##### 









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


|                                                                                         |  | 
|---------------------------------------------------------------------------------------- |  | 
|ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|                                                                                        
|For the fiscal year ended December 31, 2004                                             

Commission file number 000-23520


Quintiles Transnational Corp.


(Exact name of registrant as specified in its charter)


|                                        |  |                                        
|--------------------------------------- |  | ---------------------------------------
|North Carolina                          |  | 56-1714315                             
|(State of incorporation)                |  | (I.R.S. Employer Identification Number)
|                                       
|4709 Creekstone Drive, Suite 200        |  |                                        
|Durham, North Carolina                  |  | 27703-8411                             
|(Address of principal executive office) |  | (Zip Code)                             

Registrants telephone number, including area code:


(919) 998-2000


Securities registered pursuant to Section 12(b) of the
Act:


None.


Securities registered pursuant to Section 12(g) of the
Act:


None.


þ o


þ


o þ














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QUINTILES TRANSNATIONAL CORP.


Form 10-K Annual Report


INDEX


|         |  |                                                                                                                  |  |      |     | 
|-------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|         |  |                                                                                                                  |  | Page |    
|         |  |                                                                                                                  |  |      |    
|PART I  
|Item 1.  |  | Business                                                                                                         |  |      | 2   | 
|Item 2.  |  | Properties                                                                                                       |  |      | 19  | 
|Item 3.  |  | Legal Proceedings                                                                                                |  |      | 19  | 
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                              |  |      | 21  | 
|        
|PART II 
|Item 5.  |  | Market for Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities |  |      | 21  | 
|Item 6.  |  | Selected Consolidated Financial Data                                                                             |  |      | 22  | 
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition
    and Results of Operations                        |  |      | 23  | 
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                                                       |  |      | 56  | 
|Item 8.  |  | Financial Statements and Supplementary Data                                                                      |  |      | 57  | 
|Item 9.  |  | Changes In and Disagreements With Accountants on Accounting and
    Financial Disclosure                         |  |      | 124 | 
|Item 9A. |  | Controls and Procedures                                                                                          |  |      | 124 | 
|Item 9B. |  | Other Information                                                                                                |  |      | 124 | 
|        
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                                               |  |      | 125 | 
|Item 11. |  | Executive Compensation                                                                                           |  |      | 129 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management
    and Related Stockholder Matters               |  |      | 140 | 
|Item 13. |  | Certain Relationships and Related Transactions                                                                   |  |      | 146 | 
|Item 14. |  | Principal Accountant Fees and Services                                                                           |  |      | 147 | 
|        
|PART IV 
|Item 15. |  | Exhibits, Financial Statement Schedules                                                                          |  |      | 149 | 

1



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PART I








|        |         
|------- | --------
|Item 1. | Business

General






Product Development Group.


2



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Commercial Services Group.


PharmaBio Development Group.


Pharma Services Transaction




Services




3



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Product Development Offerings






| |   |                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Preclinical, which involves testing to identify, quantify and
    evaluate biological activity and safety;                                                                        
|
| |  | Phase I, which involves determining how a drug is processed
    by the body and the duration of the drugs actions on the
    body;                                               
|
| |  | Phase II, which involves controlled testing of a drug to
    determine the safe dosage range of a drug and a broader safety
    profile;                                          
|
| |  | Phase IIIa, which involves extensive testing to confirm the
    effectiveness and safety of a drug;                                                                               
|
| |  | Phase IIIb, which involves conducting additional studies
    following submission to the FDA and/or foreign regulatory
    authorities and agencies; and                          
|
| |  | Phase IV, which involves conducting additional studies to
    further evaluate the effectiveness, side effects and cost
    effectiveness of a drug following regulatory approval.



Early Development and Laboratory Services


Preclinical Services.


Pharmaceutical Services.


4



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Clinical Trial Services.


Phase I Services.


Centralized Clinical Trial Laboratories.


Clinical Development Services


Clinical Trial Services.








| |                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Study Design. We assist our customers in preparing
    the study protocol and designing case report forms, or CRFs. The
    study protocol defines the medical issues to be examined, the
    number of patients required to produce statistically valid
    results, the period of time over which they must be tracked, the
    frequency and dosage of drug administration and the study
    procedures.
|
| | Investigator Recruitment. During clinical trials,
    the drug is administered to patients by physicians, referred to
    as investigators, at hospitals, clinics or other sites. We have
    access to several thousand investigators who conduct our
    clinical trials worldwide.                                                                                                                      
|
| | Patient Recruitment. We assist our customers in
    recruiting patients to participate in clinical trials through
    investigator relationships, media advertising, use of Web-based
    techniques and other methods. We also help to ensure patients
    are retained for the duration of the studies.                                                                                                  
|
| | Study Monitoring. We provide study monitoring
    services which include investigational site initiation, patient
    enrollment assistance and data collection and clarification.
    Site visits help to assure                                                                                                                                                                                          

5



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| |                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the quality of the data, which are gathered according to good
    clinical practice, or GCP, and International Conference on
    Harmonization, or ICH, regulations and guidelines, and to meet
    the sponsors and regulatory agencies requirements
    according to the study protocol.                                                                                                                
|
| | Clinical Data Management and Biostatistical
    Services. We have extensive experience in the creation
    and statistical analysis of scientific databases for all phases
    of the drug development process. These databases include
    customized databases to meet customer-specific formats,
    integrated databases to support NDA submissions and databases in
    accordance with ICH guidelines.

Regulatory Affairs Services.


Late Phase Clinical Studies.


Medical Device Services.


Commercial Services Offerings




Commercialization Offerings




Contract Sales.


6



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Health Management Services.


Marketing Services.


Internet-Based Sales and Marketing Services.


Training.


Quintiles Medical Communications and Consulting


Strategic Marketing Services.


7



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Healthcare Policy Research and Consulting.


Regulatory and Compliance Consulting.


Strategic Medical Communications.


PharmaBio Development Offerings










| |   |                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Focusing primarily on compounds that already have regulatory
    approval or are in the later stages of clinical development,
    thus reducing regulatory risk;                                                                                                                          
|
| |  | Structuring all transactions in a prudent manner which, in some
    instances, may include structuring financial commitments in the
    form of milestone payments, whereby payments are made based on
    the successful completion of different stages of the development
    cycle; and
|
| |  | In some instances, requiring an option to reduce our financial
    commitment if the drug sponsor does not invest a certain minimum
    amount on promotion of the drug.                                                                                                                  

8



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Transaction Models






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Risk-Based Commercialization Arrangements. Risk-based
    commercialization arrangements include transactions in which we
    provide commercialization services in exchange for fees and/or
    product royalty rights. In these transactions, we receive from
    our customers the right to royalties on the sales of the
    products covered by the agreements. We use a variety of contract
    structures in our risk-based commercialization transactions.
    Certain transactions may include contractual minimum and/or
    maximum royalty amounts. In other instances, we may have no
    guaranteed minimum royalty. Regardless of the structure, we
    always seek to earn financial returns commensurate with the
    risks presented by the transaction.
|
| |  | Strategic Investments. The PharmaBio Development Group
    makes a variety of strategic investments, including direct
    investments in both marketable and non-marketable equities, as
    well as debt, and indirect investments through such vehicles as
    venture capital funds. In some cases, PharmaBio Development may
    make investments in connection with risk-based commercialization
    agreements. As of December 31, 2004, the PharmaBio
    Development Group had a total of $80.8 million in such
    investments, including $24.4 million of investments in
    marketable equities and $56.4 million of investments in
    non-marketable equity securities and loans.                                                                            



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In addition, the PharmaBio Development Group occasionally
    acquires the rights to market certain pharmaceutical products.
    In 2004, we sold the assets relating to our Bioglan
    Pharmaceuticals business, which primarily included the rights to
    certain dermatology products marketed in the United States,
    including Solaraze® and ADOXA®. We acquired the assets
    relating to our Bioglan business in 2001 and 2002 for a total
    consideration of $54.6 million and sold the Bioglan
    operations in 2004 for net proceeds before taxes of
    $170.3 million. The PharmaBio Development Group continues
    to hold the rights to several products in Europe, via licensing
    or distribution agreements, which involve a variety of up-front
    or ongoing payments to the licensors. In these arrangements,
    third parties manufacture the products for us and Innovex sells
    the products. The PharmaBio Development Group recognizes the
    revenues from the sales of these pharmaceutical products.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Risk-Based Development Services. In these types of
    arrangements we provide some or all of the clinical development
    services costs on behalf of a partner in exchange for milestone
    payments and/or royalty rights in the product. Our September
    2004 transaction with Solvay Pharmaceuticals B.V., or Solvay, is
    an example of such an arrangement and is structured to mitigate
    our risk through the ability to earn milestone payments from our
    work on multiple projects.

Recent Strategic Alliances






| |   |                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In January 2002, we entered into a series of agreements with Kos
    Pharmaceuticals, Inc., or Kos, to commercialize in the United
    States Kos treatments for cholesterol disorders,
    Advicor® and Niaspan®. We provided a dedicated sales
    force at our own expense who, in combination with Kos

9



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | sales force, commercialized Advicor® and Niaspan® for
    two years. In return, we received warrants to purchase shares of
    Kos common stock at an agreed price. We will receive
    commissions, subject to a minimum and maximum amount over the
    life of the agreement, based on net sales of the product from
    2002 through 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | During the second quarter of 2002, we finalized an agreement
    with a large pharmaceutical customer to market pharmaceutical
    products in Belgium, Germany and Italy. We will provide, at our
    own expense, sales and marketing resources over the eight-year
    life of the agreement, in return for which the customer will pay
    us royalties on product sales in excess of certain baselines. In
    the first quarter of 2003 and the third quarter of 2003, the
    agreements in Germany and Belgium, respectively, were terminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | In July 2002, we entered into an agreement with Eli Lilly and
    Company, or Lilly, to support its commercialization efforts for
    Cymbaltatm
    in the United States. In return for providing sales
    representatives and making marketing and milestone payments to
    Lilly totaling $115.0 million, we receive an 8.25%
    percent-of-sales royalty over the five-year service period
    followed by a three percent royalty over the subsequent three
    years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | In July 2002, we entered into a series of agreements with
    Columbia Laboratories, Inc., or Columbia, to assist them in the
    United States commercialization of the following womens
    health products:
    Prochievetm
    8%,
    Prochievetm
    4%, Advantage-S® and
    RepHreshtm
    Vaginal Gel. Under the terms of these agreements, we have paid
    Columbia an aggregate of $4.5 million in exchange for
    royalties on the sales of the four Columbia products for a
    five-year period beginning in the first quarter of 2003. In
    addition, we will provide to Columbia, at Columbias
    expense on a fee-for-service basis, a sales force to
    commercialize the products. We also purchased shares of Columbia
    common stock as part of these arrangements. During January 2004,
    we restructured the sales force agreement to allow for an
    accelerated transfer of responsibility to Columbia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | In December 2002, we entered into an agreement with a large
    pharmaceutical customer to market two products in Belgium. Under
    the terms of the agreement, we acquired the marketing and
    distribution rights to one of the products and entered into a
    six-year distribution agreement for the other product.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | In March 2003, we entered into an additional agreement with
    Columbia to assist them in the commercialization of
    Strianttm,
    Columbias testosterone buccal bioadhesive product, in the
    United States. We have paid Columbia an aggregate of
    $15.0 million in exchange for royalties on the sales of
    Strianttm
    for a seven-year period beginning in the third quarter of 2003.
    In addition we will provide to Columbia, at Columbias
    expense on a fee-for-service basis, a sales force to
    commercialize the products. During January 2004, we restructured
    the sales force agreement to allow for an accelerated transfer
    of responsibility to Columbia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | In February 2004, we entered into an agreement with a large
    pharmaceutical customer to provide services in connection with
    the customers development and United States launch of a
    Phase III product, or the new product, which is related to
    one of the customers currently marketed pharmaceutical
    products, or the existing product. The existing product has
    historically achieved multi-hundred million dollars in sales
    annually. Under the agreement, we will provide up to
    $90.0 million of development and commercialization services
    for the new and existing products. Our customer has agreed that
    at least $67.5 million of those services will be performed
    by our affiliates, at agreed upon rates. The customer, though,
    may direct us to use third parties to perform up to
    $22.5 million of the $90.0 million of services. The
    agreement contains quarterly limits on our service obligations
    with a maximum of $10.0 million of services in any quarter.
    Without revising the overall limits of the agreement, the
    agreement was amended to allow for $11.0 million of
    spending in the second quarter of 2004 and $13.0 million in
    each of the third and fourth quarters of 2004. Our service
    obligations are anticipated to occur through the end of 2006,
    but may run longer depending on the customers actual use
    of services and when, and if, FDA approval of the new product
    occurs. Until the FDA approves the new product, we are obligated
    to provide no more than

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | $57.5 million in services. In return for performing our
    obligations, we will receive (1) beginning in the first
    quarter of 2005, a low, single-digit royalty on United States
    net sales of the existing product and (2) beginning on the
    United States launch of the new product, a declining tiered
    royalty (beginning in the low teens) on United States net sales
    of the new product. Our royalty period under the agreement lasts
    for approximately 9 years; however, the agreement limits
    the amount of royalties we receive each year and also caps the
    aggregate amount of royalties we can receive under the agreement
    at $180.0 million. We will also receive a
    $20.0 million payment from the customer upon the United
    States launch of the new product. If the new product is not
    approved by the FDA or a significant delay occurs in its
    approval process, we may terminate our remaining service
    obligations and continue to receive the royalty on the existing
    product subject to a return ceiling of no less than 8%. The
    agreement also provides for royalty term extensions, in the
    event of certain other specified unfavorable circumstances such
    as product shortages or recalls. The customer may terminate the
    agreement at any time subject to the customers payment to
    us of the then-present value of its remaining expected royalties.
|
| |  | In September 2004, we entered into an agreement with Solvay to
    provide clinical development services valued at
    $25.0 million for ten Solvay clinical Phase II
    projects, thereby sharing the costs and uncertainties of the
    outcomes for these projects. The agreement specifies project and
    annual spending limits. Spending beneath these limits may be
    carried over to one of the other ten projects or another year,
    but may not exceed the overall $25.0 million limit. In
    return, we will receive a milestone payment from Solvay for each
    of the compounds reaching positive clinical proof-of-principle
    and moving into further development. The agreement terminates
    upon the final determination of the successful or unsuccessful
    completion of the ten projects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | In December 2004, we entered into an agreement with Cell
    Therapeutics, Inc., or Cell Therapeutics, involving its cancer
    therapy, TRISENOX® (arsenic trioxide). Under the agreement,
    we paid Cell Therapeutics $25.0 million in cash and will
    make available $5.0 million in services. In return, Cell
    Therapeutics will pay us royalties based on a percentage of net
    sales of TRISENOX® in the United States and certain
    European countries over a five year period beginning
    January 1, 2006 and provide us with a security interest in
    Cell Therapeutics TRISENOX® assets related to the
    royalty payment obligations. The royalty payments from Cell
    Therapeutics are subject to minimum and maximum amounts of
    $53.0 million and $69.0 million, respectively, over
    the life of the agreement. Under certain termination events,
    including product divestiture by Cell Therapeutics, the minimum
    amounts due from Cell Therapeutics may be adjusted to ensure we
    maintain a certain internal rate of return.                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | In December 2004, we entered into a co-promotion agreement with
    Yamanouchi Pharma Limited, or Yamanouchi, to support Yamanouchi
    in its commercialization efforts for
    Vesicaretm
    in the United Kingdom.
    Vesicaretm,
    or solifenacin, is currently approved for the treatment of
    overactive bladder. Under the terms of the agreement, we will
    provide, at our expense, a £500,000 (approximately
    $963,000) marketing contribution and a sales force to supplement
    Yamanouchis sales force for three years. Our sales force
    will promote
    Vesicaretm
    in its primary, or P1, position within sales calls and will be
    required to make a minimum number of sales calls each year. In
    return for the P1 position for
    Vesicaretm,
    Yamanouchi will pay us a royalty based on the net sales of
    Vesicaretm
    over six years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



Informatics Offerings




11



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Customers and Marketing








Competition




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| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | previous experience,                                                                                                  
|
| |  | medical and scientific expertise in specific therapeutic areas,                                                       
|
| |  | the quality of contract research,                                                                                     
|
| |  | speed to completion,                                                                                                  
|
| |  | the ability to organize and manage large-scale trials on a
    global basis,                                          
|
| |  | the ability to manage large and complex medical databases,                                                            
|
| |  | the ability to provide statistical and regulatory services,                                                           
|
| |  | the ability to recruit investigators,                                                                                 
|
| |  | the ability to deploy and integrate information technology
    systems to improve the efficiency of contract research,
|
| |  | an international presence with strategically located
    facilities and                                               
|
| |  | financial viability and price.                                                                                        









Employees




13



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Backlog Reporting








Potential Liability






14



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Government Regulation




15



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| |   |                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | complying with specific regulations governing the selection of
    qualified investigators,                                                                                       
|
| |  | obtaining specific written commitments from the investigators,                                                                                                                    
|
| |  | ensuring the protection of human subjects by verifying that
    Institutional Review Board or independent Ethics Committee
    approval and patient informed consent are obtained,
|
| |  | instructing investigators to maintain records and reports,                                                                                                                        
|
| |  | verifying drug or device accountability,                                                                                                                                          
|
| |  | reporting of adverse events,                                                                                                                                                      
|
| |  | adequate monitoring of the study for compliance with GCP
    requirements and                                                                                                     
|
| |  | permitting appropriate regulatory authorities access to data for
    their review.                                                                                                









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17



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per se


18



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Available Information


www.quintiles.com




|        |           
|------- | ----------
|Item 2. | Properties





|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings



19



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20



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|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



PART II




|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Market Prices




|                                        |  |      |        |  |     |   |        | 
|--------------------------------------- |  | ---- | ------ |  | --- | - | ------ | 
|Calendar Period                         |  | High |        |  | Low |  
|                                        |  |      |        |  |     |  
|Quarter ended March 31, 2003            |  | $    | 13.210 |  |     | $ | 11.990 | 
|Quarter ended June 30, 2003             |  | $    | 14.250 |  |     | $ | 12.190 | 
|July 1, 2003 through September 25, 2003 |  | $    | 14.490 |  |     | $ | 13.660 | 

