745
)


(5,234
)Income tax benefit from stock option exercises


(2
)


(175
)


(188
)Compensation expense on stock grants


679



1,030



879Debt issue cost amortization


7,729



7,783



8,081Foreign currency exchange (gain) loss


(2,691
)


4,321



3,770Gain on extinguishment of debt


(2,887
)






Other


1,333



(1,564
)


172Changes in operating assets and liabilities, net of effects from
    acquisitions:Restricted cash


(82
)


(85
)


1,587Accounts receivable


37,786



(28,036
)


(16,138
)Other current assets


(1,344
)


(3,493
)


1,507Other assets


(31
)


(317
)


(486
)Trade payables


(4,395
)


1,010



2,632Advance billings


(22,401
)


19,613



18,814Accrued liabilities and other


5,508



5,318



14,712Net cash provided by operating activities


54,289



37,056



60,983Cash flows from investing activitiesProceeds from termination of foreign currency hedges


17,312







Acquisitions of property and equipment


(18,966
)


(27,097
)


(15,255
)Acquisitions of businesses, less cash acquired


(2,875
)


(18,053
)


2,154Other


32



(1,143
)


(722
)Net cash used in investing activities


(4,497
)


(46,293
)


(13,823
)Cash flows from financing activitiesProceeds from issuance of long-term debt






37,500



200,000Payments of long-term debt






(37,500
)


(199,500
)Repurchase of convertible notes


(36,463
)






Purchase of note hedges


(97
)






(42,880
)Proceeds from the issuance of warrants










24,740Proceeds from issuance of common stock


247



2,241



2,623Income tax benefit from stock option exercises


2



175



188Accounts payable  book overdraft


133



465



(22
)Payments on capital lease obligations


(228
)


(234
)


(196
)Debt issue costs


(482
)






(6,946
)Net cash provided by (used in) financing activities


(36,888
)


2,647



(21,993
)Effects of exchange rates on cash and cash equivalents


4,030



(3,753
)


428Net increase (decrease) in cash and cash equivalents


16,934



(10,343
)


25,595Cash and cash equivalentsBeginning of year


35,169



45,512



19,917End of year

$
52,103


$
35,169


$
45,512Supplemental disclosure of cash flow informationCash paid during the year for interest

$
7,312


$
8,087


$
10,107Cash paid during the year for income taxes

$
14,382


$
25,931


$
4,870Supplemental schedule of noncash investing and financing
    activitiesAcquisition of equipment under capital leases

$



$



$
173Accrued equipment purchases

$
(1,307
)

$
(1,090
)

$
(3,574
)Acquisitions of businesses:Fair value of assets acquired via cash

$
5,039


$
25,432


$
(2,154
)Fair value of liabilities assumed or incurred

$
(2,164
)

$
(7,379
)

$
Net cash payments/(inflows)

$
2,875


$
18,053


$
(2,154
)     (1)
    
    As adjusted due to the implementation of accounting guidance
    related to convertible debt. See Note 2: Accounting Changes.   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
      Foreign
    Currency Translation
    Cash
    and Cash Equivalents, Including Restricted Cash
    time-to-time
   F-7




---



##### Table of Contents



project-related
  Revenue
    Recognition
  percentage-of-completion) 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.      percentage-of-completion
   F-8




---



##### Table of Contents



Units-Based
          out-of-pocket out-of-pocket
  Concentration
    of Credit Risk
    Long-Lived
    Assets
   F-9




---



##### Table of Contents



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
          Marketing
    and Advertising Costs
    Investigator
    and Project Costs
  out-of-pocket out-of-pocket out-of-pocket out-of-pocket
  Net
    Income Per Share Data
   F-11




---



##### Table of Contents



Net
    Income Per Share Data
  2009


2008


2007(In thousands)Weighted average common shares outstanding


14,862



14,751



14,520Stock options and non-vested restricted shares


130



242



369Weighted average shares


14,992



14,993



14,889       Incremental SharesTotal Treasury

Shares Due to the

Issued by theConvertible Notes



Method Incremental

Company under Note

Company UponShare Price

Shares

Warrant Shares

Shares(1)