Holders




Repurchases of Equity Securities




Dividend Policies




Recent Sales of Unregistered Securities




21



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|        |                                     
|------- | ------------------------------------
|Item 6. | Selected Consolidated Financial Data



|                                                                                                                                       |  |              |           |               |              |   |         |            |               |                |   |                         |  |  |             |           |  |             |   |           |   |  |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | ------------- | ------------ | - | ------- | ---------- | ------------- | -------------- | - | ----------------------- |  |  | ----------- | --------- |  | ----------- | - | --------- | - |  | - | --------- | -
|                                                                                                                                       |  |              |           | September 26, |              |   |         | January 1, |               |                |  
|                                                                                                                                       |  | Year ended   |           |               | 2003 through |   |         |            | 2003 through  |                |   | Year ended December 31, | 
|                                                                                                                                       |  | December 31, |           |               | December 31, |   |         |            | September 25, |                |   |                         | 
|                                                                                                                                       |  | 2004         |           |               | 2003         |   |         |            | 2003          |                |   | 2002                    |  |  | 2001        |           |  | 2000        |  
|                                                                                                                                       |  |              |           |               |              |   |         |            |               |                |   |                         |  |  |             |           |  |             |  
|                                                                                                                                       |  | Successor    |           |               | Successor    |   |         |            | Predecessor   |                |   | Predecessor             |  |  | Predecessor |           |  | Predecessor |  
|                                                                                                                                       |  |              |           |               |              |   |         |            |               | (In thousands) |  
|Net revenues                                                                                                                           |  | $            | 1,782,254 |               |              | $ | 431,626 |            |               |                | $ | 1,196,247               |  |  | $           | 1,570,383 |  |             | $ | 1,620,483 |   |  | $ | 1,660,489 |  
|Gross revenues                                                                                                                         |  |              | 2,146,334 |               |              |   | 527,881 |            |               |                |   | 1,464,930               |  |  |             | 1,970,033 |  |             |   | 1,883,912 |   |  |   | 1,871,077 |  
|(Loss) income from continuing operations before income taxes                                                                           |  |              | (67,583   | )             |              |   | (2,306  | )          |               |                |   | 59,755                  |  |  |             | 122,770   |  |             |   | (262,496  | ) |  |   | (51,005   | )
|(Loss) income from continuing operations                                                                                               |  |              | (62,999   | )             |              |   | (12,226 | )          |               |                |   | 32,535                  |  |  |             | 81,222    |  |             |   | (175,873  | ) |  |   | (34,174   | )
|Income from discontinued operations, net of income taxes                                                                               |  |              | 9,620     |               |              |   | 4,799   |            |               |                |   | 4,626                   |  |  |             | 442       |  |             |   |          |   |  |   | 16,770    |  
|Gain from sale of discontinued operation, net of income taxes                                                                          |  |              | 54,422    |               |              |   |        |            |               |                |   |                        |  |  |             |          |  |             |   |          |   |  |   |          |  
|Extraordinary gain from sale of discontinued operation, net of
    income taxes                                                        |  |              |          |               |              |   |        |            |               |                |   |                        |  |  |             |          |  |             |   | 142,030   |   |  |   | 436,327   |  
|Cumulative effect on prior years (to December 31, 2001) of
    changing to a different method of recognizing deferred income
    taxes |  |              |          |               |              |   |        |            |               |                |   |                        |  |  |             | 45,659    |  |             |   |          |   |  |   |          |  
|Net income (loss)                                                                                                                      |  | $            | 1,043     |               |              | $ | (7,427  | )          |               |                | $ | 37,161                  |  |  | $           | 127,323   |  |             | $ | (33,843   | ) |  | $ | 418,923   |  
|                                                                                                                                       |  |              |           |               |              |   |         |            |               |                |   |                         |  |  |             |           |  |             |  

|                                                            |  |                                      |           |  |           |   |           |  |             |  |   |             |  |  |             |           |  |  |   |           | 
|----------------------------------------------------------- |  | ------------------------------------ | --------- |  | --------- | - | --------- |  | ----------- |  | - | ----------- |  |  | ----------- | --------- |  |  | - | --------- | 
|                                                            |  | As of December 31,                   |          
|                                                            |  |                                      |           |  |           |   |          
|                                                            |  | 2004                                 |           |  | 2003      |   |           |  | 2002        |  |   | 2001        |  |  | 2000        |          
|                                                            |  |                                      |           |  |           |   |           |  |             |  |   |             |  |  |             |          
|                                                            |  | Successor                            |           |  | Successor |   |           |  | Predecessor |  |   | Predecessor |  |  | Predecessor |          
|                                                            |  | (In thousands, except employee data) |          
|Cash and cash equivalents                                   |  | $                                    | 535,680   |  |           | $ | 373,622   |  |             |  | $ | 644,255     |  |  | $           | 565,063   |  |  | $ | 330,214   | 
|Working capital, excluding discontinued operation           |  |                                      | 315,551   |  |           |   | 131,490   |  |             |  |   | 569,784     |  |  |             | 617,552   |  |  |   | 308,684   | 
|Total assets                                                |  |                                      | 2,047,962 |  |           |   | 1,992,711 |  |             |  |   | 2,054,195   |  |  |             | 1,853,794 |  |  |   | 1,961,578 | 
|Long-term debt and capital leases including current portion |  |                                      | 794,881   |  |           |   | 794,256   |  |             |  |   | 40,574      |  |  |             | 37,866    |  |  |   | 38,992    | 
|Shareholders equity                                        |  | $                                    | 568,091   |  |           | $ | 535,098   |  |             |  | $ | 1,598,386   |  |  | $           | 1,455,088 |  |  | $ | 1,404,706 | 
|Full-time equivalent employees                              |  |                                      | 17,015    |  |           |   | 15,662    |  |             |  |   | 15,801      |  |  |             | 17,639    |  |  |   | 18,060    | 

22



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##### 





|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Overview










Results of Operations




23



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##### 





|                                                                                                         |                                     |                    |         |         |                    |   |           |                   |   |   |           |           |  
|-------------------------------------------------------------------------------------------------------- | ----------------------------------- | ------------------ | ------- | ------- | ------------------ | - | --------- | ----------------- | - | - | --------- | --------- | -
|                                                                                                         |                                     | September 26, 2003 |         |         | January 1, 2003    |   |           |                  
|                                                                                                         |                                     | through            |         |         | through            |   |           | Year ended        |  
|                                                                                                         |                                     | December 31, 2003  |         |         | September 25, 2003 |   |           | December 31, 2003 |  
|                                                                                                         |                                     |                    |         |         |                    |   |           |                   |  
|                                                                                                         |                                     | Successor          |         |         | Predecessor        |   |           | Combined          |  
|                                                                                                         |                                     | (in thousands)     |        
|Net revenues                                                                                             |                                     | $                  | 431,626 |         |                    | $ | 1,196,247 |                   |   | $ | 1,627,873 |          
|Add: reimbursed service costs                                                                            |                                     |                    | 96,255  |         |                    |   | 268,683   |                   |   |   | 364,938   |          
|                                                                                                         |                                     |                    |         |         |                    |   |           |                   |  
|Gross revenues                                                                                           |                                     |                    | 527,881 |         |                    |   | 1,464,930 |                   |   |   | 1,992,811 |          
|Costs, expenses and other:                                                                               |                                     |                    |         |         |                    |   |           |                   |   |   |           |          
|                                                                                                         | Costs of revenues                   |                    |         | 362,012 |                    |   |           | 969,474           |   |   |           | 1,331,486 |  
|                                                                                                         | Selling, general and administrative |                    |         | 154,688 |                    |   |           | 397,318           |   |   |           | 552,006   |  
|                                                                                                         | Interest income                     |                    |         | (4,761  | )                  |   |           | (12,112           | ) |   |           | (16,873   | )
|                                                                                                         | Interest expense                    |                    |         | 20,651  |                    |   |           | 1,738             |   |   |           | 22,389    |  
|                                                                                                         | Other (income) expense, net         |                    |         | (2,403  | )                  |   |           | (5,391            | ) |   |           | (7,794    | )
|                                                                                                         | Transaction and restructuring       |                    |         |        |                    |   |           | 54,148            |   |   |           | 54,148    |  
|                                                                                                         |                                     |                    |         |         |                    |   |           |                   |  
|                                                                                                         |                                     |                    | 530,187 |         |                    |   | 1,405,175 |                   |   |   | 1,935,362 |          
|                                                                                                         |                                     |                    |         |         |                    |   |           |                   |  
|(Loss) income before income taxes                                                                        |                                     |                    | (2,306  | )       |                    |   | 59,755    |                   |   |   | 57,449    |          
|Income tax expense                                                                                       |                                     |                    | 9,810   |         |                    |   | 27,224    |                   |   |   | 37,034    |          
|                                                                                                         |                                     |                    |         |         |                    |   |           |                   |  
|(Loss) income before minority interests and equity in (losses)
    earnings of unconsolidated affiliates |                                     |                    | (12,116 | )       |                    |   | 32,531    |                   |   |   | 20,415    |          
|Equity in earnings (losses) of unconsolidated affiliates                                                 |                                     |                    | 13      |         |                    |   | (8        | )                 |   |   | 5         |          
|Minority interests                                                                                       |                                     |                    | (123    | )       |                    |   | 12        |                   |   |   | (111      | )        
|                                                                                                         |                                     |                    |         |         |                    |   |           |                   |  
|(Loss) income from continuing operations                                                                 |                                     |                    | (12,226 | )       |                    |   | 32,535    |                   |   |   | 20,309    |          
|Income from discontinued operation                                                                       |                                     |                    | 4,799   |         |                    |   | 4,626     |                   |   |   | 9,425     |          
|                                                                                                         |                                     |                    |         |         |                    |   |           |                   |  
|Net (loss) income                                                                                        |                                     | $                  | (7,427  | )       |                    | $ | 37,161    |                   |   | $ | 29,734    |          
|                                                                                                         |                                     |                    |         |         |                    |   |           |                   |  



|              |                       |                    |         |         |                    |   |           |                   |   |   |           |           |  
|------------- | --------------------- | ------------------ | ------- | ------- | ------------------ | - | --------- | ----------------- | - | - | --------- | --------- | -
|              |                       | September 26, 2003 |         |         | January 1, 2003    |   |           |                  
|              |                       | through            |         |         | through            |   |           | Year ended        |  
|              |                       | December 31, 2003  |         |         | September 25, 2003 |   |           | December 31, 2003 |  
|              |                       |                    |         |         |                    |   |           |                   |  
|              |                       | Successor          |         |         | Predecessor        |   |           | Combined          |  
|              |                       | (in thousands)     |        
|Net revenues: |                       |                    |         |         |                    |   |           |                   |   |   |           |          
|              | Product Development   |                    | $       | 270,247 |                    |   | $         | 734,729           |   |   | $         | 1,004,976 |  
|              | Commercial Services   |                    |         | 141,163 |                    |   |           | 392,050           |   |   |           | 533,213   |  
|              | PharmaBio Development |                    |         | 30,674  |                    |   |           | 99,245            |   |   |           | 129,919   |  
|              | Eliminations          |                    |         | (10,458 | )                  |   |           | (29,777           | ) |   |           | (40,235   | )
|              |                       |                    |         |         |                    |   |           |                   |  
|              |                       | $                  | 431,626 |         |                    | $ | 1,196,247 |                   |   | $ | 1,627,873 |          
|              |                       |                    |         |         |                    |   |           |                   |  
|Contribution: |                       |                    |         |         |                    |   |           |                   |   |   |           |          
|              | Product Development   |                    | $       | 141,046 |                    |   | $         | 375,125           |   |   | $         | 516,171   |  
|              | Commercial Services   |                    |         | 55,353  |                    |   |           | 142,144           |   |   |           | 197,497   |  
|              | PharmaBio Development |                    |         | 4,040   |                    |   |           | 37,455            |   |   |           | 41,495    |  
|              |                       |                    |         |         |                    |   |           |                   |  
|              |                       | $                  | 200,439 |         |                    | $ | 554,724   |                   |   | $ | 755,163   |          
|              |                       |                    |         |         |                    |   |           |                   |  

24



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##### 





|                                                    |                                                                 |                    |            |                 |               |   |         |              |   |   |            |            |  
|--------------------------------------------------- | --------------------------------------------------------------- | ------------------ | ---------- | --------------- | ------------- | - | ------- | ------------ | - | - | ---------- | ---------- | -
|                                                    |                                                                 |                    |            | January 1, 2003 |               |   |        
|                                                    |                                                                 | September 26, 2003 |            |                 | through       |   |         | Year ended   |  
|                                                    |                                                                 | through            |            |                 | September 25, |   |         | December 31, |  
|                                                    |                                                                 | December 31, 2003  |            |                 | 2003          |   |         | 2003         |  
|                                                    |                                                                 |                    |            |                 |               |   |         |              |  
|                                                    |                                                                 | Successor          |            |                 | Predecessor   |   |         | Combined     |  
|                                                    |                                                                 | (in thousands)     |           
|Net cash provided by operating activities           |                                                                 | $                  | 96,010     |                 |               | $ | 165,137 |              |   | $ | 261,147    |           
|Investing activities:                               |                                                                 |                    |            |                 |               |   |         |              |   |   |            |           
|                                                    | Acquisition of property and equipment                           |                    |            | (14,779         | )             |   |         | (39,143      | ) |   |            | (53,922    | )
|                                                    | Repurchase of common stock in Transaction                       |                    |            | (1,617,567      | )             |   |         |             |   |   |            | (1,617,567 | )
|                                                    | Payment of transaction costs in Transaction                     |                    |            | (64,734         | )             |   |         | (2,896       | ) |   |            | (67,630    | )
|                                                    | Acquisition of businesses, net of cash acquired                 |                    |            | (3,363          | )             |   |         | (1,379       | ) |   |            | (4,742     | )
|                                                    | Acquisition of intangible assets                                |                    |            |                |               |   |         | (3,739       | ) |   |            | (3,739     | )
|                                                    | Acquisition of commercial rights and royalties                  |                    |            | (3,000          | )             |   |         | (17,710      | ) |   |            | (20,710    | )
|                                                    | Proceeds from disposition of property and equipment             |                    |            | 1,960           |               |   |         | 6,219        |   |   |            | 8,179      |  
|                                                    | (Purchases of) proceeds from debt securities, net               |                    |            | (886            | )             |   |         | 25,267       |   |   |            | 24,381     |  
|                                                    | Purchases of equity securities and other investments            |                    |            | (6,020          | )             |   |         | (10,830      | ) |   |            | (16,850    | )
|                                                    | Proceeds from sale of equity securities                         |                    |            | 7,633           |               |   |         | 61,926       |   |   |            | 69,559     |  
|                                                    |                                                                 |                    |            |                 |               |   |         |              |  
|Net cash (used in) provided by investing activities |                                                                 |                    | (1,700,756 | )               |               |   | 17,715  |              |   |   | (1,683,041 | )         
|Financing activities:                               |                                                                 |                    |            |                 |               |   |         |              |   |   |            |           
|                                                    | Proceeds from issuance of debt, net of expenses, in Transaction |                    |            | 733,433         |               |   |         |             |   |   |            | 733,433    |  
|                                                    | Principal payments on credit arrangements                       |                    |            | (5,647          | )             |   |         | (13,248      | ) |   |            | (18,895    | )
|                                                    | Dividend from discontinued operation                            |                    |            | 8,336           |               |   |         | 3,138        |   |   |            | 11,474     |  
|                                                    | Capital contribution                                            |                    |            | 390,549         |               |   |         |             |   |   |            | 390,549    |  
|                                                    | Issuance of common stock                                        |                    |            |                |               |   |         | 7,042        |   |   |            | 7,042      |  
|                                                    |                                                                 |                    |            |                 |               |   |         |              |  
|Net cash provided by (used in) financing activities |                                                                 | $                  | 1,126,671  |                 |               | $ | (3,068  | )            |   | $ | 1,123,603  |           
|                                                    |                                                                 |                    |            |                 |               |   |         |              |  



| |                                                                            
| | ---------------------------------------------------------------------------
| | Year Ended December 31, 2004 Compared with Year Ended
    December 31, 2003

Gross Revenues.


|                                              |  |      |           |   |      |   |           |  
|--------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                              |  | 2004 |           |   | 2003 |  
|                                              |  |      |           |   |      |  
|Service revenues  external                   |  | $    | 2,093,437 |   |      | $ | 1,862,892 |  
|Less: reimbursed service costs                |  |      | 364,080   |   |      |   | 364,938   |  
|                                              |  |      |           |   |      |  
|Net service revenues  external               |  |      | 1,729,357 |   |      |   | 1,497,954 |  
|Net service revenues  intersegment           |  |      | 65,687    |   |      |   | 40,235    |  
|                                              |  |      |           |   |      |  
|Net service revenues  combined               |  |      | 1,795,044 |   |      |   | 1,538,189 |  
|Commercial rights and royalties               |  |      | 62,517    |   |      |   | 98,986    |  
|Investments                                   |  |      | (9,620    | ) |      |   | 30,933    |  
|Eliminations: service revenues  intersegment |  |      | (65,687   | ) |      |   | (40,235   | )
|                                              |  |      |           |   |      |  
|Total net revenues                            |  | $    | 1,782,254 |   |      | $ | 1,627,873 |  
|                                              |  |      |           |   |      |  
|Reimbursed service costs                      |  |      | 364,080   |   |      |   | 364,938   |  
|                                              |  |      |           |   |      |  
|Gross revenues                                |  | $    | 2,146,334 |   |      | $ | 1,992,811 |  
|                                              |  |      |           |   |      |  

25



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Service Revenues  External. Service
    revenues  external, which represent services we
    provide to third parties, were $2.09 billion for 2004
    compared to $1.86 billion for 2003. Service
    revenues  external less reimbursed service costs, or
    net service revenues  external, for 2004 were
    $1.73 billion, an increase of $231.4 million or 15.4%
    over net service revenues  external of
    $1.50 billion in 2003. Net service revenues 
    external for 2004 were positively impacted by approximately
    $101.4 million due to the effect of the weakening of the
    United States dollar relative to the euro, the British pound,
    the South African rand and the Japanese yen. Net service
    revenues  external increased in the Asia Pacific and
    Africa region $45.5 million or 16.2% to $326.4 million
    in 2004 from 2003 as a result of strong growth in our Commercial
    Services Group. Net service revenues  external in the
    Asia Pacific and Africa region were positively impacted by
    approximately $24.3 million due to the effect of foreign
    currency fluctuations. Net service revenues  external
    increased $140.5 million or 22.8% to $755.7 million in
    2004 from 2003 in the Europe region, including a positive impact
    of approximately $75.6 million due to the effect of foreign
    currency fluctuations. We experienced strong growth in our
    Clinical Development Services, or CDS, and an improvement in the
    business conditions for our Commercial Services Group in Europe,
    primarily Germany, Italy and the United Kingdom. Net service
    revenues  external increased $45.3 million or
    7.5% to $647.3 million for 2004 from 2003 in the Americas
    region, including a positive impact of approximately
    $1.4 million due to the effect of foreign currency
    fluctuations. The increase in the Americas region is primarily a
    result of strong growth in CDS revenues.                                                                                                                                                                                                                                   
|
| |  | Net Service Revenues  Intersegment. Net
    service revenues  intersegment represents the
    revenues from services provided by our service segments,
    primarily commercial services, to our PharmaBio Development
    Group under risk-based arrangements in which we provide services
    to customers at our cost in exchange for royalties. Net service
    revenues  intersegment increased to
    $65.7 million for 2004 versus $40.2 million for 2003
    primarily as a result of the incremental services provided under
    our
    Cymbaltatm
    contract and our February 2004 contract with a large
    pharmaceutical customer. These increases were partially offset
    by a reduction in the services provided under our contract with
    Kos which concluded in December 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Net Service Revenues  Combined. Net services
    revenues  combined for 2004 were $1.80 billion
    versus $1.54 billion for 2003 for reasons stated above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Commercial Rights and Royalties Revenues. Commercial
    rights and royalties revenues, which include product revenues,
    royalties and commissions, for 2004 were $62.5 million, a
    decrease of $36.5 million from 2003 commercial rights and
    royalties revenues of $99.0 million. Commercial rights and
    royalties revenues were positively impacted by approximately
    $4.0 million due to the effect of foreign currency
    fluctuations related to the weakening of the United States
    dollar relative to the euro. Commercial rights and royalties
    revenues were reduced by approximately $17.0 million in
    2004 relating to the amortization of payments we made to our
    customers versus $3.5 million for 2003. These payments are
    considered incentives and are amortized against revenues over
    the service period of the contract. The decrease in commercial
    rights and royalties revenues is due to (1) our contracts
    with Columbia which decreased revenue by $407,000 in 2004,
    compared to a $11.9 million contribution to revenues in
    2003, due to an impairment of the Columbia receivable of
    approximately $7.8 million representing a decline in fair
    value of the related commercial rights and royalties asset which
    we believed to be other than temporary; (2) the conclusion
    of our service contract in December 2003 with Kos which
    contributed approximately $24.9 million of revenue in 2003;
    (3) a decrease in revenues under our contracts in Europe
    with two large pharmaceutical customers to $38.7 million in
    2004 as compared to $40.4 million in 2003; and (4) a
    decline in revenues from miscellaneous contracts and activities
    to $1.6 million in 2004 from $3.1 million in 2003. In
    addition, 2003 included $15.9 million of revenues related
    to our contract and subsequent termination agreement with Scios,
    Inc., or Scios. These decreases were partially offset by
    increases resulting from (1) our contract for
    Cymbaltatm,
    which contributed $11.6 million of revenues in 2004 and
    (2) our September 2003 acquisition of a controlling
    interest in Pharmaplan Limited, or

26



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | Pharmaplan, which contributed $11.1 million of revenues in
    2004 versus $2.7 million in 2003. Commercial rights and
    royalties revenues for 2004 were attributable to the following:
    (1) approximately 61.9% to our contracts with two large
    pharmaceutical customers in Europe; (2) approximately 18.5%
    to our
    Cymbaltatm
    contract; (3) approximately 17.7% to the Pharmaplan
    operations acquired during September 2003;
    (4) approximately 2.6% related to miscellaneous contracts
    and activities and (5) approximately (0.7%) related to our
    contracts with Columbia.                                                                                                                             
|
| |  | Investment Revenues.Investment revenues which relate to
    our PharmaBio Development Groups financing arrangements
    and include gains and losses from the sale of equity securities
    and impairments from other than temporary declines in the fair
    values of our direct and indirect investments, were a loss of
    $9.6 million for 2004 versus a gain of $30.9 million
    for 2003. Investment revenues for 2004 included
    $2.8 million of net gains on marketable securities versus
    $42.7 million for 2003. During 2004 and 2003, we recognized
    $12.5 million and $11.8 million, respectively, of
    impairment losses on investments whose decline in fair value was
    considered to be other than temporary.

Costs of Revenues.


|                                      |  |      |           |   |      |   |           |  
|------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                      |  | 2004 |           |   | 2003 |  
|                                      |  |      |           |   |      |  
|Reimbursed service costs              |  | $    | 364,080   |   |      | $ | 364,938   |  
|Service costs                         |  |      | 986,927   |   |      |   | 824,521   |  
|Commercial rights and royalties costs |  |      | 137,219   |   |      |   | 88,424    |  
|Depreciation and amortization         |  |      | 124,905   |   |      |   | 93,838    |  
|Eliminations  intersegment costs     |  |      | (65,687   | ) |      |   | (40,235   | )
|                                      |  |      |           |   |      |  
|                                      |  | $    | 1,547,444 |   |      | $ | 1,331,486 |  
|                                      |  |      |           |   |      |  



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Reimbursed Service Costs. Reimbursed service costs were
    $364.1 million and $364.9 million for 2004 and 2003,
    respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Service Costs. Service costs, which include compensation
    and benefits for billable employees, and certain other expenses
    directly related to service contracts, were $986.9 million
    or 55.0% of 2004 net service revenues  combined
    versus $824.5 million or 53.6% of 2003 net service
    revenues  combined. Compensation and related expenses
    increased approximately $119.0 million primarily as a
    result of salary and wage increases, including an increase in
    the number of billable employees. Other expenses directly
    related to our service contracts increased approximately
    $43.4 million. Service costs were negatively impacted by
    approximately $52.2 million from the effect of foreign
    currency fluctuations.                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Commercial Rights and Royalties Costs. Commercial rights
    and royalties costs, which include compensation and related
    benefits for employees, amortization of commercial rights,
    infrastructure costs of the PharmaBio Development Group and
    other expenses directly related to commercial rights and
    royalties, were $137.2 million for 2004 versus
    $88.4 million for 2003. The increase in commercial rights
    and royalties costs is primarily due to (1) an increase in
    costs related to
    Cymbaltatm
    of approximately $36.2 million to $43.7 million in
    2004; (2) costs of approximately $21.4 million related
    to our February 2004 contract with a large pharmaceutical
    company; and (3) an increase in costs incurred by our
    Pharmaplan operations by approximately $7.0 million to
    $9.6 million as a result of the September 2003 transaction
    in which we acquired a controlling interest. These increases
    were partially offset by a decrease of approximately
    $16.0 million in costs related to our service contract with
    Kos which was terminated in December 2003.
|
| |  | Depreciation and Amortization. Depreciation and
    amortization, which include depreciation of our property and
    equipment and amortization of our definite-lived intangible
    assets except commercial rights, increased to
    $124.9 million for 2004 versus $93.8 million for 2003.
    Amortization expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

27



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##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | increased approximately $30.2 million as a result of the
    increase in intangible assets with finite lives that were
    recorded in connection with the Pharma Services transaction. We
    have approximately $109.7 million of identifiable
    intangible assets that have indefinite lives and therefore are
    not being amortized. Depreciation expense remained relatively
    constant increasing approximately $850,000.                                                                                                                                                                                                                                                                                        
|
| |  | Eliminations  Intersegment Costs. Eliminations
    represent the services provided by our service segments,
    primarily commercial services, to our PharmaBio Development
    Group under risk-based arrangements in which we provide services
    to customers at our cost in exchange for royalties. Eliminations
    increased to $65.7 million for 2004 versus
    $40.2 million for 2003 primarily as a result of the
    incremental services provided under our Cymbalta contract
    and our February 2004 contract with a large pharmaceutical
    customer. These increases were partially offset by a reduction
    in the services provided under our contract with Kos which
    concluded in December 2003.













28



---



##### 













29



---



##### 

















| |                     
| | --------------------
| | Analysis by Segment:



|                      |  |                    |         |   |              |          |         |          |  |  |          |   |  |          |       |   |      |  |        |          |  |   |       |  |  |  |      |  
|--------------------- |  | ------------------ | ------- | - | ------------ | -------- | ------- | -------- |  |  | -------- | - |  | -------- | ----- | - | ---- |  | ------ | -------- |  | - | ----- |  |  |  | ---- | -
|                      |  | Total Net Revenues |         |   | Contribution |         
|                      |  |                    |         |   |              |         
|                      |  |                    |         |   |              | % of Net |         |          |  |  | % of Net |  
|                      |  | 2004               |         |   | 2003         |          |         | Growth % |  |  | 2004     |   |  | Revenues |       |   | 2003 |  |        | Revenues | 
|                      |  |                    |         |   |              |          |         |          |  |  |          |   |  |          |       |   |      |  |        |          | 
|Product Development   |  | $                  | 1,126.7 |   |              | $        | 1,005.0 |          |  |  | 12.1     | % |  | $        | 554.4 |   |      |  | 49.2   | %        |  | $ | 516.2 |  |  |  | 51.4 | %
|Commercial Services   |  |                    | 668.4   |   |              |          | 533.2   |          |  |  | 25.3     |   |  |          | 253.7 |   |      |  | 38.0   |          |  |   | 197.5 |  |  |  | 37.0 |  
|PharmaBio Development |  |                    | 52.9    |   |              |          | 129.9   |          |  |  | (59.3    | ) |  |          | (84.3 | ) |      |  | (159.4 | )        |  |   | 41.5  |  |  |  | 31.9 |  
|Eliminations          |  |                    | (65.7   | ) |              |          | (40.2   | )        |  |  | (63.3    | ) |  |          |      |   |      |  |       |          |  |   |      |  |  |  |     |  
|                      |  |                    |         |   |              |          |         |          |  |  |          |   |  |          |       |   |      |  |        |          | 
|                      |  | $                  | 1,782.3 |   |              | $        | 1,627.9 |          |  |  | 9.5      | % |  | $        | 723.8 |   |      |  | 40.6   | %        |  | $ | 755.2 |  |  |  | 46.4 | %

Product Development Group.


30



---



##### 







Commercial Services Group.




PharmaBio Development Group.




31



---



##### 





| |                                                                            
| | ---------------------------------------------------------------------------
| | Year Ended December 31, 2003 Compared with Year Ended
    December 31, 2002

Gross Revenues.


|                                              |  |      |           |   |      |   |           |  
|--------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                              |  | 2003 |           |   | 2002 |  
|                                              |  |      |           |   |      |  
|Service revenues  external                   |  | $    | 1,862,892 |   |      | $ | 1,868,324 |  
|Less: reimbursed service costs                |  |      | 364,938   |   |      |   | 399,650   |  
|                                              |  |      |           |   |      |  
|Net service revenues  external               |  |      | 1,497,954 |   |      |   | 1,468,674 |  
|Net service revenues  intersegment           |  |      | 40,235    |   |      |   | 54,548    |  
|                                              |  |      |           |   |      |  
|Net service revenues  combined               |  |      | 1,538,189 |   |      |   | 1,523,222 |  
|Commercial rights and royalties               |  |      | 98,986    |   |      |   | 88,005    |  
|Investments                                   |  |      | 30,933    |   |      |   | 13,704    |  
|Eliminations: service revenues  intersegment |  |      | (40,235   | ) |      |   | (54,548   | )
|                                              |  |      |           |   |      |  
|Total net revenues                            |  | $    | 1,627,873 |   |      | $ | 1,570,383 |  
|                                              |  |      |           |   |      |  
|Reimbursed service costs                      |  |      | 364,938   |   |      |   | 399,650   |  
|                                              |  |      |           |   |      |  
|Gross revenues                                |  | $    | 1,992,811 |   |      | $ | 1,970,033 |  
|                                              |  |      |           |   |      |  



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Service Revenues  External. Service
    revenues  external were $1.86 billion for 2003
    compared to $1.87 billion for 2002. Net service
    revenues  external for 2003 were $1.50 billion,
    an increase of $29.3 million or 2.0% over net service
    revenues  external of $1.47 billion in 2002.
    Included in net service revenues  external for 2002
    was $20.3 million from our Informatics Group, which was
    transferred to a joint venture during May 2002 and, therefore,
    there were no net service revenues from that group for 2003. Net
    service revenues  external for 2003 were positively
    impacted by approximately $101.2 million due to the effect
    of the weakening of the United States dollar relative to the
    euro, the British pound, the South African rand and the Japanese
    yen. Net service revenues  external increased in the
    Asia Pacific and Africa region $51.2 million or 22.3% to
    $280.8 million, which was positively impacted by
    approximately $28.5 million due to the effect of foreign
    currency fluctuations. Net service revenues  external
    increased $42.6 million or 7.4% to $615.1 million in
    the Europe region, although they were positively impacted by
    $71.6 million due to the effect of foreign currency
    fluctuations. During 2003, our Commercial Services Group
    experienced difficult business conditions due to the
    under-utilization of its syndicated sales forces in primarily
    two markets, the United Kingdom and France. Net service
    revenues  external decreased $64.5 million or
    9.7% to $602.0 million in the Americas primarily as a
    result of increased competition in the Product Development Group
    and the absence of informatics revenue in 2003.
|
| |  | Net Service Revenues  Intersegment. Net
    service revenues  intersegment decreased to
    $40.2 million for 2003 versus $54.5 million for 2002
    primarily as a result of the reduction in services provided
    under our contract with Scios, which was terminated in the
    fourth quarter of 2002. This decrease was partially offset by
    increases resulting from the services provided under our
    Columbia and Cymbalta contracts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Net Service Revenues  Combined. Net services
    revenues  combined for 2003 were $1.54 billion
    versus $1.52 billion for 2002 for reasons stated above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Commercial Rights and Royalties Revenues. Commercial
    rights and royalties revenues for 2003 were $99.0 million,
    an increase of $11.0 million over 2002 commercial rights
    and royalties revenues of $88.0 million. Commercial rights
    and royalties revenues were positively impacted by approximately
    $5.4 million due to the effect of foreign currency
    fluctuations related to the weakening of the United States
    dollar relative to the euro. Commercial rights and royalties
    revenues for 2003 were reduced by approximately
    $3.5 million, versus $19.8 million in 2002, for the
    amortization of payments made by us to our customers. These
    payments are considered incentives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

32



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | and are amortized against revenues over the service period of
    the contract. The $11.0 million increase in commercial
    rights and royalties revenues is primarily the result of
    (1) our contracts with Kos and Columbia, which contributed
    approximately $36.9 million of revenues for 2003 versus
    $22.3 million for 2002, and (2) our contracts in
    Europe with two large pharmaceutical customers which contributed
    approximately $40.4 million of revenues for 2003 versus
    $18.9 million for 2002. These increases were partially
    offset by a reduction in revenue of approximately
    $25.6 million as a result of the completion of the services
    portion of our Scios contract during the fourth quarter of 2002.
    For 2003, approximately 40.8% of our commercial rights and
    royalties revenues was attributable to our contracts with two
    large pharmaceutical customers in Europe, approximately 37.2%
    was attributable to our contracts with Kos and Columbia,
    approximately 16.1% was attributable to the termination of the
    Scios contract and the remaining 5.9% was attributable to
    miscellaneous contracts and activities.
|
| |  | Investment Revenues. Investment revenues related to our
    PharmaBio Development Groups financing arrangements were
    $30.9 million for 2003 versus $13.7 million for 2002.
    Investment revenues for 2003 included $23.6 million of gain
    on the sale of equity investments in Triangle Pharmaceuticals,
    Inc., or Triangle, The Medicines Company and CV Therapeutics,
    and a $12.1 million gain on warrants to acquire
    700,000 shares of Scios as a result of the acquisition of
    Scios by Johnson & Johnson, Inc. During 2003 and 2002,
    we recognized $11.8 million and $4.3 million,
    respectively, of impairment losses on investments whose decline
    in fair value was considered to be other than temporary.                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Costs of Revenues.


|                                      |  |      |           |   |      |   |           |  
|------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                      |  | 2003 |           |   | 2002 |  
|                                      |  |      |           |   |      |  
|Reimbursed service costs              |  | $    | 364,938   |   |      | $ | 399,650   |  
|Service costs                         |  |      | 824,521   |   |      |   | 829,995   |  
|Commercial rights and royalties costs |  |      | 88,424    |   |      |   | 83,933    |  
|Investment costs                      |  |      |          |   |      |   | 320       |  
|Depreciation and amortization         |  |      | 93,838    |   |      |   | 86,148    |  
|Eliminations  intersegment costs     |  |      | (40,235   | ) |      |   | (54,548   | )
|                                      |  |      |           |   |      |  
|                                      |  | $    | 1,331,486 |   |      | $ | 1,345,498 |  
|                                      |  |      |           |   |      |  



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Reimbursed Service Costs. Reimbursed service costs were
    $364.9 million and $399.7 million for 2003 and 2002,
    respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Service Costs. Service costs were $824.5 million or
    53.6% of 2003 net service revenues  combined
    versus $830.0 million or 54.5% of 2002 net service
    revenues  combined. Service costs were negatively
    impacted by approximately $52.3 million from the effect of
    foreign currency fluctuations. Bonus expense included in service
    costs increased approximately $3.2 million in 2003 as
    compared to 2002 as a result of our migration to a cash-based
    incentive program for our employees. The reduction in service
    costs, as a percentage of net service revenues 
    combined, is primarily a result of the residual effect of our
    process enhancements and cost reduction efforts.
|
| |  | Commercial Rights and Royalties Costs. Commercial rights
    and royalties costs were $88.4 million for 2003 versus
    $83.9 million for 2002. These costs include services and
    products provided by third parties, as well as services provided
    by our other service groups totaling approximately
    $40.2 million for 2003 and $54.5 million for 2002. The
    year 2003 includes approximately $7.6 million of expenses
    relating to our
    Cymbaltatm
    contract.                                                                                                                                                                                                                                           
|
| |  | Investment Costs. Investment costs, which include costs
    directly related to direct and indirect investments in our
    customers or other strategic partners as part of the PharmaBio
    Development Groups financing arrangements, were $320,000
    in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                             

33



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##### 





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Depreciation and Amortization. Depreciation and
    amortization increased to $93.8 million for 2003 versus
    $86.1 million for 2002. Amortization expense increased
    approximately $14.3 million as a result of the amortization
    of the identifiable intangible assets with finite lives that
    were recorded in connection with the Pharma Services
    transaction. This increase was partially offset by a decrease in
    depreciation expense of approximately $6.7 million
    primarily resulting from the transfer of our Informatics Group
    to Verispan.
|
| |  | Eliminations  Intersegment Costs. Eliminations
    decreased to $40.2 million for 2003 versus
    $54.5 million for 2002 primarily as a result of the
    reduction in services provided under our contract with Scios
    which was terminated in the fourth quarter of 2002. This
    decrease was partially offset by increases resulting from the
    services provided under our Columbia and
    Cymbaltatm
    contracts.                                                                                                                                               















34



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##### 



















| |                     
| | --------------------
| | Analysis by Segment:



|                      |  |                    |         |   |              |          |         |          |  |  |          |   |  |          |       |  |      |  |      |          |  |   |       |  |  |  |      |  
|--------------------- |  | ------------------ | ------- | - | ------------ | -------- | ------- | -------- |  |  | -------- | - |  | -------- | ----- |  | ---- |  | ---- | -------- |  | - | ----- |  |  |  | ---- | -
|                      |  | Total Net Revenues |         |   | Contribution |         
|                      |  |                    |         |   |              |         
|                      |  |                    |         |   |              | % of Net |         |          |  |  | % of Net |  
|                      |  | 2003               |         |   | 2002         |          |         | Growth % |  |  | 2003     |   |  | Revenues |       |  | 2002 |  |      | Revenues | 
|                      |  |                    |         |   |              |          |         |          |  |  |          |   |  |          |       |  |      |  |      |          | 
|Product Development   |  | $                  | l,005.0 |   |              | $        | 944.9   |          |  |  | 6.4      | % |  | $        | 516.2 |  |      |  | 51.4 | %        |  | $ | 477.5 |  |  |  | 50.5 | %
|Commercial Services   |  |                    | 533.2   |   |              |          | 558.0   |          |  |  | (4.4     | ) |  |          | 197.5 |  |      |  | 37.0 |          |  |   | 207.7 |  |  |  | 37.2 |  
|PharmaBio Development |  |                    | 129.9   |   |              |          | 101.7   |          |  |  | 27.7     |   |  |          | 41.5  |  |      |  | 31.9 |          |  |   | 17.5  |  |  |  | 17.2 |  
|Informatics           |  |                    |        |   |              |          | 20.3    |          |  |  | (100.0   | ) |  |          |      |  |      |  |     |          |  |   | 8.0   |  |  |  | 39.4 |  
|Eliminations          |  |                    | (40.2   | ) |              |          | (54.5   | )        |  |  | (26.2    | ) |  |          |      |  |      |  |     |          |  |   |      |  |  |  |     |  
|                      |  |                    |         |   |              |          |         |          |  |  |          |   |  |          |       |  |      |  |      |          | 
|                      |  | $                  | 1,627.9 |   |              | $        | 1,570.4 |          |  |  | 3.7      | % |  | $        | 755.2 |  |      |  | 46.4 | %        |  | $ | 710.7 |  |  |  | 45.3 | %

Product Development Group.


35



---



##### 







Commercial Services Group.