Hedges(2)

Conversion(2)$40.00


















$45.00


















$50.00


148,094







148,094



(148,094
)


$55.00


429,003







429,003



(429,003
)


$60.00


663,094







663,094



(663,094
)


$65.00


861,171



188,457



1,049,628



(861,171
)


188,457$70.00


1,030,951



406,288



1,437,240



(1,030,951
)


406,288     (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-12




---



##### Table of Contents



Stock
    Options
    Restricted/Unrestricted
    Stock
   F-13




---



##### Table of Contents



Use of
    Estimates
    Subsequent
    Events
    New
    Accounting Pronouncements
  2009-13,
  2.
    ACCOUNTING
    CHANGES:   F-14




---



##### Table of Contents



Balance
    Sheet
  As of December 31, 2008As Reported

Adjustments

As AdjustedBefore

due to

AfterASC 470

ASC 470

ASC 470Other assets

$
27,735


$
(671
)

$
27,064Total assets


555,559



(671
)


554,888Convertible notes


200,000



(28,152
)


171,848Total liabilities


370,416



(28,152
)


342,264Additional paid in capital


143,608



36,412



180,020Retained earnings


27,430



(8,931
)


18,499Total shareholders equity


185,143



27,481



212,624Total liabilities and shareholders equity


555,559



(671
)


554,888   Statement
    of Operations
  For the Year Ended December 31, 2008As Reported

Adjustments

As AdjustedBefore

due to

AfterASC 470

ASC 470

ASC 470Interest expense

$
(9,637
)

$
(6,254
)

$
(15,891
)Total other income (expense)


(10,920
)


(6,254
)


(17,174
)Income before taxes


45,906



(6,254
)


39,652Net income


29,397



(6,254
)


23,143Earnings per shareBasic


1.99



(0.42
)


1.57Diluted


1.96



(0.42
)


1.54Comprehensive income


40,121



(6,254
)


33,867   Statement
    of Operations
  For the Year Ended December 31, 2007As Reported

Adjustments

As AdjustedBefore

due to

AfterASC 470

ASC 470

ASC 470Interest expense

$
(14,870
)

$
(2,677
)

$
(17,547
)Total other income/(expense)


(22,372
)


(2,677
)


(25,049
)Income before taxes


30,442



(2,677
)


27,765Net income


18,687



(2,677
)


16,010Earnings per shareBasic


1.29



(0.19
)


1.10Diluted


1.26



(0.18
)


1.08Comprehensive income


20,205



(2,677
)


17,528  F-15




---



##### Table of Contents



3.
    FAIR
    VALUE OF FINANCIAL INSTRUMENTS:    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)Money Market Accounts

$
16,627


$
16,627


$



$
     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


$



$
   over-the-counter
    4.
    ACCOUNTS
    RECEIVABLE:    December 31,2009


2008(In thousands)Billed (net of allowance)

$
79,207


$
94,860Unbilled


46,080



63,111$
125,287


$
157,971  F-16




---



##### Table of Contents



Balance 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

$
3,067Invoice write-offs


(1,317
)Additional expense


847Foreign currency adjustments


86Balance at December 31, 2009

$
2,683     5.
    PROPERTY
    AND EQUIPMENT:    December 31,2009


2008(In thousands)Furnishings, equipment and other

$
95,786


$
85,628Construction in process


18,395



9,862Equipment under capital leases


467



1,616Less: accumulated depreciation and amortization


(61,109
)


(52,528
)Property and equipment, net

$
53,539


$
44,578    F-17




---



##### Table of Contents



6.
    GOODWILL
    AND OTHER INTANGIBLE ASSETS:  Non-amortizable
  Early Stage


Late Stage


Goodwill Total(In thousands)Balance at December 31, 2007

$
4,083


$
226,085


$
230,168Additional amounts acquired


9,073







9,073Additional adjustments






81



81Tax benefit to reduce goodwill






(338
)