PharmaBio Development Group. tm


tm




36



---



##### 



Liquidity and Capital Resources














tm






37



---



##### 





|                                               |  |              |          |   |      |   |          |  
|---------------------------------------------- |  | ------------ | -------- | - | ---- | - | -------- | -
|                                               |  | December 31, |         
|                                               |  |              |         
|                                               |  | 2004         |          |   | 2003 |  
|                                               |  |              |          |   |      |  
|Trade accounts receivable, net                 |  | $            | 151,981  |   |      | $ | 122,496  |  
|Unbilled services                              |  |              | 138,347  |   |      |   | 102,802  |  
|Unearned income                                |  |              | (202,148 | ) |      |   | (190,918 | )
|                                               |  |              |          |   |      |  
|Net service receivables outstanding            |  | $            | 88,180   |   |      | $ | 34,380   |  
|                                               |  |              |          |   |      |  
|Number of days of service revenues outstanding |  |              | 14       |   |      |   | 7        |  
|                                               |  |              |          |   |      |  

















38



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##### 





|                                                                                          |  |      |         |  |      |   |         |      |  |   |         |  |  |      |         |  |            |   |         |       |  |   |         |  |  |   |           | 
|----------------------------------------------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  | ---------- | - | ------- | ----- |  | - | ------- |  |  | - | --------- | 
|                                                                                          |  | 2005 |         |  | 2006 |   |         | 2007 |  |   | 2008    |  |  | 2009 |         |  | Thereafter |   |         | Total | 
|                                                                                          |  |      |         |  |      |   |         |      |  |   |         |  |  |      |         |  |            |   |         |       | 
|Long-term debt                                                                            |  | $    | 71,496  |  |      | $ | 70,868  |      |  | $ | 69,701  |  |  | $    | 69,143  |  |            | $ | 63,963  |       |  | $ | 913,491 |  |  | $ | 1,258,662 | 
|Obligations under capital leases                                                          |  |      | 16,060  |  |      |   | 14,341  |      |  |   | 1,341   |  |  |      | 704     |  |            |   | 421     |       |  |   | 242     |  |  |   | 33,109    | 
|Operating leases                                                                          |  |      | 63,669  |  |      |   | 46,909  |      |  |   | 30,834  |  |  |      | 18,696  |  |            |   | 10,158  |       |  |   | 43,495  |  |  |   | 213,761   | 
|Service agreements                                                                        |  |      | 27,186  |  |      |   | 22,582  |      |  |   | 20,877  |  |  |      | 15,658  |  |            |   |        |       |  |   |        |  |  |   | 86,303    | 
|Management fee agreement                                                                  |  |      | 3,750   |  |      |   | 3,750   |      |  |   | 3,750   |  |  |      | 3,750   |  |            |   |        |       |  |   |        |  |  |   | 15,000    | 
|PharmaBio funding commitments in various commercial rights and
    royalties:             |  |      |         |  |      |   |         |      |  |   |         |  |  |      |         |  |            |   |         |       |  |   |         |  |  |   |           | 
|Service commitments                                                                       |  |      | 130,729 |  |      |   | 99,086  |      |  |   | 97,431  |  |  |      | 88,593  |  |            |   | 66,932  |       |  |   |        |  |  |   | 482,771   | 
|Milestone payments                                                                        |  |      | 20,000  |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |        |  |  |   | 20,000    | 
|Licensing and distribution rights                                                         |  |      | 2,183   |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |        |  |  |   | 2,183     | 
|PharmaBio funding commitments to purchase non-marketable equity
    securities and loans: |  |      |         |  |      |   |         |      |  |   |         |  |  |      |         |  |            |   |         |       |  |   |         |  |  |   |           | 
|Venture capital funds                                                                     |  |      | 12,419  |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |        |  |  |   | 12,419    | 
|Equity investments                                                                        |  |      | 1,023   |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |        |  |  |   | 1,023     | 
|Convertible loans                                                                         |  |      | 19      |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |        |  |  |   | 19        | 
|Loans                                                                                     |  |      | 2,564   |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |        |  |  |   | 2,564     | 
|                                                                                          |  |      |         |  |      |   |         |      |  |   |         |  |  |      |         |  |            |   |         |       | 
|Total                                                                                     |  | $    | 351,098 |  |      | $ | 257,536 |      |  | $ | 223,934 |  |  | $    | 196,544 |  |            | $ | 141,474 |       |  | $ | 957,228 |  |  | $ | 2,127,814 | 
|                                                                                          |  |      |         |  |      |   |         |      |  |   |         |  |  |      |         |  |            |   |         |       | 









39



---



##### 





Critical Accounting Policies






| |                    
| | -------------------
| | Revenue Recognition









| |                                          
| | -----------------------------------------
| | Accounts Receivable and Unbilled Services



40



---



##### 







| |                                       
| | --------------------------------------
| | Marketable Debt and Equity Investments





| |                                            
| | -------------------------------------------
| | Non-Marketable Equity Investments and Loans





| |             
| | ------------
| | Income Taxes





41



---



##### 







| |                   
| | ------------------
| | Foreign Currencies





| |                                                          
| | ---------------------------------------------------------
| | Goodwill, Tangible and Identifiable Intangible
    Assets







| |                  
| | -----------------
| | Backlog Reporting





| |   |                                            
| | - | -------------------------------------------
| |  | the variable size and duration of projects,

42



---



##### 





| |   |                                                              
| | - | -------------------------------------------------------------
| |  | the loss or delay of projects, and                           
|
| |  | a change in the scope of work during the course of a project.



Inflation




Market Risk






| |                                
| | -------------------------------
| | Foreign Currency Exchange Rates







| |               
| | --------------
| | Interest Rates



43



---



##### 







| |              
| | -------------
| | Equity Prices



Recently Issued Accounting Standards










44



---



##### 





Subsequent Events








Risk Factors






| |                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our substantial debt could adversely affect our financial
    condition and prevent us from fulfilling our obligations under
    our senior subordinated notes.



45



---



##### 







| |   |                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increase our vulnerability to adverse general economic and
    industry conditions;                                                                                                                                                                                                                                   
|
| |  | require us to dedicate a substantial portion of our cash flows
    from operations to payments on our indebtedness, thereby
    reducing the availability of our cash flows to fund working
    capital, investments, capital expenditures, research and
    development efforts and other general corporate purposes;
|
| |  | limit our ability to make required payments under our existing
    contractual commitments;                                                                                                                                                                                                                           
|
| |  | limit our flexibility in planning for, or reacting to, changes
    in our business and the industry in which we operate;                                                                                                                                                                                              
|
| |  | place us at a competitive disadvantage compared to our
    competitors that have less debt;                                                                                                                                                                                                                           
|
| |  | increase our exposure to rising interest rates because a portion
    of our borrowings is at variable interest rates; and                                                                                                                                                                                             
|
| |  | limit our ability to borrow additional funds on terms that are
    satisfactory to us or at all.                                                                                                                                                                                                                      



| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The indenture governing the senior subordinated notes and
    the senior secured credit facility contain covenants that limit
    our flexibility and prevent us from taking certain
    actions.





| |   |                                                           
| | - | ----------------------------------------------------------
| |  | incur additional debt;                                    
|
| |  | pay dividends on, redeem or repurchase capital stock;     
|
| |  | issue capital stock of restricted subsidiaries;           
|
| |  | make certain investments;                                 
|
| |  | enter into certain types of transactions with affiliates; 
|
| |  | engage in unrelated businesses;                           
|
| |  | create liens; and                                         
|
| |  | sell certain assets or merge with or into other companies.



46



---



##### 







| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | We are subject to additional risks and restrictions as a
    result of Intermediate Holdings outstanding discount
    notes.





| |                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Despite our level of indebtedness, we and our parent
    companies are able to incur more debt and undertake additional
    obligations. Incurring such debt or undertaking such obligations
    could further exacerbate the risks to our financial
    condition.







| |                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Mitsuis ownership interest in our Japanese
    subsidiary could give rise to Mitsuis right to acquire our
    entire interest in our Japanese subsidiary or to require us to
    buy out Mitsuis interest.



47



---



##### 







| |                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Changes in aggregate spending, research and development
    budgets and outsourcing trends in the pharmaceutical and
    biotechnology industries could adversely affect our operating
    results and growth rate.





| |                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------
| | If we are unable to successfully develop and market
    potential new services, our growth could be adversely
    affected.





| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | Operation of our information systems and evolution of the
    technology platform for our services pose risks to our
    business.





| |   |                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | invasion, disruption, impairment or failure of data centers,
    telecommunications facilities, or other key infrastructure
    platforms,
|
| |  | failure or malfunction of or attacks on critical application
    systems or the hardware they run on, or                                  
|
| |  | excessive costs, excessive delays or other deficiencies in
    systems development and deployment.                                        



48



---



##### 







| |                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------
| | We may not be able to derive the benefits we hope to
    achieve from Verispan, our joint venture with McKesson.





| |   |                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | its ability to obtain continuous access to de-identified
    healthcare data from third parties in sufficient quantities to
    support its informatics products;                                         
|
| |  | its ability to process and use the volume of data received from
    a variety of data providers;                                                                                                          
|
| |  | its ability to attract customers, besides us and McKesson, to
    purchase its products and services;                                                                                                     
|
| |  | the risk of changes in healthcare information privacy laws and
    regulations that could create a risk of liability, increase the
    cost of Verispans business or limit its service
    offerings; and
|
| |  | the risk that industry regulation may restrict Verispans
    ability to analyze and disseminate pharmaceutical and healthcare
    data.                                                                  







| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | The potential loss or delay of our large contracts could
    adversely affect our results.



49



---



##### 





| |                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Investments in our customers business or products
    and our related commercial rights strategies could have a
    negative impact on our financial performance.





| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | Our rights to market and sell certain pharmaceutical
    products expose us to product risks typically associated with
    pharmaceutical companies.





50



---



##### 





| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | If we lose the services of key personnel, our business
    could be adversely affected.





| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | Our insurance may not cover all of our indemnification
    obligations and other liabilities associated with our
    operations.









51



---



##### 





| |                                                            
| | -----------------------------------------------------------
| | We may be exposed to additional income tax
    liabilities.





| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | Changes in government regulation could decrease the need
    for the services we provide.





| |                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Actions by government regulators or customers to limit the
    scope of prescription or withdraw approved products from the
    market could result in a loss of revenue.





| |                                                                                   
| | ----------------------------------------------------------------------------------
| | Failure to comply with existing regulations could result
    in a loss of revenue.



52



---



##### 





| |                                                                                
| | -------------------------------------------------------------------------------
| | Our product development services could result in potential
    liability to us.













53



---



##### 





| |                                                                              
| | -----------------------------------------------------------------------------
| | Our commercialization services could result in potential
    liability to us.





| |                                                                                             
| | --------------------------------------------------------------------------------------------
| | Exchange rate fluctuations may affect our results of
    operations and financial condition.





| |   |                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Foreign Currency Translation Risk. The revenue and
    expenses of our foreign operations are generally denominated in
    local currencies.                                   
|
| |  | Foreign Currency Transaction Risk. Our service contracts
    may be denominated in a currency other than the currency in
    which we incur expenses related to such contracts.





| |                                                                         
| | ------------------------------------------------------------------------
| | We face other risks in connection with our international
    operations.





| |   |                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | foreign countries could enact legislation or impose regulations
    or other restrictions which have an adverse effect on our
    ability to conduct business in that country;                                                                                                                       
|
| |  | the regulatory or judicial authorities of foreign countries may
    not enforce legal rights and recognize business procedures in a
    manner to which we are accustomed or would reasonably expect;                                                                                                
|
| |  | political changes and economic crises may lead to changes in the
    business environment in which we operate; and                                                                                                                                                                                   
|
| |  | natural disasters or international conflict, including terrorist
    acts, could interrupt our services, endangering our personnel,
    causing project delays or loss of study material or results,
    with a significant negative impact on our financial condition
    and results of operations.



| |                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | New and proposed laws and regulations regarding
    confidentiality of patients information could result in
    increased risks of liability or increased cost to us, or could
    limit our service offerings.



54



---



##### 







| |                                                                           
| | --------------------------------------------------------------------------
| | We may be adversely affected by customer or therapeutic
    concentration.







| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to submit electronic records to the FDA
    according to FDA regulations, our ability to perform services
    for our customers which meet applicable regulatory requirements
    could be adversely affected.



55



---



##### 







| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | Compliance with changing regulation of corporate
    governance and public disclosure may result in additional risks
    and expenses.





|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk



56



---



##### 





|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                                                                                       |                                                          |                |           |               |              |   |         |            |               |  |   |              |         |   |   |           |           |  
|-------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | -------------- | --------- | ------------- | ------------ | - | ------- | ---------- | ------------- |  | - | ------------ | ------- | - | - | --------- | --------- | -
|                                                                                                                                       |                                                          |                |           | September 26, |              |   |         | January 1, |               |  |  
|                                                                                                                                       |                                                          | Year ended     |           |               | 2003 through |   |         |            | 2003 through  |  |   | Year ended   |        
|                                                                                                                                       |                                                          | December 31,   |           |               | December 31, |   |         |            | September 25, |  |   | December 31, |        
|                                                                                                                                       |                                                          | 2004           |           |               | 2003         |   |         |            | 2003          |  |   | 2002         |        
|                                                                                                                                       |                                                          |                |           |               |              |   |         |            |               |  |   |              |        
|                                                                                                                                       |                                                          | Successor      |           |               | Successor    |   |         |            | Predecessor   |  |   | Predecessor  |        
|                                                                                                                                       |                                                          | (In thousands) |          
|Net revenues                                                                                                                           |                                                          | $              | 1,782,254 |               |              | $ | 431,626 |            |               |  | $ | 1,196,247    |         |   | $ | 1,570,383 |          
|Add: reimbursed service costs                                                                                                          |                                                          |                | 364,080   |               |              |   | 96,255  |            |               |  |   | 268,683      |         |   |   | 399,650   |          
|                                                                                                                                       |                                                          |                |           |               |              |   |         |            |               |  |   |              |        
|Gross revenues                                                                                                                         |                                                          |                | 2,146,334 |               |              |   | 527,881 |            |               |  |   | 1,464,930    |         |   |   | 1,970,033 |          
|Costs, expenses and other:                                                                                                             |                                                          |                |           |               |              |   |         |            |               |  |   |              |         |   |   |           |          
|                                                                                                                                       | Costs of revenues                                        |                |           | 1,547,444     |              |   |         | 362,012    |               |  |   |              | 969,474 |   |   |           | 1,345,498 |  
|                                                                                                                                       | Selling, general and administrative                      |                |           | 637,115       |              |   |         | 154,688    |               |  |   |              | 397,318 |   |   |           | 508,103   |  
|                                                                                                                                       | Interest income                                          |                |           | (11,324       | )            |   |         | (4,761     | )             |  |   |              | (12,112 | ) |   |           | (16,734   | )
|                                                                                                                                       | Interest expense                                         |                |           | 69,902        |              |   |         | 20,651     |               |  |   |              | 1,738   |   |   |           | 2,551     |  
|                                                                                                                                       | Other expense (income), net                              |                |           | (1,079        | )            |   |         | (2,403     | )             |  |   |              | (5,391  | ) |   |           | 4,486     |  
|                                                                                                                                       | Transaction and restructuring                            |                |           | 6,577         |              |   |         |           |               |  |   |              | 54,148  |   |   |           | 3,359     |  
|                                                                                                                                       | Gain on sale of portion of an investment in a subsidiary |                |           | (24,688       | )            |   |         |           |               |  |   |              |        |   |   |           |          |  
|                                                                                                                                       | Non-operating gain on change of interest transaction     |                |           | (10,030       | )            |   |         |           |               |  |   |              |        |   |   |           |          |  
|                                                                                                                                       |                                                          |                |           |               |              |   |         |            |               |  |   |              |        
|                                                                                                                                       |                                                          |                | 2,213,917 |               |              |   | 530,187 |            |               |  |   | 1,405,175    |         |   |   | 1,847,263 |          
|                                                                                                                                       |                                                          |                |           |               |              |   |         |            |               |  |   |              |        
|(Loss) income before income taxes                                                                                                      |                                                          |                | (67,583   | )             |              |   | (2,306  | )          |               |  |   | 59,755       |         |   |   | 122,770   |          
|Income tax (benefit) expense                                                                                                           |                                                          |                | (6,599    | )             |              |   | 9,810   |            |               |  |   | 27,224       |         |   |   | 40,979    |          
|                                                                                                                                       |                                                          |                |           |               |              |   |         |            |               |  |   |              |        
|(Loss) income before equity in (losses) earnings of
    unconsolidated affiliates and minority interests                               |                                                          |                | (60,984   | )             |              |   | (12,116 | )          |               |  |   | 32,531       |         |   |   | 81,791    |          
|Equity in (losses) earnings of unconsolidated affiliates                                                                               |                                                          |                | (149      | )             |              |   | 13      |            |               |  |   | (8           | )       |   |   | (526      | )        
|Minority interests                                                                                                                     |                                                          |                | (1,866    | )             |              |   | (123    | )          |               |  |   | 12           |         |   |   | (43       | )        
|                                                                                                                                       |                                                          |                |           |               |              |   |         |            |               |  |   |              |        
|(Loss) income from continuing operations                                                                                               |                                                          |                | (62,999   | )             |              |   | (12,226 | )          |               |  |   | 32,535       |         |   |   | 81,222    |          
|Income from discontinued operation                                                                                                     |                                                          |                | 9,620     |               |              |   | 4,799   |            |               |  |   | 4,626        |         |   |   | 442       |          
|Gain from sale of discontinued operation, net of income taxes                                                                          |                                                          |                | 54,422    |               |              |   |        |            |               |  |   |             |         |   |   |          |          
|Cumulative effect on prior years (to December 31, 2001) of
    changing to a different method of recognizing deferred income
    taxes |                                                          |                |          |               |              |   |        |            |               |  |   |             |         |   |   | 45,659    |          
|                                                                                                                                       |                                                          |                |           |               |              |   |         |            |               |  |   |              |        
|Net income (loss)                                                                                                                      |                                                          | $              | 1,043     |               |              | $ | (7,427  | )          |               |  | $ | 37,161       |         |   | $ | 127,323   |          
|                                                                                                                                       |                                                          |                |           |               |              |   |         |            |               |  |   |              |        



57



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


|                              |                                                           |                      |         |         |           |  |         |         |           | 
|----------------------------- | --------------------------------------------------------- | -------------------- | ------- | ------- | --------- |  | ------- | ------- | --------- | 
|                              |                                                           | December 31,         |        
|                              |                                                           |                      |        
|                              |                                                           | 2004                 |         |         | 2003      | 
|                              |                                                           |                      |         |         |           | 
|                              |                                                           | Successor            |         |         | Successor | 
|                              |                                                           | (In thousands)       |        
|Assets                       
|Current assets:               |                                                           |                      |         |         |           |  |         |        
|                              | Cash and cash equivalents                                 |                      | $       | 535,680 |           |  | $       | 373,622 |          
|                              | Trade accounts receivable and unbilled services, net      |                      |         | 300,407 |           |  |         | 237,142 |          
|                              | Investments in debt securities                            |                      |         | 569     |           |  |         | 611     |          
|                              | Prepaid expenses                                          |                      |         | 20,424  |           |  |         | 20,096  |          
|                              | Other current assets and receivables                      |                      |         | 58,254  |           |  |         | 52,723  |          
|                              | Assets of discontinued operation                          |                      |         |        |           |  |         | 88,549  |          
|                              |                                                           |                      |         |         |           | 
|                              |                                                           | Total current assets |         |         | 915,334   |  |         |         | 772,743   | 
|                             
|Property and equipment:       |                                                           |                      |         |         |           |  |         |        
|                              | Land, buildings and leasehold improvements                |                      |         | 181,735 |           |  |         | 167,344 |          
|                              | Equipment                                                 |                      |         | 113,575 |           |  |         | 88,012  |          
|                              | Furniture and fixtures                                    |                      |         | 24,537  |           |  |         | 20,221  |          
|                              | Motor vehicles                                            |                      |         | 39,226  |           |  |         | 25,325  |          
|                              |                                                           |                      |         |         |           | 
|                              |                                                           |                      | 359,073 |         |           |  | 300,902 |        
|                              | Less accumulated depreciation                             |                      |         | (67,928 | )         |  |         | (15,072 | )        
|                              |                                                           |                      |         |         |           | 
|                              |                                                           |                      | 291,145 |         |           |  | 285,830 |        
|Intangibles and other assets: |                                                           |                      |         |         |           |  |         |        
|                              | Investments in debt securities                            |                      |         | 11,552  |           |  |         | 10,426  |          
|                              | Investments in marketable equity securities               |                      |         | 24,425  |           |  |         | 58,294  |          
|                              | Investments in non-marketable equity securities and loans |                      |         | 56,441  |           |  |         | 48,556  |          
|                              | Investments in unconsolidated affiliates                  |                      |         | 120,984 |           |  |         | 121,176 |          
|                              | Commercial rights and royalties                           |                      |         | 138,543 |           |  |         | 12,528  |          
|                              | Accounts receivable  unbilled                            |                      |         | 46,669  |           |  |         | 40,107  |          
|                              | Advances to customer                                      |                      |         |        |           |  |         | 70,000  |          
|                              | Goodwill                                                  |                      |         | 116,013 |           |  |         | 181,327 |          
|                              | Other identifiable intangibles, net                       |                      |         | 274,457 |           |  |         | 335,251 |          
|                              | Deferred income taxes                                     |                      |         | 2,877   |           |  |         | 4,093   |          
|                              | Deposits and other assets                                 |                      |         | 49,522  |           |  |         | 52,380  |          
|                              |                                                           |                      |         |         |           | 
|                              |                                                           |                      | 841,483 |         |           |  | 934,138 |        
|                              |                                                           |                      |         |         |           | 
|                              |                                                           | Total assets         |         | $       | 2,047,962 |  |         | $       | 1,992,711 | 
|                              |                                                           |                      |         |         |           | 