(338
)Foreign currency fluctuations


(1,609
)


(1,046
)


(2,655
)Balance at December 31, 2008

$
11,547


$
224,782


$
236,329Contingent consideration paid


5,039







5,039Foreign currency fluctuations


1,727



494



2,221Balance at December 31, 2009

$
18,313


$
225,276


$
243,589       As of December 31,


As of December 31,2009


2008(In thousands)Goodwill

$
243,589


$
236,329Amortizable intangible assets:Carrying amount:Customer relationships

$
22,169


$
22,007Non-compete agreements






460Completed technology


2,600



2,600Backlog


6,200



6,200Internally developed software(a)


17,963



17,427Total carrying amount

$
48,932


$
48,694Accumulated Amortization:Customer relationships

$
(8,098
)

$
(5,003
)Non-compete agreements






(460
)Completed technology


(1,771
)


(1,252
)Backlog


(5,936
)


(5,521
)Internally developed software(a)


(16,187
)


(15,569
)Total accumulated amortization

$
(31,992
)

$
(27,805
)Net amortizable intangible assets

$
16,940


$
20,889Total goodwill and intangible assets

$
260,529


$
257,218     (a)
    
    Internally developed software is included in Other Assets in the
    Companys Consolidated Balance Sheets. F-18




---



##### Table of Contents



(a)InternallyCustomer


Completed





DevelopedRelationships


Technology


Backlog


Software(In thousands)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


$
1,858Additional amounts acquired














536Foreign currency fluctuations


662











2009 amortization


(3,595
)


(519
)


(415
)


(618
)Balance at December 31, 2009

$
14,071


$
829


$
264


$
1,776     (a)
    
    Internally developed software is included in Other Assets in the
    Companys Consolidated Balance Sheets.            (In thousands)2010:

$
3,9382011:


3,3512012:


2,2612013:


1,4452014:


906Thereafter:


5,039Total

$
16,940    F-19




---



##### Table of Contents



7.
    OTHER
    ACCRUED LIABILITIES:    December 31,2009


2008(In thousands)Accrued compensation and related payroll withholdings and taxes

$
22,428


$
16,640Income tax payable


4,369



2,895Interest payable


2,390



3,113Other


30,480



21,533$
59,667


$
44,181   8.
    DEBT:               F-20




---



##### Table of Contents



Note 2-Accounting
      As of December 31,


As of December 31,2009


2008(In thousands)Equity component, carrying amount

$
36,207


$
36,412Principal component, at par

$
154,500


$
200,000Unamortized discount


(16,192
)


(28,152
)Principal component, carrying amount

$
138,308


$
171,848       For the Years Ended December 31,2009


2008


2007(In thousands)Interest cost at coupon rate

$
6,096


$
6,750


$
3,094Discount amortization


6,456



6,631



2,873Total interest expense recognized

$
12,552


$
13,381


$
5,967    F-21




---



##### Table of Contents



9.
    EMPLOYEE
    BENEFIT PLANS:  401(k)
    Plan
    Stock
    Option and Stock Incentive Plan
        12-month
     F-22




---



##### Table of Contents



2009


2008


2007Expected dividend yield


0
%


0
%


0
%Risk-free interest rate


2.2
%


3.6
%


4.7
%Expected volatility


70.9
%


52.0
%


41.9
%Expected holding period


3.2 years



5.0 years



4.5 years    F-23




---



##### Table of Contents



WeightedWeighted


Average


AggregateAverage


Remaining


IntrinsicShares


Exercise Price


Contractual Life


Value($ in thousands)Options 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



17.35Granted


54,250



12.37Canceled


(53,275
)


25.79Exercised


(35,777
)


6.95Options outstanding at Dec. 31, 2009


379,875



16.44



5.01


$
2,328Exercisable at Dec. 31, 2009


336,425



15.33



4.53


$
2,239      F-24




---



##### Table of Contents



Weighted Average


WeightedOutstanding at


Remaining


AverageRange of Exercise Price

December 31, 2009


Contractual Life


Exercise Price$ 3.46 - $ 6.92


44,560



3.56


$
5.92$ 6.93 - $10.38


146,290



4.49



8.40$10.39 - $13.83


33,750



5.10



11.81$13.84 - $17.29


15,500



7.18



16.21$17.30 - $20.75


42,775



1.63



19.82$20.76 - $24.21


8,000



9.11



22.28$24.22 - $27.67










$27.68 - $31.13


12,000



6.98



30.06$31.14 - $34.59


37,000



6.57



32.76$34.60 - $60.00


40,000



8.37



37.60379,875



5.01



16.44     WeightedExercisable at


AverageRange of Exercise Price

December 31, 2009


Exercise Price$ 3.46 - $ 6.92


44,560


$
5.92$ 6.93 - $10.38


146,290



8.40$10.39 - $13.83


24,000



11.56$13.84 - $17.29


5,000



16.95$17.30 - $20.75


42,775



19.82$20.76 - $24.21


5,600



22.45$24.22 - $27.67






$27.68 - $31.13


7,200



30.06$31.14 - $34.59


37,000



32.76$34.60 - $60.00


24,000



37.48336,425


$
15.33     Restricted/Unrestricted
    Stock
   F-25




---



##### Table of Contents



Year Ended December 31,2009


2008


2007(In thousands)Restricted stock

$
315


$
244


$
19Unrestricted stock


35







Total stock based compensation

$
350


$
244


$
19       SharesOutstanding 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


8,950Granted


86,250Vested


(6,084
)Canceled


(36,800
)Outstanding at December 31, 2009


52,316     10.
    RESTRUCTURING
    COSTS:     F-26




---



##### Table of Contents



11.
    COMMITMENTS
    AND CONTINGENCIES:  Leases:
    Capital


OperatingLeases


Leases(In thousands)2010

$
55


$
18,4762011


35



15,6982012






13,0382013






9,2952014






7,400Thereafter






25,091Total minimum lease payments


90


$
88,998Amounts representing interest


(4
)Present value of net minimum lease payments


86Current portion


52Obligations under capital leases, less current portion

$
34       Protective
    Compensation and Benefit Agreements:
   F-27




---



##### Table of Contents



Other:
    Legal
    Proceedings:
    Anti-takeover
    Provisions:
    12.
    INCOME
    TAXES:      2009


2008


2007(In thousands)Current:Federal

$
(4,519
)

$
2,908


$
1,946State and local


(586
)


324



510Foreign


14,401



19,702



14,195Subtotal


9,296



22,934



16,651Deferred:Federal


4,131



(3,394
)


(3,091
)State and local


164



(828
)


(755
)Foreign


(157
)


(2,523
)


(1,388
)Subtotal


4,138



(6,745
)


(5,234
)Benefit applied to reduce goodwill






320



338Total provision

$
13,434


$
16,509


$
11,755  F-28




---



##### Table of Contents



2009


2008


2007(In thousands)United States

$
(19,124
)

$
4,406


$
(2,157
)Foreign


47,795



35,246



29,922Income before income taxes

$
28,671


$
39,652


$
27,765     2009


2008


2007Income tax expense at the U.S. Federal statutory rate


34.0
%


34.0
%


34.0
%Effects of foreign taxes, net of foreign tax credits and
    deductions


(6.5
)


2.0



3.3State and local income taxes, net of Federal benefit


(1.4
)


(1.8
)


(0.7
)Original issue discount-Convertible Notes


(0.9
)


0.1



0.1Effects of cross currency hedge unwind


14.2



0.0



0.0Effects of deemed foreign dividend


7.8



8.3



2.6Other


(0.4
)


(1.0
)