58



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS (Continued)


|                                     |                                                                                                                              |                            |                                            |         |           |           |         |         |         |           | 
|------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ------- | --------- | --------- | ------- | ------- | ------- | --------- | 
|                                     |                                                                                                                              | December 31,               |                                           
|                                     |                                                                                                                              |                            |                                           
|                                     |                                                                                                                              | 2004                       |                                            |         | 2003      |          
|                                     |                                                                                                                              |                            |                                            |         |           |          
|                                     |                                                                                                                              | Successor                  |                                            |         | Successor |          
|                                     |                                                                                                                              | (In thousands,             |                                           
|                                     |                                                                                                                              | except share data)         |                                           
|Liabilities and Shareholders Equity
|Current liabilities:                 |                                                                                                                              |                            |                                            |         |           |           |         |        
|                                     | Accounts payable                                                                                                             |                            | $                                          | 73,716  |           |           | $       | 60,997  |        
|                                     | Accrued expenses                                                                                                             |                            |                                            | 273,951 |           |           |         | 251,703 |        
|                                     | Unearned income                                                                                                              |                            |                                            | 199,450 |           |           |         | 191,255 |        
|                                     | Income taxes payable                                                                                                         |                            |                                            | 25,354  |           |           |         | 24,911  |        
|                                     | Current portion of obligations held under capital leases                                                                     |                            |                                            | 14,888  |           |           |         | 15,086  |        
|                                     | Current portion of long-term debt                                                                                            |                            |                                            | 5,431   |           |           |         | 5,583   |        
|                                     | Other current liabilities                                                                                                    |                            |                                            | 6,993   |           |           |         | 3,169   |        
|                                     | Liabilities of discontinued operation                                                                                        |                            |                                            |        |           |           |         | 7,081   |        
|                                     |                                                                                                                              |                            |                                            |         |           |          
|                                     |                                                                                                                              |                            | Total current liabilities                  |         |           | 599,783   |         |         |         | 559,785   | 
|                                    
|Long-term liabilities:               |                                                                                                                              |                            |                                            |         |           |           |         |        
|                                     | Obligations held under capital leases, less current portion                                                                  |                            |                                            | 16,452  |           |           |         | 10,230  |        
|                                     | Long-term debt, less current portion                                                                                         |                            |                                            | 758,110 |           |           |         | 763,357 |        
|                                     | Deferred income taxes                                                                                                        |                            |                                            | 45,833  |           |           |         | 99,622  |        
|                                     | Minority interest                                                                                                            |                            |                                            | 38,550  |           |           |         | 1,380   |        
|                                     | Other liabilities                                                                                                            |                            |                                            | 21,143  |           |           |         | 23,239  |        
|                                     |                                                                                                                              |                            |                                            |         |           |          
|                                     |                                                                                                                              |                            | 880,088                                    |         |           |           | 897,828 |        
|                                     |                                                                                                                              |                            |                                            |         |           |          
|                                     |                                                                                                                              |                            | Total liabilities                          |         |           | 1,479,871 |         |         |         | 1,457,613 | 
|                                    
|Commitments and contingencies        |                                                                                                                              |                            |                                            |         |           |           |         |        
|                                    
|Shareholders equity:                |                                                                                                                              |                            |                                            |         |           |           |         |        
|                                     | Preferred stock, none issued and outstanding at
    December 31, 2004 and 2003                                               |                            |                                            |        |           |           |         |        |        
|                                     | Common stock and additional paid-in capital,
    125,000,000 shares issued and outstanding at
    December 31, 2004 and 2003 |                            |                                            | 521,979 |           |           |         | 521,725 |        
|                                     | Accumulated deficit                                                                                                          |                            |                                            | (6,384  | )         |           |         | (7,427  | )      
|                                     | Accumulated other comprehensive income                                                                                       |                            |                                            | 52,496  |           |           |         | 20,800  |        
|                                     |                                                                                                                              |                            |                                            |         |           |          
|                                     |                                                                                                                              | Total shareholders equity |                                            |         | 568,091   |           |         |         | 535,098 |          
|                                     |                                                                                                                              |                            |                                            |         |           |          
|                                    
|                                     |                                                                                                                              |                            | Total liabilities and shareholders equity |         | $         | 2,047,962 |         |         | $       | 1,992,711 | 
|                                     |                                                                                                                              |                            |                                            |         |           |          



59



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                                                                  |                                                                                                                                        |                                            |         |               |              |   |        |            |               |  |  |              |         |         |   |         |         |        |  
|--------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------------- | ------------ | - | ------ | ---------- | ------------- |  |  | ------------ | ------- | ------- | - | ------- | ------- | ------ | -
|                                                                                                                                  |                                                                                                                                        |                                            |         | September 26, |              |   |        | January 1, |               |  | 
|                                                                                                                                  |                                                                                                                                        | Year ended                                 |         |               | 2003 through |   |        |            | 2003 through  |  |  | Year ended   |        
|                                                                                                                                  |                                                                                                                                        | December 31,                               |         |               | December 31, |   |        |            | September 25, |  |  | December 31, |        
|                                                                                                                                  |                                                                                                                                        | 2004                                       |         |               | 2003         |   |        |            | 2003          |  |  | 2002         |        
|                                                                                                                                  |                                                                                                                                        |                                            |         |               |              |   |        |            |               |  |  |              |        
|                                                                                                                                  |                                                                                                                                        | Successor                                  |         |               | Successor    |   |        |            | Predecessor   |  |  | Predecessor  |        
|                                                                                                                                  |                                                                                                                                        | (In thousands)                             |        
|Operating activities:                                                                                                             |                                                                                                                                        |                                            |         |               |              |   |        |            |               |  |  |              |         |         |   |         |        
|                                                                                                                                  | Net income (loss)                                                                                                                      |                                            | $       | 1,043         |              |   | $      | (7,427     | )             |  |  | $            | 37,161  |         |   | $       | 127,323 |       
|                                                                                                                                  | Income from discontinued operation                                                                                                     |                                            |         | (9,620        | )            |   |        | (4,799     | )             |  |  |              | (4,626  | )       |   |         | (442    | )     
|                                                                                                                                  | Gain from sale of discontinued operation, net of tax                                                                                   |                                            |         | (54,422       | )            |   |        |           |               |  |  |              |        |         |   |         |        |       
|                                                                                                                                  | Cumulative effect on prior years (to December 31, 2001) of
    changing to a different method of recognizing deferred income
    taxes |                                            |         |              |              |   |        |           |               |  |  |              |        |         |   |         | (45,659 | )     
|                                                                                                                                  |                                                                                                                                        |                                            |         |               |              |   |        |            |               |  |  |              |        
|                                                                                                                                  | (Loss) income from continuing operations                                                                                               |                                            |         | (62,999       | )            |   |        | (12,226    | )             |  |  |              | 32,535  |         |   |         | 81,222  |       
|Adjustments to reconcile (loss) income from continuing
    operations to net cash (used in) provided by operating
    activities: |                                                                                                                                        |                                            |         |               |              |   |        |            |               |  |  |              |         |         |   |         |        
|                                                                                                                                  | Depreciation and amortization                                                                                                          |                                            |         | 128,359       |              |   |        | 35,532     |               |  |  |              | 61,478  |         |   |         | 87,127  |       
|                                                                                                                                  | Amortization expense of debt issuance costs                                                                                            |                                            |         | 3,565         |              |   |        | 878        |               |  |  |              |        |         |   |         |        |       
|                                                                                                                                  | Amortization of commercial rights and royalties assets                                                                                 |                                            |         | 16,985        |              |   |        |           |               |  |  |              |        |         |   |         |        |       
|                                                                                                                                  | Restructuring (payments) accrual and write-off of other
    assets, net                                                                |                                            |         | (3,442        | )            |   |        | (1,942     | )             |  |  |              | 283     |         |   |         | (21,158 | )     
|                                                                                                                                  | Transaction costs                                                                                                                      |                                            |         |              |              |   |        |           |               |  |  |              | 44,057  |         |   |         |        |       
|                                                                                                                                  | Loss (gain) on sale of property and equipment, net                                                                                     |                                            |         | 4,988         |              |   |        | (124       | )             |  |  |              | (383    | )       |   |         | 2,399   |       
|                                                                                                                                  | Gain from sale of certain assets                                                                                                       |                                            |         | (5,967        | )            |   |        |           |               |  |  |              |        |         |   |         |        |       
|                                                                                                                                  | Gain from sale of a portion of an investment in a subsidiary                                                                           |                                            |         | (24,688       | )            |   |        |           |               |  |  |              |        |         |   |         |        |       
|                                                                                                                                  | Non-operating gain on change of interest transaction                                                                                   |                                            |         | (10,030       | )            |   |        |           |               |  |  |              |        |         |   |         |        |       
|                                                                                                                                  | Loss (gain) on investments, net                                                                                                        |                                            |         | 8,956         |              |   |        | (2,952     | )             |  |  |              | (28,085 | )       |   |         | (13,710 | )     
|                                                                                                                                  | Provision for deferred income taxes                                                                                                    |                                            |         | 3,441         |              |   |        | 705        |               |  |  |              | 12,592  |         |   |         | 2,464   |       
|                                                                                                                                  | Change in operating assets and liabilities:                                                                                            |                                            |         |               |              |   |        |            |               |  |  |              |         |         |   |         |         |       
|                                                                                                                                  |                                                                                                                                        | Accounts receivable and unbilled services  |         |               | (50,112      | ) |        |            | 23,495        |  |  |              |         | 105,863 |   |         |         | 62,268 |  
|                                                                                                                                  |                                                                                                                                        | Prepaid expenses and other assets          |         |               | (11,955      | ) |        |            | 17,428        |  |  |              |         | 43,790  |   |         |         | (6,509 | )
|                                                                                                                                  |                                                                                                                                        | Accounts payable and accrued expenses      |         |               | 33,954       |   |        |            | 16,759        |  |  |              |         | (10,638 | ) |         |         | 12,194 |  
|                                                                                                                                  |                                                                                                                                        | Unearned income                            |         |               | (730         | ) |        |            | 16,716        |  |  |              |         | (80,304 | ) |         |         | 30,390 |  
|                                                                                                                                  |                                                                                                                                        | Income taxes payable and other liabilities |         |               | (48,674      | ) |        |            | 1,932         |  |  |              |         | (16,357 | ) |         |         | 7,330  |  
|                                                                                                                                  | Other                                                                                                                                  |                                            |         | 613           |              |   |        | (191       | )             |  |  |              | 306     |         |   |         |        |       
|                                                                                                                                  |                                                                                                                                        |                                            |         |               |              |   |        |            |               |  |  |              |        
|Net cash (used in) provided by operating activities                                                                               |                                                                                                                                        |                                            | (17,736 | )             |              |   | 96,010 |            |               |  |  | 165,137      |         |         |   | 244,017 |        



60



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)


|                                                         |                                                                            |                |         |               |              |   |            |            |               |  |   |              |         |   |   |          |         |  
|-------------------------------------------------------- | -------------------------------------------------------------------------- | -------------- | ------- | ------------- | ------------ | - | ---------- | ---------- | ------------- |  | - | ------------ | ------- | - | - | -------- | ------- | -
|                                                         |                                                                            |                |         | September 26, |              |   |            | January 1, |               |  |  
|                                                         |                                                                            | Year ended     |         |               | 2003 through |   |            |            | 2003 through  |  |   | Year ended   |        
|                                                         |                                                                            | December 31,   |         |               | December 31, |   |            |            | September 25, |  |   | December 31, |        
|                                                         |                                                                            | 2004           |         |               | 2003         |   |            |            | 2003          |  |   | 2002         |        
|                                                         |                                                                            |                |         |               |              |   |            |            |               |  |   |              |        
|                                                         |                                                                            | Successor      |         |               | Successor    |   |            |            | Predecessor   |  |   | Predecessor  |        
|                                                         |                                                                            | (In thousands) |        
|Investing activities:                                    |                                                                            |                |         |               |              |   |            |            |               |  |   |              |         |   |   |          |        
|                                                         | Acquisition of property, equipment and software                            |                |         | (50,114       | )            |   |            | (14,779    | )             |  |   |              | (39,143 | ) |   |          | (39,910 | )
|                                                         | Repurchase of common stock in Transaction                                  |                |         |              |              |   |            | (1,617,567 | )             |  |   |              |        |   |   |          |        |  
|                                                         | Payment of transaction costs in Transaction                                |                |         | (20,367       | )            |   |            | (64,734    | )             |  |   |              | (2,896  | ) |   |          |        |  
|                                                         | Acquisition of businesses, net of cash acquired                            |                |         | (2,299        | )            |   |            | (3,363     | )             |  |   |              | (1,379  | ) |   |          | (27,232 | )
|                                                         | Acquisition of intangible assets                                           |                |         |              |              |   |            |           |               |  |   |              | (3,739  | ) |   |          | (2,541  | )
|                                                         | Advances to customer                                                       |                |         |              |              |   |            |           |               |  |   |              |        |   |   |          | (70,000 | )
|                                                         | Acquisition of commercial rights and royalties                             |                |         | (53,000       | )            |   |            | (3,000     | )             |  |   |              | (17,710 | ) |   |          | (15,790 | )
|                                                         | Proceeds from disposal of discontinued operation                           |                |         | 188,329       |              |   |            |           |               |  |   |              |        |   |   |          |        |  
|                                                         | Expenses of disposal of discontinued operation                             |                |         | (18,027       | )            |   |            |           |               |  |   |              |        |   |   |          |        |  
|                                                         | Proceeds from sale of certain assets                                       |                |         | 9,218         |              |   |            |           |               |  |   |              |        |   |   |          |        |  
|                                                         | Proceeds from sale of minority interest in subsidiary, net of
    expenses |                |         | 35,963        |              |   |            |           |               |  |   |              |        |   |   |          |        |  
|                                                         | Proceeds from disposition of property and equipment                        |                |         | 6,530         |              |   |            | 1,960      |               |  |   |              | 6,219   |   |   |          | 6,290   |  
|                                                         | Maturities of held-to-maturity investments                                 |                |         | 693           |              |   |            | 326        |               |  |   |              | 245     |   |   |          | 397     |  
|                                                         | Purchase of available-for-sale investments                                 |                |         | (1,042        | )            |   |            | (1,212     | )             |  |   |              | (1,353  | ) |   |          | (1,611  | )
|                                                         | Proceeds from sale of available-for-sale investments                       |                |         |              |              |   |            |           |               |  |   |              | 26,375  |   |   |          |        |  
|                                                         | Purchase of equity securities                                              |                |         | (13,070       | )            |   |            | (5,900     | )             |  |   |              | (10,645 | ) |   |          | (6,616  | )
|                                                         | Proceeds from sale of equity securities                                    |                |         | 39,983        |              |   |            | 7,633      |               |  |   |              | 61,926  |   |   |          | 26,853  |  
|                                                         | Purchase of other investments                                              |                |         | (1,838        | )            |   |            | (120       | )             |  |   |              | (185    | ) |   |          | (11,483 | )
|                                                         | Proceeds from other investments                                            |                |         | 667           |              |   |            |           |               |  |   |              |        |   |   |          | 608     |  
|                                                         | Advances to unconsolidated affiliates                                      |                |         |              |              |   |            |           |               |  |   |              |        |   |   |          | (10,328 | )
|                                                         | Other                                                                      |                |         | 250           |              |   |            |           |               |  |   |              |        |   |   |          |        |  
|                                                         |                                                                            |                |         |               |              |   |            |            |               |  |   |              |        
|Net cash provided by (used in) investing activities      |                                                                            |                | 121,876 |               |              |   | (1,700,756 | )          |               |  |   | 17,715       |         |   |   | (151,363 | )      
|Financing activities:                                    |                                                                            |                |         |               |              |   |            |            |               |  |   |              |         |   |   |          |        
|                                                         | Proceeds from issuance of debt, net of costs, in Transaction               |                |         |              |              |   |            | 733,433    |               |  |   |              |        |   |   |          |        |  
|                                                         | Capital contribution in Transaction                                        |                |         |              |              |   |            | 390,549    |               |  |   |              |        |   |   |          |        |  
|                                                         | Repayment of debt                                                          |                |         | (5,775        | )            |   |            | (2,568     | )             |  |   |              | (1,832  | ) |   |          | (2,487  | )
|                                                         | Principal payments on capital lease obligations                            |                |         | (13,062       | )            |   |            | (3,079     | )             |  |   |              | (11,416 | ) |   |          | (12,987 | )
|                                                         | Dividend from discontinued operation                                       |                |         | 10,874        |              |   |            | 8,336      |               |  |   |              | 3,138   |   |   |          | 1,169   |  
|                                                         | Intercompany with parent companies                                         |                |         | (985          | )            |   |            |           |               |  |   |              |        |   |   |          |        |  
|                                                         | Proceeds from change in interest transaction                               |                |         | 41,773        |              |   |            |           |               |  |   |              |        |   |   |          |        |  
|                                                         | Issuance of common stock                                                   |                |         |              |              |   |            |           |               |  |   |              | 7,042   |   |   |          | 9,641   |  
|                                                         | Repurchase of common stock                                                 |                |         |              |              |   |            |           |               |  |   |              |        |   |   |          | (27,024 | )
|                                                         |                                                                            |                |         |               |              |   |            |            |               |  |   |              |        
|Net cash provided by (used in) financing activities      |                                                                            |                | 32,825  |               |              |   | 1,126,671  |            |               |  |   | (3,068       | )       |   |   | (31,688  | )      
|Effect of foreign currency exchange rate changes on cash |                                                                            |                | 25,093  |               |              |   | 9,736      |            |               |  |   | 17,922       |         |   |   | 18,226   |        
|                                                         |                                                                            |                |         |               |              |   |            |            |               |  |   |              |        
|Increase (decrease) in cash and cash equivalents         |                                                                            |                | 162,058 |               |              |   | (468,339   | )          |               |  |   | 197,706      |         |   |   | 79,192   |        
|Cash and cash equivalents at beginning of period         |                                                                            |                | 373,622 |               |              |   | 841,961    |            |               |  |   | 644,255      |         |   |   | 565,063  |        
|                                                         |                                                                            |                |         |               |              |   |            |            |               |  |   |              |        
|Cash and cash equivalents at end of period               |                                                                            | $              | 535,680 |               |              | $ | 373,622    |            |               |  | $ | 841,961      |         |   | $ | 644,255  |        
|                                                         |                                                                            |                |         |               |              |   |            |            |               |  |   |              |        
|Supplemental Cash Flow Information:                      |                                                                            |                |         |               |              |   |            |            |               |  |   |              |         |   |   |          |        
|                                                         | Interest paid, net of capitalized interest                                 |                | $       | 66,837        |              |   | $          | 7,689      |               |  |   | $            | 1,785   |   |   | $        | 2,633   |  
|                                                         | Capitalized interest                                                       |                |         | 277           |              |   |            |           |               |  |   |              |        |   |   |          |        |  
|                                                         | Income taxes paid, net                                                     |                |         | 35,541        |              |   |            | 2,263      |               |  |   |              | 37,571  |   |   |          | 19,466  |  
|Non-cash Investing and Financing Activities:             |                                                                            |                |         |               |              |   |            |            |               |  |   |              |         |   |   |          |        
|                                                         | Acquisition of property and equipment utilizing capital leases             |                |         | 9,266         |              |   |            | 2,568      |               |  |   |              | 3,144   |   |   |          | 9,903   |  
|                                                         | Equity impact of rollovers in Transaction                                  |                |         |              |              |   |            | 107,062    |               |  |   |              |        |   |   |          |        |  
|                                                         | Transfer of assets to joint venture                                        |                |         |              |              |   |            |           |               |  |   |              |        |   |   |          | 112,136 |  
|                                                         | Unrealized gain (loss) on marketable securities, net of income
    tax     |                | $       | (461          | )            |   | $          | 976        |               |  |   | $            | 19,637  |   |   | $        | 6,026   |  