3.0Total


46.8
%


41.6
%


42.3
%    F-29




---



##### Table of Contents



2009


2008(In thousands)Deferred tax assets:Compensation and employee benefits

$
1,346


$
3,221Accrued expenses and other future deductible items


5,412



4,833Foreign operating loss carryforward


17,965



17,256State and local operating loss carryforward


2,317



1,616Federal operating loss carryforward


2,873



737Deferred state income taxes


182



279Contributions carryforward


68



67Capital loss carryforward


18



18Foreign tax credit carryforward


10,552



3,678Unrealized foreign exchange losses


3,377



533Stock option expense


455



Other


3,141



2,956Total deferred tax assets


47,706



35,194Deferred tax liabilities:Intangible assets


(1,673
)


(1,247
)Depreciation and software costs


(3,930
)


(521
)Open market repurchase


(995
)


Total deferred tax liability


(6,598
)


(1,768
)Valuation allowance


(28,080
)


(22,368
)Total net deferred tax asset/(liability)

$
13,028


$
11,058            F-30




---



##### Table of Contents



2009


2008


2007(In thousands)Beginning balance

$
22,368


$
19,341


$
18,118Additions charged to expense


1,025



9,080



3,050Additions attributable to acquisitions


6,874







Reductions from utilization, reassessments and expirations


(2,187
)


(6,053
)


(1,827
)Ending balance

$
28,080


$
22,368


$
19,341         2009


2008


2007(In thousands)Beginning Balance

$
1,764


$
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


451



384



1,663Gross decreases  tax positions in current period










(71
)Settlements










Lapse of statute of limitations


(447
)


(1,550
)


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

$
1,768


$
1,764


$
5,447          F-31




---



##### Table of Contents



Jurisdiction

Open YearsUnited States


2006 - 2009Germany


2007 - 2009United Kingdom


2006 - 2009Netherlands


2008 - 2009     13.
    ACQUISITION:    Acquisition
    of DecisionLine Clinical Research Corporation and related
    company:
     F-32




---



##### Table of Contents



(In thousands at theprevailing exchange rateat June 2, 2008,except contingentconsideration recorded at appropriatePurchase Price Allocation

exchange rate)Cash

$
1,562Accounts receivable


5,922Other current assets


1,398Property, plant and equipment


2,913Other long-term assets


1,196Intangible assets


4,930Goodwill


14,112Total assets acquired


32,033Advance billings


(3,503
)Other current liabilities


(2,956
)Other long-term liabilities


(898
)Total liabilities assumed


(7,357
)Net assets acquired

$
24,676       Twelve Months EndedDecember 31, 2008(1)(In thousands, except per share data)Net service revenues

$
485,778Income before income taxes

$
41,866Net income

$
24,302Net income per diluted share

$
1.62Weighted average shares


14,993     (1)
    
    As adjusted due to the implementation of accounting guidance
    related to the convertible debt. See Note 2: Accounting
    Changes.      14.
    INVESTMENTS:   F-33




---



##### Table of Contents



15.
    SEGMENT
    INFORMATION:      Early


Late


SupportStage


Stage


& Other


Total(In thousands)Twelve months ended December 31, 2009Net service revenues

$
37,473


$
370,178


$
9,037


$
416,688Reimbursable
    out-of-pocket
    revenues






135,224







135,224Total revenues

$
37,473


$
505,402


$
9,037


$
551,912Operating income (loss)

$
4,187


$
81,109


$
(49,722
)

$
35,574Total assets

$
48,070


$
406,832


$
84,821
(a)

$
539,723   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


$
423,785


$
84,672
(a)

$
554,888
(c)   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
)

$
52,814     (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)
    
    As adjusted due to the implementation of accounting guidance
    related to the convertible debt. See Note 2: Accounting
    Changes. F-34




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##### Table of Contents



For the Years Ended December 31,Net Service Revenues

2009


2008


2007(In thousands)North American Region:United States

$
179,700


$
214,935


$
196,588Other


21,166



14,411



1,654$
200,866


$
229,346


$
198,242European Region:Germany

$
40,475


$
56,661


$
41,822United Kingdom


37,792



42,303



44,145Other


79,362



90,564



79,228$
157,629


$
189,528


$
165,195Latin American Region(1):