61



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY


(In thousands, except share data)


|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |   |   |   |         |   |   |   |           |        |         |  
|----------------------------------------------------------------------------------------- | ------------------------------------------------------ | ---------------------------------------------------- | ----------- | - | ------------- | ------------ | -------- | ----------- | ------- | ------------- | ------- | ------ | ------- | --------- | ------- | ------ | ---------- | - | ------- | - | - | ----- | ----- | - | - | - | ------- | - | - | - | --------- | ------ | ------- | -
|                                                                                          |                                                        |                                                      |             |   |               |              |          | Accumulated |         |               |         |        |         |           |         |        |           
|                                                                                          |                                                        |                                                      |             |   |               | (Accumulated |          |             | Other   |               |         |        |         |           |         |        |            |  
|                                                                                          |                                                        | Number of                                            |             |   |               |              | Deficit) |             |         | Comprehensive |         |        |         |           |         |        | Additional |   |         |  
|                                                                                          |                                                        | Common                                               |             |   | Comprehensive |              |          | Retained    |         |               | Income  |        |         | Preferred |         | Common |            |   | Paid-In |   |   |      
|                                                                                          |                                                        | Shares                                               |             |   | Income        |              |          | Earnings    |         |               | (Loss)  |        |         | Stock     |         | Stock  |            |   | Capital |   |   | Total |      
|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |      
|Predecessor:                                                                              |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |   |   |   |         |   |   |   |           |       
|Balance, December 31, 2001                                                                |                                                        |                                                      | 118,623,669 |   |               |              |          |             |         | $             | 589,142 |        |         | $         | (31,129 | )      |            | $ |        |   |   | $     | 1,190 |   |   | $ | 895,885 |   |   | $ | 1,455,088 |       
|Issuance of common stock                                                                  |                                                        |                                                      | 796,928     |   |               |              |          |             |         |               |        |        |         |           |        |        |            |   |        |   |   |       | 9     |   |   |   | 9,610   |   |   |   | 9,619     |       
|Repurchase of common stock                                                                |                                                        |                                                      | (1,570,000  | ) |               |              |          |             |         |               |        |        |         |           |        |        |            |   |        |   |   |       | (19   | ) |   |   | (27,005 | ) |   |   | (27,024   | )     
|Tax benefit from the exercise of non-qualified stock options                              |                                                        |                                                      |             |   |               |              |          |             |         |               |        |        |         |           |        |        |            |   |        |   |   |       |      |   |   |   | 857     |   |   |   | 857       |       
|Other                                                                                     |                                                        |                                                      |             |   |               |              |          |             |         |               |        |        |         |           |        |        |            |   |        |   |   |       |      |   |   |   | 1,400   |   |   |   | 1,400     |       
|Comprehensive income:                                                                     |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |   |   |   |         |   |   |   |           |       
|                                                                                          |                                                        | Net income                                           |             |   |               |              |          | $           | 127,323 |               |         |        | 127,323 |           |         |        |           |   |         |   |  |       |       |   |  |   |         |   |  |   |           |        | 127,323 |  
|                                                                                          |                                                        | Unrealized gain on marketable securities, net of tax |             |   |               |              |          |             | 6,026   |               |         |        |        |           |         |        | 6,026      |   |         |   |  |       |       |   |  |   |         |   |  |   |           |        | 6,026   |  
|                                                                                          |                                                        | Reclassification adjustment, net of tax              |             |   |               |              |          |             | (17,097 | )             |         |        |        |           |         |        | (17,097    | ) |         |   |  |       |       |   |  |   |         |   |  |   |           |        | (17,097 | )
|                                                                                          |                                                        | Foreign currency adjustments                         |             |   |               |              |          |             | 42,194  |               |         |        |        |           |         |        | 42,194     |   |         |   |  |       |       |   |  |   |         |   |  |   |           |        | 42,194  |  
|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |  
|Comprehensive income for year ended December 31, 2002                                     |                                                        |                                                      |             |   |               | $            | 158,446  |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |   |   |   |         |   |   |   |           |       
|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |  
|Balance, December 31, 2002                                                                |                                                        |                                                      | 117,850,597 |   |               |              |          |             |         |               | 716,465 |        |         |           | (6      | )      |            |   |        |   |   |       | 1,180 |   |   |   | 880,747 |   |   |   | 1,598,386 |       
|Issuance of common stock                                                                  |                                                        |                                                      | 849,181     |   |               |              |          |             |         |               |        |        |         |           |        |        |            |   |        |   |   |       | 8     |   |   |   | 7,803   |   |   |   | 7,811     |       
|Tax benefit from the exercise of non-qualified stock options                              |                                                        |                                                      |             |   |               |              |          |             |         |               |        |        |         |           |        |        |            |   |        |   |   |       |      |   |   |   | 1,092   |   |   |   | 1,092     |       
|Other                                                                                     |                                                        |                                                      | (73,266     | ) |               |              |          |             |         |               |        |        |         |           |        |        |            |   |        |   |   |       | (1    | ) |   |   | (346    | ) |   |   | (347      | )     
|Comprehensive income:                                                                     |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |   |   |   |         |   |   |   |           |       
|                                                                                          |                                                        | Net income                                           |             |   |               |              |          | $           | 37,161  |               |         |        | 37,161  |           |         |        |           |   |         |   |  |       |       |   |  |   |         |   |  |   |           |        | 37,161  |  
|                                                                                          |                                                        | Unrealized gain on marketable securities, net of tax |             |   |               |              |          |             | 19,637  |               |         |        |        |           |         |        | 19,637     |   |         |   |  |       |       |   |  |   |         |   |  |   |           |        | 19,637  |  
|                                                                                          |                                                        | Reclassification adjustment, net of tax              |             |   |               |              |          |             | (11,103 | )             |         |        |        |           |         |        | (11,103    | ) |         |   |  |       |       |   |  |   |         |   |  |   |           |        | (11,103 | )
|                                                                                          |                                                        | Minimum pension liability, net of tax                |             |   |               |              |          |             | (3,098  | )             |         |        |        |           |         |        | (3,098     | ) |         |   |  |       |       |   |  |   |         |   |  |   |           |        | (3,098  | )
|                                                                                          |                                                        | Foreign currency adjustments                         |             |   |               |              |          |             | 25,178  |               |         |        |        |           |         |        | 25,178     |   |         |   |  |       |       |   |  |   |         |   |  |   |           |        | 25,178  |  
|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |  
|Comprehensive income for the period from January 1, 2003
    through September 25, 2003   |                                                        |                                                      |             |   |               | $            | 67,775   |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |   |   |   |         |   |   |   |           |       
|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |  
|Balance, September 25, 2003                                                               |                                                        |                                                      | 118,626,512 |   |               |              |          |             |         | $             | 753,626 |        |         | $         | 30,608  |        |            | $ |        |   |   | $     | 1,187 |   |   | $ | 889,296 |   |   | $ | 1,674,717 |       
|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |  
|                                                                                         
|Successor:                                                                                |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |   |   |   |         |   |   |   |           |       
|Balance, September 25, 2003                                                               |                                                        |                                                      |             |   |               |              |          |             |         | $             |        |        |         | $         |        |        |            | $ |        |   |   | $     |      |   |   | $ |        |   |   | $ |          |       
|Issuance of common stock                                                                  |                                                        |                                                      | 125,000,000 |   |               |              |          |             |         |               |        |        |         |           |        |        |            |   |        |   |   |       | 1,250 |   |   |   | 520,475 |   |   |   | 521,725   |       
|Comprehensive income:                                                                     |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |   |   |   |         |   |   |   |           |       
|                                                                                          | Net loss                                               |                                                      |             |   |               |              | $        | (7,427      | )       |               |         | (7,427 | )       |           |         |       |            |   |         |  |   |       |       |  |   |   |         |  |   |   |           | (7,427 | )      
|                                                                                          | Unrealized gain on marketable securities, net of tax   |                                                      |             |   |               |              |          | 1,968       |         |               |         |       |         |           |         | 1,968  |            |   |         |  |   |       |       |  |   |   |         |  |   |   |           | 1,968  |        
|                                                                                          | Unrealized loss on derivative instruments, net of tax  |                                                      |             |   |               |              |          | (992        | )       |               |         |       |         |           |         | (992   | )          |   |         |  |   |       |       |  |   |   |         |  |   |   |           | (992   | )      
|                                                                                          | Foreign currency adjustments                           |                                                      |             |   |               |              |          | 19,824      |         |               |         |       |         |           |         | 19,824 |            |   |         |  |   |       |       |  |   |   |         |  |   |   |           | 19,824 |        
|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |  
|Comprehensive income for the period from September 26, 2003
    through December 31, 2003 |                                                        |                                                      |             |   |               | $            | 13,373   |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |   |   |   |         |   |   |   |           |       
|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |  
|Balance, December 31, 2003                                                                |                                                        |                                                      | 125,000,000 |   |               |              |          |             |         |               | (7,427  | )      |         |           | 20,800  |        |            |   |        |   |   |       | 1,250 |   |   |   | 520,475 |   |   |   | 535,098   |       
|Stock compensation expense                                                                |                                                        |                                                      |             |   |               |              |          |             |         |               |        |        |         |           |        |        |            |   |        |   |   |       |      |   |   |   | 254     |   |   |   | 254       |       
|Comprehensive income:                                                                     |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |   |   |   |         |   |   |   |           |       
|                                                                                          | Net income                                             |                                                      |             |   |               |              | $        | 1,043       |         |               |         | 1,043  |         |           |         |       |            |   |         |  |   |       |       |  |   |   |         |  |   |   |           | 1,043  |        
|                                                                                          | Unrealized loss on marketable securities, net of tax   |                                                      |             |   |               |              |          | (482        | )       |               |         |       |         |           |         | (482   | )          |   |         |  |   |       |       |  |   |   |         |  |   |   |           | (482   | )      
|                                                                                          | Unrealized gain on derivative instruments, net of tax  |                                                      |             |   |               |              |          | 21          |         |               |         |       |         |           |         | 21     |            |   |         |  |   |       |       |  |   |   |         |  |   |   |           | 21     |        
|                                                                                          | Reclassification adjustment, net of tax                |                                                      |             |   |               |              |          | 2,219       |         |               |         |       |         |           |         | 2,219  |            |   |         |  |   |       |       |  |   |   |         |  |   |   |           | 2,219  |        
|                                                                                          | Minimum pension liability, net of tax                  |                                                      |             |   |               |              |          | 4,890       |         |               |         |       |         |           |         | 4,890  |            |   |         |  |   |       |       |  |   |   |         |  |   |   |           | 4,890  |        
|                                                                                          | Foreign currency adjustments                           |                                                      |             |   |               |              |          | 25,494      |         |               |         |       |         |           |         | 25,494 |            |   |         |  |   |       |       |  |   |   |         |  |   |   |           | 25,494 |        
|                                                                                          | Other comprehensive income to non-controlling interest |                                                      |             |   |               |              |          | (446        | )       |               |         |       |         |           |         | (446   | )          |   |         |  |   |       |       |  |   |   |         |  |   |   |           | (446   | )      
|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |  
|Comprehensive income for year ended December 31, 2004                                     |                                                        |                                                      |             |   |               | $            | 32,739   |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |   |   |   |         |   |   |   |           |       
|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |  
|Balance, December 31, 2004                                                                |                                                        |                                                      | 125,000,000 |   |               |              |          |             |         | $             | (6,384  | )      |         | $         | 52,496  |        |            | $ |        |   |   | $     | 1,250 |   |   | $ | 520,729 |   |   | $ | 568,091   |       
|                                                                                          |                                                        |                                                      |             |   |               |              |          |             |         |               |         |        |         |           |         |        |            |   |         |   |   |       |       |  



62



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial Statements




|   |                                           
|-- | ------------------------------------------
|1. | Summary of Significant Accounting Policies



| |            
| | -----------
| | The Company





| |                            
| | ---------------------------
| | Principles of Consolidation





| |                      
| | ---------------------
| | Basis of Presentation











| |                 
| | ----------------
| | Use of Estimates





| |                   
| | ------------------
| | Foreign Currencies



63



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






| |                         
| | ------------------------
| | Foreign Currency Hedging





| |                                 
| | --------------------------------
| | Cash Equivalents and Investments









| |            
| | -----------
| | Derivatives



64



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






| |                             
| | ----------------------------
| | Billed and Unbilled Services





| |                  
| | -----------------
| | Long-Lived Assets



|                                     |  |  |               | 
|------------------------------------ |  |  | ------------- | 
|Buildings and leasehold improvements |  |  | 3 - 50  years | 
|Equipment                            |  |  | 3 - 10  years | 
|Furniture and fixtures               |  |  | 5 - 10  years | 
|Motor vehicles                       |  |  | 3 - 5 years   | 





|                                            |  |  |               | 
|------------------------------------------- |  |  | ------------- | 
|Trademarks and trade names                  |  |  | 29 years      | 
|Product licensing and distribution rights   |  |  | 3 - 10  years | 
|Contract backlog and customer relationships |  |  | 2 - 8 years   | 
|Software and related                        |  |  | 3 - 5 years   | 
|Covenants not-to-compete                    |  |  | 1 year        | 







| |                    
| | -------------------
| | Revenue Recognition



65



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)














66



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)










| |                             
| | ----------------------------
| | Concentration of Credit Risk





| |                               
| | ------------------------------
| | Research and Development Costs







| |             
| | ------------
| | Income Taxes



67



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






| |                            
| | ---------------------------
| | Employee Stock Compensation











68



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                                                                                   |  |                    |        |   |  |                    |   |         |                   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------ |  | ------------------ | ------ | - |  | ------------------ | - | ------- | ----------------- |  | - | ------- | -
|                                                                                                                   |  | September 26, 2003 |        |   |  | January 1, 2003    |   |         |                  
|                                                                                                                   |  | through            |        |   |  | through            |   |         | Year ended        | 
|                                                                                                                   |  | December 31, 2003  |        |   |  | September 25, 2003 |   |         | December 31, 2002 | 
|                                                                                                                   |  |                    |        |   |  |                    |   |         |                   | 
|                                                                                                                   |  | Successor          |        |   |  | Predecessor        |   |         | Predecessor       | 
|Net (loss) income, as reported                                                                                     |  | $                  | (7,427 | ) |  |                    | $ | 37,161  |                   |  | $ | 127,323 |  
|Add: stock-based compensation expense included in net income
    (loss) as reported, net of related income tax     |  |                    |       |   |  |                    |   | 7,262   |                   |  |   |        |  
|Less: total stock-based employee compensation expense determined
    under SFAS No. 123, net of related income tax |  |                    |       |   |  |                    |   | (18,435 | )                 |  |   | (15,957 | )
|                                                                                                                   |  |                    |        |   |  |                    |   |         |                   | 
|Pro forma net (loss) income                                                                                        |  | $                  | (7,427 | ) |  |                    | $ | 25,988  |                   |  | $ | 111,366 |  
|                                                                                                                   |  |                    |        |   |  |                    |   |         |                   | 



| |                     
| | --------------------
| | Comprehensive Income





| |                                      
| | -------------------------------------
| | Recently Adopted Accounting Standards







69



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)








|   |                                           
|-- | ------------------------------------------
|2. | Pharma Services and Financing Transactions



70



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                     |               |   |           |           | 
|---------------------------------------------------- | ------------- | - | --------- | --------- | 
|Sources:                                             |               |   |           |          
|Proceeds Senior Term Loan                            |               | $ | 310,000   |          
|Proceeds from 10% Senior Subordinated Notes due 2013 |               |   | 450,000   |          
|Proceeds from equity investors                       |               |   | 424,406   |          
|Exchange of equity                                   |               |   | 107,062   |          
|Available cash                                       |               |   | 592,009   |          
|                                                     |               |   |          
|                                                     | Total sources |   | $         | 1,883,477 | 
|                                                     |               |   |          
|Uses:                                                |               |   |           |          
|Purchase price                                       |               | $ | 1,736,211 |          
|Repayment of certain debt                            |               |   | 912       |          
|Fees and expenses                                    |               |   | 146,354   |          
|                                                     |               |   |          
|                                                     | Total uses    |   | $         | 1,883,477 | 
|                                                     |               |   |          



|                                                                                                      |                                    |   |           |           | 
|----------------------------------------------------------------------------------------------------- | ---------------------------------- | - | --------- | --------- | 
|Acquired tangible net assets                                                                          |                                    | $ | 1,179,070 |          
|Acquired intangible assets  commercial rights and
    royalties, licenses and customer relationships |                                    |   | 207,829   |          
|Acquired intangible assets  trademarks, trade names
    and other                                    |                                    |   | 164,720   |          
|Acquired intangible assets  software and related                                                     |                                    |   | 65,859    |          
|Goodwill                                                                                              |                                    |   | 118,733   |          
|                                                                                                      |                                    |   |          
|                                                                                                      | Total allocation of purchase price |   | $         | 1,736,211 | 
|                                                                                                      |                                    |   |          







71



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)








|   |                                          
|-- | -----------------------------------------
|3. | Accounts Receivable and Unbilled Services



|                                |                   |              |         |         |           |   |         |         | 
|------------------------------- | ----------------- | ------------ | ------- | ------- | --------- | - | ------- | ------- | 
|                                |                   | December 31, |        
|                                |                   |              |        
|                                |                   | 2004         |         |         | 2003      |  
|                                |                   |              |         |         |           |  
|                                |                   | Successor    |         |         | Successor |  
|Trade:                          |                   |              |         |         |           |   |         |        
|                                | Billed            |              | $       | 166,647 |           |   | $       | 139,963 | 
|                                | Unbilled services |              |         | 138,607 |           |   |         | 103,216 | 
|                                |                   |              |         |         |           |  
|                                |                   |              | 305,254 |         |           |   | 243,179 |        
|Allowance for doubtful accounts |                   |              | (4,847  | )       |           |   | (6,037  | )      
|                                |                   |              |         |         |           |  
|                                |                   | $            | 300,407 |         |           | $ | 237,142 |        
|                                |                   |              |         |         |           |  



|                         |                |                         |     |    |           |  |     |    |    | 
|------------------------ | -------------- | ----------------------- | --- | -- | --------- |  | --- | -- | -- | 
|                         |                | December 31,            |    
|                         |                |                         |    
|Region                   |                | 2004                    |     |    | 2003      | 
|                         |                |                         |     |    |           | 
|                         |                | Successor               |     |    | Successor | 
|Americas:                |                |                         |     |    |           |  |     |   
|                         | United States  |                         |     | 41 | %         |  |     | 35 | % 
|                         | Other          |                         |     | 1  |           |  |     | 3  |   
|                         |                |                         |     |    |           | 
|                         |                | Americas                |     |    | 42        |  |     |    | 38 | 
|Europe:                  |                |                         |     |    |           |  |     |   
|                         | United Kingdom |                         |     | 32 |           |  |     | 28 |   
|                         | Other          |                         |     | 17 |           |  |     | 20 |   
|                         |                |                         |     |    |           | 
|                         |                | Europe                  |     |    | 49        |  |     |    | 48 | 
|Asia-Pacific and Africa: |                |                         |     |    |           |  |     |   
|                         | Japan          |                         |     | 6  |           |  |     | 8  |   
|                         | Other          |                         |     | 3  |           |  |     | 6  |   
|                         |                |                         |     |    |           | 
|                         |                | Asia-Pacific and Africa |     |    | 9         |  |     |    | 14 | 
|                         |                |                         |     |    |           | 
|                         |                |                         | 100 | %  |           |  | 100 | % 
|                         |                |                         |     |    |           | 

72



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|   |                                
|-- | -------------------------------
|4. | Commercial Rights and Royalties

tm tm


|                                |  |              |         |  |           |   |         | 
|------------------------------- |  | ------------ | ------- |  | --------- | - | ------- | 
|                                |  | December 31, |        
|                                |  |              |        
|                                |  | 2004         |         |  | 2003      |  
|                                |  |              |         |  |           |  
|                                |  | Successor    |         |  | Successor |  
|Commercial rights and royalties |  | $            | 138,543 |  |           | $ | 12,528  | 
|Accounts receivable-unbilled    |  |              | 46,669  |  |           |   | 40,107  | 
|Advances to customer            |  |              |        |  |           |   | 70,000  | 
|                                |  |              |         |  |           |  
|Total                           |  | $            | 185,212 |  |           | $ | 122,635 | 
|                                |  |              |         |  |           |  



tm tm tm




tm tm tm tm


73



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)








74



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






tm tm tm tm tm tm tm tm


75



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


tm tm tm tm


tm tm tm tm tm




76



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)








77



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






tm tm tm tm tm




78



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                  |  |      |         |  |      |   |        |      |  |   |        |  |  |      |        |  |       |   |        |  |  |   |         | 
|--------------------------------- |  | ---- | ------- |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  | ----- | - | ------ |  |  | - | ------- | 
|                                  |  | 2005 |         |  | 2006 |   |        | 2007 |  |   | 2008   |  |  | 2009 |        |  | Total |  
|                                  |  |      |         |  |      |   |        |      |  |   |        |  |  |      |        |  |       |  
|Service commitments               |  | $    | 130,729 |  |      | $ | 99,086 |      |  | $ | 97,431 |  |  | $    | 88,593 |  |       | $ | 66,932 |  |  | $ | 482,771 | 
|Milestone payments                |  |      | 20,000  |  |      |   |       |      |  |   |       |  |  |      |       |  |       |   |       |  |  |   | 20,000  | 
|Licensing and distribution rights |  |      | 2,183   |  |      |   |       |      |  |   |       |  |  |      |       |  |       |   |       |  |  |   | 2,183   | 
|                                  |  |      |         |  |      |   |        |      |  |   |        |  |  |      |        |  |       |  
|                                  |  | $    | 152,912 |  |      | $ | 99,086 |      |  | $ | 97,431 |  |  | $    | 88,593 |  |       | $ | 66,932 |  |  | $ | 504,954 | 
|                                  |  |      |         |  |      |   |        |      |  |   |        |  |  |      |        |  |       |  



|   |                              
|-- | -----------------------------
|5. | Investments  Debt Securities



|                             |                              |           |       |       |            |       |            |   |        |   |   |   |  |   |       |       | 
|---------------------------- | ---------------------------- | --------- | ----- | ----- | ---------- | ----- | ---------- | - | ------ | - | - | - |  | - | ----- | ----- | 
|                             |                              |           |       | Gross |            | Gross |            |  
|                             |                              | Amortized |       |       | Unrealized |       | Unrealized |   | Market |  
|Held-To-Maturity Securities: |                              | Cost      |       |       | Gains      |       | Losses     |   | Value  |  
|                             |                              |           |       |       |            |       |            |   |        |  
|State Securities            |                              |           |       |       |            |       |            |   |        |   |   |   |  |   |       |      
|                             | Maturing in one year or less |           | $     | 569   |            |       | $          |  |        |   | $ |  |  |   | $     | 569   | 
|                             | Maturing in over five years  |           |       | 2,841 |            |       |            |  |        |   |   |  |  |   |       | 2,841 | 
|                             |                              |           |       |       |            |       |            |   |        |   |   |  
|                             |                              | $         | 3,410 |       |            | $     |           |   |        | $ |  |   |  | $ | 3,410 |      
|                             |                              |           |       |       |            |       |            |   |        |   |   |  

|                               |  |           |       |       |            |   |       |            |  |        |   |  |  |   |       | 
|------------------------------ |  | --------- | ----- | ----- | ---------- | - | ----- | ---------- |  | ------ | - |  |  | - | ----- | 
|                               |  |           |       | Gross |            |   | Gross |            | 
|                               |  | Amortized |       |       | Unrealized |   |       | Unrealized |  | Market |  
|Available-For-Sale Securities: |  | Cost      |       |       | Gains      |   |       | Losses     |  | Value  |  
|                               |  |           |       |       |            |   |       |            |  |        |  
|Other                          |  | $         | 7,667 |       |            | $ | 1,044 |            |  | $      |  |  |  | $ | 8,711 | 
|                               |  |           |       |       |            |   |       |            |  |        |   | 
|                               |  | $         | 7,667 |       |            | $ | 1,044 |            |  | $      |  |  |  | $ | 8,711 | 
|                               |  |           |       |       |            |   |       |            |  |        |   | 



|                             |                              |           |       |       |            |       |            |   |        |   |   |   |  |   |       |       | 
|---------------------------- | ---------------------------- | --------- | ----- | ----- | ---------- | ----- | ---------- | - | ------ | - | - | - |  | - | ----- | ----- | 
|                             |                              |           |       | Gross |            | Gross |            |  
|                             |                              | Amortized |       |       | Unrealized |       | Unrealized |   | Market |  
|Held-To-Maturity Securities: |                              | Cost      |       |       | Gains      |       | Losses     |   | Value  |  
|                             |                              |           |       |       |            |       |            |   |        |  
|State Securities            |                              |           |       |       |            |       |            |   |        |   |   |   |  |   |       |      
|                             | Maturing in one year or less |           | $     | 611   |            |       | $          |  |        |   | $ |  |  |   | $     | 611   | 
|                             | Maturing in over five years  |           |       | 3,492 |            |       |            |  |        |   |   |  |  |   |       | 3,492 | 
|                             |                              |           |       |       |            |       |            |   |        |   |   |  
|                             |                              | $         | 4,103 |       |            | $     |           |   |        | $ |  |   |  | $ | 4,103 |      
|                             |                              |           |       |       |            |       |            |   |        |   |   |  

|                               |  |           |       |       |            |   |       |            |  |        |   |  |  |   |       | 
|------------------------------ |  | --------- | ----- | ----- | ---------- | - | ----- | ---------- |  | ------ | - |  |  | - | ----- | 
|                               |  |           |       | Gross |            |   | Gross |            | 
|                               |  | Amortized |       |       | Unrealized |   |       | Unrealized |  | Market |  
|Available-For-Sale Securities: |  | Cost      |       |       | Gains      |   |       | Losses     |  | Value  |  
|                               |  |           |       |       |            |   |       |            |  |        |  
|Other                          |  | $         | 6,626 |       |            | $ | 308   |            |  | $      |  |  |  | $ | 6,934 | 
|                               |  |           |       |       |            |   |       |            |  |        |   | 
|                               |  | $         | 6,626 |       |            | $ | 308   |            |  | $      |  |  |  | $ | 6,934 | 
|                               |  |           |       |       |            |   |       |            |  |        |   | 



79



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






|   |                                           
|-- | ------------------------------------------
|6. | Investments  Marketable Equity Securities



|                                   |  |         |      |  |           |           |           |                |  |  |            |  |             |       |        |  |  |   |        | 
|---------------------------------- |  | ------- | ---- |  | --------- | --------- | --------- | -------------- |  |  | ---------- |  | ----------- | ----- | ------ |  |  | - | ------ | 
|                                   |  |         |      |  |           | Estimated |           |                |  |  |           
|                                   |  | Trading |      |  | Number of |           |           | Beneficial     |  |  |            |  | Fair Market |      
|Company                            |  | Symbol  |      |  | Shares    |           |           | Ownership %(1) |  |  | Cost Basis |  |             | Value |       
|                                   |  |         |      |  |           |           |           |                |  |  |            |  |             |       |       
|Common Stock:                      |  |         |      |  |           |           |           |                |  |  |            |  |             |       |        |  |  |   |        | 
|Discovery Laboratories, Inc.       |  |         | DSCO |  |           |           | 1,567,741 |                |  |  | 5.1%       |  |             | $     | 12,370 |  |  | $ | 12,432 | 
|Genitope, Inc.                     |  |         | GTOP |  |           |           | 222,222   |                |  |  | 0.9%       |  |             |       | 1,000  |  |  |   | 3,787  | 
|Columbia Laboratories, Inc.        |  |         | CBRX |  |           |           | 1,178,359 |                |  |  | 2.8%       |  |             |       | 3,123  |  |  |   | 3,123  | 
|Other                              |  |         |      |  |           |           |           |                |  |  |            |  |             |       | 4,737  |  |  |   | 5,083  | 
|                                   |  |         |      |  |           |           |           |                |  |  |            |  |             |       |       
|Total Marketable Equity Securities |  |         |      |  |           |           |           |                |  |  |            |  |             | $     | 21,230 |  |  | $ | 24,425 | 
|                                   |  |         |      |  |           |           |           |                |  |  |            |  |             |       |       



|                                    |  |         |      |  |           |           |           |                |  |  |            |  |             |       |        |  |  |   |        |  
|----------------------------------- |  | ------- | ---- |  | --------- | --------- | --------- | -------------- |  |  | ---------- |  | ----------- | ----- | ------ |  |  | - | ------ | -
|                                    |  |         |      |  |           | Estimated |           |                |  |  |           
|                                    |  | Trading |      |  | Number of |           |           | Beneficial     |  |  |            |  | Fair Market |      
|Company                             |  | Symbol  |      |  | Shares    |           |           | Ownership %(1) |  |  | Cost Basis |  |             | Value |       
|                                    |  |         |      |  |           |           |           |                |  |  |            |  |             |       |       
|Common Stock:                       |  |         |      |  |           |           |           |                |  |  |            |  |             |       |        |  |  |   |        |  
|The Medicines Company               |  |         | MDCO |  |           |           | 1,185,320 |                |  |  | 2.5%       |  |             | $     | 30,759 |  |  | $ | 34,920 |  
|Discovery Laboratories, Inc.        |  |         | DSCO |  |           |           | 1,359,567 |                |  |  | 4.6%       |  |             |       | 9,789  |  |  |   | 14,262 |  
|Columbia Laboratories, Inc.         |  |         | CBRX |  |           |           | 1,178,359 |                |  |  | 3.0%       |  |             |       | 14,235 |  |  |   | 7,424  |  
|Derivative instruments (see Note 8) |  |         |      |  |           |           |           |                |  |  |            |  |             |       |       |  |  |   | (1,526 | )
|Other                               |  |         |      |  |           |           |           |                |  |  |            |  |             |       | 2,301  |  |  |   | 3,214  |  
|                                    |  |         |      |  |           |           |           |                |  |  |            |  |             |       |       
|Total Marketable Equity Securities  |  |         |      |  |           |           |           |                |  |  |            |  |             | $     | 57,084 |  |  | $ | 58,294 |  
|                                    |  |         |      |  |           |           |           |                |  |  |            |  |             |       |       






|    |                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The estimated beneficial ownership percentage calculation is
    based upon the issuers filings with the United States
    Securities and Exchange Commission. The beneficial ownership
    percentage is subject to change due to the Companys
    transactions in these investments and changes in the
    issuers capitalization.



80



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






|   |                                                             
|-- | ------------------------------------------------------------
|7. | Investments  Non-Marketable Equity Securities and
    Loans



|                                                 |  |            |        |           |            |   |        | 
|------------------------------------------------ |  | ---------- | ------ | --------- | ---------- | - | ------ | 
|                                                 |  |            |        | Remaining |           
|                                                 |  |            |        | Funding   |           
|Company                                          |  | Cost Basis |        |           | Commitment |  
|                                                 |  |            |        |           |            |  
|Venture capital funds                            |  | $          | 32,950 |           |            | $ | 12,419 | 
|Equity investments (nine companies)              |  |            | 17,827 |           |            |   | 1,023  | 
|Convertible loans (three companies)              |  |            | 60     |           |            |   | 19     | 
|Loans (two companies)                            |  |            | 5,604  |           |            |   | 2,564  | 
|                                                 |  |            |        |           |            |  
|Total non-marketable equity securities and loans |  | $          | 56,441 |           |            | $ | 16,025 | 
|                                                 |  |            |        |           |            |  





|                                                 |  |            |        | 
|------------------------------------------------ |  | ---------- | ------ | 
|Company                                          |  | Cost Basis |       
|                                                 |  |            |       
|Venture capital funds                            |  | $          | 31,669 | 
|Equity investments (six companies)               |  |            | 13,581 | 
|Convertible loans (three companies)              |  |            | 727    | 
|Loans (two companies)                            |  |            | 2,579  | 
|                                                 |  |            |       
|Total non-marketable equity securities and loans |  | $          | 48,556 | 
|                                                 |  |            |       







81



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)








|   |            
|-- | -----------
|8. | Derivatives











82



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)








|   |                    
|-- | -------------------
|9. | Investment Revenues



|                                             |                       |              |        |               |              |   |       |            |               |  |   |              |         |   |   |        |        |  
|-------------------------------------------- | --------------------- | ------------ | ------ | ------------- | ------------ | - | ----- | ---------- | ------------- |  | - | ------------ | ------- | - | - | ------ | ------ | -
|                                             |                       |              |        | September 26, |              |   |       | January 1, |               |  |  
|                                             |                       | Year ended   |        |               | 2003 through |   |       |            | 2003 through  |  |   | Year ended   |        
|                                             |                       | December 31, |        |               | December 31, |   |       |            | September 25, |  |   | December 31, |        
|                                             |                       | 2004         |        |               | 2003         |   |       |            | 2003          |  |   | 2002         |        
|                                             |                       |              |        |               |              |   |       |            |               |  |   |              |        
|                                             |                       | Successor    |        |               | Successor    |   |       |            | Predecessor   |  |   | Predecessor  |        
|Marketable equity and derivative securities: |                       |              |        |               |              |   |       |            |               |  |   |              |         |   |   |        |       
|                                             | Gross realized gains  |              | $      | 7,389         |              |   | $     | 4,381      |               |  |   | $            | 38,724  |   |   | $      | 18,093 |  
|                                             | Gross realized losses |              |        | (4,550        | )            |   |       | (396       | )             |  |   |              |        |   |   |        | (92    | )
|                                             | Impairment losses     |              |        | (11,379       | )            |   |       |           |               |  |   |              | (282    | ) |   |        | (335   | )
|Non-marketable equity securities and loans:  |                       |              |        |               |              |   |       |            |               |  |   |              |         |   |   |        |       
|                                             | Gross realized gains  |              |        |              |              |   |       |           |               |  |   |              |        |   |   |        |       |  
|                                             | Gross realized losses |              |        |              |              |   |       |           |               |  |   |              |        |   |   |        |       |  
|                                             | Impairment losses     |              |        | (1,080        | )            |   |       | (1,225     | )             |  |   |              | (10,269 | ) |   |        | (3,962 | )
|                                             |                       |              |        |               |              |   |       |            |               |  |   |              |        
|                                             |                       | $            | (9,620 | )             |              | $ | 2,760 |            |               |  | $ | 28,173       |         |   | $ | 13,704 |       
|                                             |                       |              |        |               |              |   |       |            |               |  |   |              |        



|    |                                         
|--- | ----------------------------------------
|10. | Investments in Unconsolidated Affiliates





83



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)








|    |                   
|--- | ------------------
|11. | Minority Interests









|    |                                                                                                
|--- | -----------------------------------------------------------------------------------------------
|12. | Gain on Sale of Portion of an Investment in a Subsidiary and
    Change in Interest Transaction





84



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)








|    |                                            
|--- | -------------------------------------------
|13. | Goodwill and Identifiable Intangible Assets



|                     |  |                   |              |                    |                   |   |              |                 |                    |  |   |                   |  |  |   |              | 
|-------------------- |  | ----------------- | ------------ | ------------------ | ----------------- | - | ------------ | --------------- | ------------------ |  | - | ----------------- |  |  | - | ------------ | 
|                     |  |                   |              | September 26, 2003 |                   |   |              | January 1, 2003 |                    |  |  
|                     |  | Year ended        |              |                    | through           |   |              |                 | through            |  |   | Year ended        | 
|                     |  | December 31, 2004 |              |                    | December 31, 2003 |   |              |                 | September 25, 2003 |  |   | December 31, 2002 | 
|                     |  |                   |              |                    |                   |   |              |                 |                    |  |   |                   | 
|                     |  | Successor         |              |                    | Successor         |   |              |                 | Predecessor        |  |   | Predecessor       | 
|Amortization expense |  | $                 | 72.4 million |                    |                   | $ | 22.5 million |                 |                    |  | $ | 23.6 million      |  |  | $ | 26.8 million | 





|                                |                                                                          |                         |         |         |                         |   |        |        |  |   |         |         |  |              |         |         |        |   |        |        |  |   |         |         | 
|------------------------------- | ------------------------------------------------------------------------ | ----------------------- | ------- | ------- | ----------------------- | - | ------ | ------ |  | - | ------- | ------- |  | ------------ | ------- | ------- | ------ | - | ------ | ------ |  | - | ------- | ------- | 
|                                |                                                                          | As of December 31, 2004 |         |         | As of December 31, 2003 |  
|                                |                                                                          |                         |         |         |                         |  
|                                |                                                                          | Gross                   |         |         | Accumulated             |   |        | Net    |  |   | Gross   |         |  | Accumulated  |         |         | Net    |  
|                                |                                                                          | Amount                  |         |         | Amortization            |   |        | Amount |  |   | Amount  |         |  | Amortization |         |         | Amount |  
|                                |                                                                          |                         |         |         |                         |   |        |        |  |   |         |         |  |              |         |         |        |  
|                                |                                                                          | Successor               |         |         | Successor               |  
|Identifiable intangible assets: |                                                                          |                         |         |         |                         |   |        |        |  |   |         |         |  |              |         |         |        |   |        |        |  |   |         |        
|                                | Commercial rights and royalties, licenses and customer
    relationships |                         | $       | 125,802 |                         |   | $      | 46,847 |  |   | $       | 78,955  |  |              | $       | 126,110 |        |   | $      | 11,011 |  |   | $       | 115,099 | 
|                                | Trademarks, trade names and other                                        |                         |         | 169,496 |                         |   |        | 18,967 |  |   |         | 150,529 |  |              |         | 164,720 |        |   |        | 4,492  |  |   |         | 160,228 | 
|                                | Software and related assets                                              |                         |         | 73,051  |                         |   |        | 28,078 |  |   |         | 44,973  |  |              |         | 65,472  |        |   |        | 5,548  |  |   |         | 59,924  | 
|                                |                                                                          |                         |         |         |                         |   |        |        |  |   |         |         |  |              |         |         |        |  
|                                |                                                                          | $                       | 368,349 |         |                         | $ | 93,892 |        |  | $ | 274,457 |         |  | $            | 356,302 |         |        | $ | 21,051 |        |  | $ | 335,251 |        
|                                |                                                                          |                         |         |         |                         |   |        |        |  |   |         |         |  |              |         |         |        |  

85



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                       |                                                                              |             |         |        |            |   |         |             |   |   |              |        |   |   |         |        |  
|------------------------------------------------------ | ---------------------------------------------------------------------------- | ----------- | ------- | ------ | ---------- | - | ------- | ----------- | - | - | ------------ | ------ | - | - | ------- | ------ | -
|                                                       |                                                                              | Product     |         |        | Commercial |   |         | PharmaBio   |   |   |             
|                                                       |                                                                              | Development |         |        | Services   |   |         | Development |   |   | Consolidated |       
|                                                       |                                                                              |             |         |        |            |   |         |             |   |   |              |       
|Balance as of December 31, 2003                        |                                                                              | $           | 116,931 |        |            | $ | 61,750  |             |   | $ | 2,646        |        |   | $ | 181,327 |       
|Less: goodwill allocated to certain assets disposed of |                                                                              |             | (519    | )      |            |   |        |             |   |   |             |        |   |   | (519    | )     
|                                                       | goodwill allocated to sale of a
    portion of an investment in a subsidiary |             |         | (2,345 | )          |   |         | (4,424      | ) |   |              |       |   |   |         | (6,769 | )
|                                                       | goodwill allocated to
    non-operating change in interest transaction       |             |         | (988   | )          |   |         | (1,865      | ) |   |              |       |   |   |         | (2,853 | )
|                                                       | goodwill allocated to the sale of
    discontinued operation                 |             |         |       |            |   |         |            |   |   |              | (1,233 | ) |   |         | (1,233 | )
|Add: Earn out on acquisition                           |                                                                              |             | 2,525   |        |            |   | 176     |             |   |   |             |        |   |   | 2,701   |       
|Privatization transaction price adjustment             |                                                                              |             | (45,131 | )      |            |   | (11,994 | )           |   |   |             |        |   |   | (57,125 | )     
|Impact of foreign currency fluctuations                |                                                                              |             | 470     |        |            |   | 14      |             |   |   |             |        |   |   | 484     |       
|                                                       |                                                                              |             |         |        |            |   |         |             |   |   |              |       
|Balance as of December 31, 2004                        |                                                                              | $           | 70,943  |        |            | $ | 43,657  |             |   | $ | 1,413        |        |   | $ | 116,013 |       
|                                                       |                                                                              |             |         |        |            |   |         |             |   |   |              |       



|                                        |  |             |         |  |            |   |        |             |  |   |              |  |  |   |         |  
|--------------------------------------- |  | ----------- | ------- |  | ---------- | - | ------ | ----------- |  | - | ------------ |  |  | - | ------- | -
|                                        |  | Product     |         |  | Commercial |   |        | PharmaBio   |  |   |             
|                                        |  | Development |         |  | Services   |   |        | Development |  |   | Consolidated | 
|                                        |  |             |         |  |            |   |        |             |  |   |              | 
|Balance as of September 26, 2003        |  | $           |        |  |            | $ |       |             |  | $ |             |  |  | $ |        |  
|Add: Transaction                        |  |             | 111,500 |  |            |   | 61,712 |             |  |   | 2,646        |  |  |   | 175,858 |  
|Add: Acquisitions                       |  |             | 5,431   |  |            |   | 39     |             |  |   |             |  |  |   | 5,470   |  
|Impact of foreign currency fluctuations |  |             |        |  |            |   | (1     | )           |  |   |             |  |  |   | (1      | )
|                                        |  |             |         |  |            |   |        |             |  |   |              | 
|Balance as of December 31, 2003         |  | $           | 116,931 |  |            | $ | 61,750 |             |  | $ | 2,646        |  |  | $ | 181,327 |  
|                                        |  |             |         |  |            |   |        |             |  |   |              | 



|                                        |  |             |        |  |            |   |        |             |  |   |              |  |  |   |        | 
|--------------------------------------- |  | ----------- | ------ |  | ---------- | - | ------ | ----------- |  | - | ------------ |  |  | - | ------ | 
|                                        |  | Product     |        |  | Commercial |   |        | PharmaBio   |  |   |             
|                                        |  | Development |        |  | Services   |   |        | Development |  |   | Consolidated | 
|                                        |  |             |        |  |            |   |        |             |  |   |              | 
|Balance as of December 31, 2002         |  | $           | 38,918 |  |            | $ | 31,215 |             |  | $ |             |  |  | $ | 70,133 | 
|Add: Acquisitions                       |  |             | 71     |  |            |   | 208    |             |  |   | 1,875        |  |  |   | 2,154  | 
|Impact of foreign currency fluctuations |  |             | 3,729  |  |            |   | 965    |             |  |   |             |  |  |   | 4,694  | 
|                                        |  |             |        |  |            |   |        |             |  |   |              | 
|Balance as of September 25, 2003        |  | $           | 42,718 |  |            | $ | 32,388 |             |  | $ | 1,875        |  |  | $ | 76,981 | 
|                                        |  |             |        |  |            |   |        |             |  |   |              | 