$
40,829


$
38,996


$
20,784Asia/Pacific Region:

$
17,364


$
17,222


$
13,363Total Net Service Revenues

$
416,688


$
475,092


$
397,584     (1)
    
    Latin American region includes Mexico  For the Years EndedDecember 31,Identifiable Long-Lived Assets

2009


2008(In thousands)North American Region:United States

$
41,711


$
33,119Other


2,414



2,275$
44,125


$
35,394European Region:Germany

$
743


$
780United Kingdom


3,606



3,344Other


3,107



3,332$
7,456


$
7,456Latin American Region:(1)

$
2,635


$
2,507Asia/Pacific Region:

$
1,099


$
1,079Total long-lived assets

$
55,315


$
46,436     (1)
    
    Latin American region includes Mexico     F-35




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##### Table of Contents



16.
    QUARTERLY
    FINANCIAL DATA (unaudited):    Quarter

First


Second


Third


Fourth(In thousands, except per share data)2009Net service revenues

$
108,103


$
107,351


$
104,588


$
96,646Gross profit


50,126



52,147



55,674



48,155Income from operations


8,137



6,978



15,533



4,926Net income


887



3,193



8,826



2,331Net income per diluted share


0.06



0.21



0.59



0.16Net income per basic share


0.06



0.22



0.59



0.16   Quarter

First


Second


Third


Fourth2008Net 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(1)


4,104



6,303



9,381



3,355Net income per diluted share(1)


0.27



0.42



0.62



0.22Net income per basic share(1)


0.28



0.43



0.64



0.23     (1)
    
    As adjusted due to the implementation of accounting guidance
    related to convertible debt. See Note 2: Accounting Changes. 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, 2010*Christopher
    C. Bergen

Executive Vice President and
    Chief Administrative Officer

March 16, 2010/s/  Keith
    A. CheesmanKeith
    A. Cheesman

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

March 16, 2010*G.
    Steven Geis, Ph.D., M.D.

Director

March 16, 2010*Donald
    C. Harrison, M.D.

Director

March 16, 2010*Timothy
    E. Johnson, Ph.D.

Director

March 16, 2010*Frederick
    A. Russ, Ph.D.

Director

March 16, 2010*Robert
    R. Buck

Director

March 16, 2010*Timothy
    M. Mooney

Director

March 16, 2010*/s/  Jarrod
    B. PontiusJarrod
    B. Pontius

as Attorney In-Fact

March 16, 2010




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description of Exhibit

Filing Status2
.1

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

*2
.2

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

*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 14, 2009 between the
    Company and  American Stock Transfer & Trust Company LLC,
    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

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

*10
.2

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

*10
.3

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

*10
.4

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

*10
.5

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

*10
.6

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

*10
.7

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

*10
.8

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
.9

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

*10
.10

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

*10
.11

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

*10
.12

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

*10
.13

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

*10
.14

Credit Agreement dated as of March 15, 2010 by and among
    the Company, various Lenders and JPMorgan Chase Bank, N.A., as
    Administrative Agent

Filed herewith10
.15

Guaranty dated as of March 15, 2010 by and among various
    Subsidiaries of the Company in favor of JPMorgan Chase Bank,
    N.A., as Administrative Agent

Filed herewith10
.16

Pledge and Security Agreement dated as of March 15, 2010 by
    and among the Company, various Subsidiaries of the Company and
    JPMorgan Chase Bank. N.A., as Administrative Agent

Filed herewith




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##### Table of Contents



ExhibitNumber

Description of Exhibit

Filing Status10
.17

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) 2007 Stock Incentive Plan

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

*(f) Annual Incentive Plan

*(g) Nonqualified Deferred Compensation Plan

*(h) 2003 Directors Compensation Plan

*12
.1

Computation of Ratio of Earnings to Fixed Charges

Filed herewith14


Code of Ethics

Available on
    the Companys
    website21


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