86



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|    |                 
|--- | ----------------
|14. | Accrued Expenses



|                               |  |              |         |  |           |   |         | 
|------------------------------ |  | ------------ | ------- |  | --------- | - | ------- | 
|                               |  | December 31, |        
|                               |  |              |        
|                               |  | 2004         |         |  | 2003      |  
|                               |  |              |         |  |           |  
|                               |  | Successor    |         |  | Successor |  
|Compensation and payroll taxes |  | $            | 126,153 |  |           | $ | 103,010 | 
|Restructuring                  |  |              | 10,646  |  |           |   | 15,743  | 
|Transaction                    |  |              | 5,576   |  |           |   | 32,900  | 
|Other                          |  |              | 131,576 |  |           |   | 100,050 | 
|                               |  |              |         |  |           |  
|                               |  | $            | 273,951 |  |           | $ | 251,703 | 
|                               |  |              |         |  |           |  



|    |                    
|--- | -------------------
|15. | Credit Arrangements



|                                                                                                                                          |  |                                                                                                           
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------
|Facility                                                                                                                                  |  | Interest Rates                                                                                            
|                                                                                                                                          |  |                                                                                                           
|$75.0 million                                                                                                                             |  | Either at LIBOR (2.56% at December 31, 2004) plus 2.75% or
    ABR (5.25% at December 31, 2004) plus 1.75%
|£1.5 million (approximately $2.9 million) general
    banking facility with a United Kingdom bank used for the
    issuance of guarantees |  | 1% per annum fee for each guarantee issued                                                                





|                                                                                                                                  |  |              |         |   |           |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | --------- | - | ------- | -
|                                                                                                                                  |  | December 31, |        
|                                                                                                                                  |  |              |        
|                                                                                                                                  |  | 2004         |         |   | 2003      |  
|                                                                                                                                  |  |              |         |   |           |  
|                                                                                                                                  |  | Successor    |         |   | Successor |  
|10% Senior Subordinated Notes due 2013                                                                                            |  | $            | 450,000 |   |           | $ | 450,000 |  
|Senior Term Loan (Either at LIBOR (2.56% at December 31,
    2004) plus 4.25% or ABR (5.25% at December 31, 2004) plus
    3.25%) |  |              | 306,125 |   |           |   | 309,225 |  
|Missouri tax incentive bonds due October 2009 (6.7% annual
    interest rate)                                                     |  |              | 3,256   |   |           |   | 3,789   |  
|Other notes payable                                                                                                               |  |              | 4,160   |   |           |   | 5,926   |  
|                                                                                                                                  |  |              |         |   |           |  
|                                                                                                                                  |  |              | 763,541 |   |           |   | 768,940 |  
|Less: current portion                                                                                                             |  |              | (5,431  | ) |           |   | (5,583  | )
|                                                                                                                                  |  |              |         |   |           |  
|                                                                                                                                  |  | $            | 758,110 |   |           | $ | 763,357 |  
|                                                                                                                                  |  |              |         |   |           |  

87



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|           |  |   |         | 
|---------- |  | - | ------- | 
|2005       |  | $ | 5,431   | 
|2006       |  |   | 5,091   | 
|2007       |  |   | 4,199   | 
|2008       |  |   | 3,904   | 
|2009       |  |   | 3,948   | 
|Thereafter |  |   | 740,968 | 
|           |  |   |        
|           |  | $ | 763,541 | 
|           |  |   |        









|    |       
|--- | ------
|16. | Leases



|                                 |  |                   |              |                    |                   |   |              |                 |                    |  |   |                   |  |  |   |              | 
|-------------------------------- |  | ----------------- | ------------ | ------------------ | ----------------- | - | ------------ | --------------- | ------------------ |  | - | ----------------- |  |  | - | ------------ | 
|                                 |  |                   |              | September 26, 2003 |                   |   |              | January 1, 2003 |                    |  |  
|                                 |  | Year ended        |              |                    | through           |   |              |                 | through            |  |   | Year ended        | 
|                                 |  | December 31, 2004 |              |                    | December 31, 2003 |   |              |                 | September 25, 2003 |  |   | December 31, 2002 | 
|                                 |  |                   |              |                    |                   |   |              |                 |                    |  |   |                   | 
|                                 |  | Successor         |              |                    | Successor         |   |              |                 | Predecessor        |  |   | Predecessor       | 
|Rental expenses under agreements |  | $                 | 74.5 million |                    |                   | $ | 18.6 million |                 |                    |  | $ | 56.3 million      |  |  | $ | 75.1 million | 



88



---



##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                      |  |                |         |   |                  |   |         | 
|------------------------------------- |  | -------------- | ------- | - | ---------------- | - | ------- | 
|                                      |  | Capital Leases |         |   | Operating Leases |  
|                                      |  |                |         |   |                  |  
|2005                                  |  | $              | 16,060  |   |                  | $ | 63,669  | 
|2006                                  |  |                | 14,341  |   |                  |   | 46,909  | 
|2007                                  |  |                | 1,341   |   |                  |   | 30,834  | 
|2008                                  |  |                | 704     |   |                  |   | 18,696  | 
|2009                                  |  |                | 421     |   |                  |   | 10,158  | 
|Thereafter                            |  |                | 242     |   |                  |   | 43,495  | 
|                                      |  |                |         |   |                  |  
|Total minimum lease payments          |  |                | 33,109  |   |                  | $ | 213,761 | 
|                                      |  |                |         |   |                  |  
|Amounts representing interest         |  |                | (1,769  | ) |                  |   |         | 
|                                      |  |                |         |   |                  |  
|Present value of net minimum payments |  |                | 31,340  |   |                  |   |         | 
|Current portion                       |  |                | (14,888 | ) |                  |   |         | 
|                                      |  |                |         |   |                  |  
|Long-term capital lease obligations   |  | $              | 16,452  |   |                  |   |         | 
|                                      |  |                |         |   |                  |  







|    |              
|--- | -------------
|17. | Contingencies



89



---



##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)










90



---



##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)








|    |            
|--- | -----------
|18. | Commitments





|    |                     
|--- | --------------------
|19. | Shareholders Equity







91



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






|    |                       
|--- | ----------------------
|20. | Discontinued Operation





|                                             |  |   |         |  
|-------------------------------------------- |  | - | ------- | -
|Cash received                                |  | $ | 188,329 |  
|Purchase price adjustments                   |  |   | (1,937  | )
|Disposal costs                               |  |   | (15,539 | )
|Net assets                                   |  |   | (78,602 | )
|Goodwill allocated to discontinued operation |  |   | (1,233  | )
|                                             |  |   |        
|Gain on disposal of discontinued operation   |  |   | 91,018  |  
|Income taxes                                 |  |   | (36,596 | )
|                                             |  |   |        
|Gain on sale of discontinued operation       |  | $ | 54,422  |  
|                                             |  |   |        





92



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






|                                  |  |              |        |               |              |   |        |            |               |  |   |              |  |  |   |        | 
|--------------------------------- |  | ------------ | ------ | ------------- | ------------ | - | ------ | ---------- | ------------- |  | - | ------------ |  |  | - | ------ | 
|                                  |  |              |        | September 26, |              |   |        | January 1, |               |  |  
|                                  |  | Year ended   |        |               | 2003 through |   |        |            | 2003 through  |  |   | Year ended   | 
|                                  |  | December 31, |        |               | December 31, |   |        |            | September 25, |  |   | December 31, | 
|                                  |  | 2004         |        |               | 2003         |   |        |            | 2003          |  |   | 2002         | 
|                                  |  |              |        |               |              |   |        |            |               |  |   |              | 
|                                  |  | Successor    |        |               | Successor    |   |        |            | Predecessor   |  |   | Predecessor  | 
|Net revenues                      |  | $            | 38,558 |               |              | $ | 19,284 |            |               |  | $ | 33,892       |  |  | $ | 22,377 | 
|Reimbursed service costs          |  |              |       |               |              |   |       |            |               |  |   |             |  |  |   |       | 
|Gross revenues                    |  |              | 38,558 |               |              |   | 19,284 |            |               |  |   | 33,892       |  |  |   | 22,377 | 
|Income (loss) before income taxes |  |              | 11,100 |               |              |   | 5,701  |            |               |  |   | 5,586        |  |  |   | 889    | 
|Income tax expense                |  |              | 1,480  |               |              |   | 902    |            |               |  |   | 960          |  |  |   | 447    | 
|                                  |  |              |        |               |              |   |        |            |               |  |   |              | 
|Net income                        |  | $            | 9,620  |               |              | $ | 4,799  |            |               |  | $ | 4,626        |  |  | $ | 442    | 
|                                  |  |              |        |               |              |   |        |            |               |  |   |              | 



|                                      |  |                   |        | 
|------------------------------------- |  | ----------------- | ------ | 
|                                      |  | As of             |       
|                                      |  | December 31, 2003 |       
|                                      |  |                   |       
|Current assets                        |  | $                 | 9,012  | 
|Property and equipment, net           |  |                   | 536    | 
|Intangible assets                     |  |                   | 78,995 | 
|Other assets                          |  |                   | 6      | 
|                                      |  |                   |       
|Assets of discontinued operation      |  | $                 | 88,549 | 
|                                      |  |                   |       
|Current liabilities                   |  | $                 | 7,040  | 
|Long-term liabilities                 |  |                   | 41     | 
|                                      |  |                   |       
|Liabilities of discontinued operation |  | $                 | 7,081  | 
|                                      |  |                   |       



|    |                                               
|--- | ----------------------------------------------
|21. | Change in Accounting for Deferred Income Taxes





93



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)








|    |                      
|--- | ---------------------
|22. | Business Combinations







94



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|    |              
|--- | -------------
|23. | Restructuring





2004 Plan  Activity Year Ended
December 31, 2004


|                            |  |                   |   |           |  |           |             |  |  |                  |        |   |                   |   |     |  |  |   |       | 
|--------------------------- |  | ----------------- | - | --------- |  | --------- | ----------- |  |  | ---------------- | ------ | - | ----------------- | - | --- |  |  | - | ----- | 
|                            |  |                   |   |           |  | 2004 Plan |             |  |  |                  |       
|                            |  | Balance at        |   | 2004 Plan |  |           | Write-Offs/ |  |  | Foreign Currency |        |   | Balance at        |  
|                            |  | December 31, 2003 |   | Accrual   |  |           | Payments    |  |  | Translation      |        |   | December 31, 2004 |  
|                            |  |                   |   |           |  |           |             |  |  |                  |        |   |                   |  
|Severance and related costs |  | $                 |  |           |  | $         | 6,577       |  |  | $                | (1,494 | ) |                   | $ | 142 |  |  | $ | 5,225 | 
|                            |  |                   |   |           |  |           |             |  |  |                  |        |   |                   |   |    
|                            |  | $                 |  |           |  | $         | 6,577       |  |  | $                | (1,494 | ) |                   | $ | 142 |  |  | $ | 5,225 | 
|                            |  |                   |   |           |  |           |             |  |  |                  |        |   |                   |   |    







2003 Plan  Activity Year Ended
December 31, 2004


|                            |  |                   |       |  |           |   |        |                 |             |   |          |            |  |                   |        |   |  |   |     | 
|--------------------------- |  | ----------------- | ----- |  | --------- | - | ------ | --------------- | ----------- | - | -------- | ---------- |  | ----------------- | ------ | - |  | - | --- | 
|                            |  |                   |       |  |           |   |        | 2003 Plan       |             |   |         
|                            |  | Balance at        |       |  |           |   |        |                 | Write-Offs/ |   |          | Balance at | 
|                            |  | December 31, 2003 |       |  | Revisions |   |        | Revised Accrual |             |   | Payments |            |  | December 31, 2004 |       
|                            |  |                   |       |  |           |   |        |                 |             |   |          |            |  |                   |       
|Severance and related costs |  | $                 | 7,551 |  |           | $ | (1,573 | )               |             | $ | 5,978    |            |  | $                 | (5,152 | ) |  | $ | 826 | 
|Exit costs                  |  |                   | 165   |  |           |   | (34    | )               |             |   | 131      |            |  |                   | (131   | ) |  |   |    | 
|                            |  |                   |       |  |           |   |        |                 |             |   |          |            |  |                   |       
|                            |  | $                 | 7,716 |  |           | $ | (1,607 | )               |             | $ | 6,109    |            |  | $                 | (5,283 | ) |  | $ | 826 | 
|                            |  |                   |       |  |           |   |        |                 |             |   |          |            |  |                   |       

95



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




2003 Plan  Activity September 26, 2003
through December 31, 2003


|                            |  |                    |   |           |  |   |                       |  |  |                   |        |   |  |   |       | 
|--------------------------- |  | ------------------ | - | --------- |  | - | --------------------- |  |  | ----------------- | ------ | - |  | - | ----- | 
|                            |  | Balance at         |   | 2003 Plan |  |   | 2003 Plan Write-Offs/ |  |  | Balance at        |       
|                            |  | September 25, 2003 |   | Accrual   |  |   | Payments              |  |  | December 31, 2003 |       
|                            |  |                    |   |           |  |   |                       |  |  |                   |       
|Severance and related costs |  | $                  |  |           |  | $ | 8,669                 |  |  | $                 | (1,118 | ) |  | $ | 7,551 | 
|Asset write-offs            |  |                    |  |           |  |   | 332                   |  |  |                   | (332   | ) |  |   |      | 
|Exit costs                  |  |                    |  |           |  |   | 219                   |  |  |                   | (54    | ) |  |   | 165   | 
|                            |  |                    |   |           |  |   |                       |  |  |                   |        |  
|                            |  | $                  |  |           |  | $ | 9,220                 |  |  | $                 | (1,504 | ) |  | $ | 7,716 | 
|                            |  |                    |   |           |  |   |                       |  |  |                   |        |  









2002 Plan  Activity Year Ended
December 31, 2004


|           |  |                   |     |  |           |   |      |                 |             |   |          |            |  |                   |     |   |  |   |   | 
|---------- |  | ----------------- | --- |  | --------- | - | ---- | --------------- | ----------- | - | -------- | ---------- |  | ----------------- | --- | - |  | - | - | 
|           |  |                   |     |  |           |   |      | 2002 Plan       |             |   |         
|           |  | Balance at        |     |  |           |   |      |                 | Write-Offs/ |   |          | Balance at | 
|           |  | December 31, 2003 |     |  | Revisions |   |      | Revised Accrual |             |   | Payments |            |  | December 31, 2004 |    
|           |  |                   |     |  |           |   |      |                 |             |   |          |            |  |                   |    
|Exit costs |  | $                 | 131 |  |           | $ | (105 | )               |             | $ | 26       |            |  | $                 | (19 | ) |  | $ | 7 | 
|           |  |                   |     |  |           |   |      |                 |             |   |          |            |  |                   |    
|           |  | $                 | 131 |  |           | $ | (105 | )               |             | $ | 26       |            |  | $                 | (19 | ) |  | $ | 7 | 
|           |  |                   |     |  |           |   |      |                 |             |   |          |            |  |                   |    

96



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




2002 Plan  Activity September 26, 2003
through December 31, 2003


|           |  |                    |     |  |                       |   |    |                   |  |   |     | 
|---------- |  | ------------------ | --- |  | --------------------- | - | -- | ----------------- |  | - | --- | 
|           |  | Balance at         |     |  | 2002 Plan Write-Offs/ |   |    | Balance at        | 
|           |  | September 25, 2003 |     |  | Payments              |   |    | December 31, 2003 | 
|           |  |                    |     |  |                       |   |    |                   | 
|Exit costs |  | $                  | 134 |  |                       | $ | (3 | )                 |  | $ | 131 | 
|           |  |                    |     |  |                       |   |    |                   | 
|           |  | $                  | 134 |  |                       | $ | (3 | )                 |  | $ | 131 | 
|           |  |                    |     |  |                       |   |    |                   | 

2002 Plan  Activity January 1, 2003
through September 25, 2003


|                            |  |                   |       |  |           |   |         |         |  |                       |          |  |            |                    |        |   |  |   |     | 
|--------------------------- |  | ----------------- | ----- |  | --------- | - | ------- | ------- |  | --------------------- | -------- |  | ---------- | ------------------ | ------ | - |  | - | --- | 
|                            |  | Balance at        |       |  |           |   | Revised |         |  | 2002 Plan Write-Offs/ |          |  | Balance at |                   
|                            |  | December 31, 2002 |       |  | Revisions |   |         | Accrual |  |                       | Payments |  |            | September 25, 2003 |       
|                            |  |                   |       |  |           |   |         |         |  |                       |          |  |            |                    |       
|Severance and related costs |  | $                 | 2,066 |  |           | $ | (1,042  | )       |  | $                     | 1,024    |  |            | $                  | (1,024 | ) |  | $ |    | 
|Exit costs                  |  |                   | 154   |  |           |   |        |         |  |                       | 154      |  |            |                    | (20    | ) |  |   | 134 | 
|                            |  |                   |       |  |           |   |         |         |  |                       |          |  |            |                    |       
|                            |  | $                 | 2,220 |  |           | $ | (1,042  | )       |  | $                     | 1,178    |  |            | $                  | (1,044 | ) |  | $ | 134 | 
|                            |  |                   |       |  |           |   |         |         |  |                       |          |  |            |                    |       



2002 Plan  Activity Year Ended
December 31, 2002


|                            |  |                   |   |           |  |   |                       |  |  |                   |        |   |  |   |       | 
|--------------------------- |  | ----------------- | - | --------- |  | - | --------------------- |  |  | ----------------- | ------ | - |  | - | ----- | 
|                            |  | Balance at        |   | 2002 Plan |  |   | 2002 Plan Write-Offs/ |  |  | Balance at        |       
|                            |  | December 31, 2001 |   | Accrual   |  |   | Payments              |  |  | December 31, 2002 |       
|                            |  |                   |   |           |  |   |                       |  |  |                   |       
|Severance and related costs |  | $                 |  |           |  | $ | 4,241                 |  |  | $                 | (2,175 | ) |  | $ | 2,066 | 
|Exit costs                  |  |                   |  |           |  |   | 310                   |  |  |                   | (156   | ) |  |   | 154   | 
|Asset write-offs            |  |                   |  |           |  |   | 112                   |  |  |                   | (112   | ) |  |   |      | 
|                            |  |                   |   |           |  |   |                       |  |  |                   |        |  
|                            |  | $                 |  |           |  | $ | 4,663                 |  |  | $                 | (2,443 | ) |  | $ | 2,220 | 
|                            |  |                   |   |           |  |   |                       |  |  |                   |        |  





97



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




2001 Plan  Activity Year Ended
December 31, 2004


|           |  |              |       |  |           |   |         |         |  |             |            |  |              |      |        |   |  |   |       | 
|---------- |  | ------------ | ----- |  | --------- | - | ------- | ------- |  | ----------- | ---------- |  | ------------ | ---- | ------ | - |  | - | ----- | 
|           |  | Balance at   |       |  |           |   |         |         |  |             | Balance at | 
|           |  | December 31, |       |  |           |   | Revised |         |  | 2001 B Plan |            |  | December 31, |     
|           |  | 2003         |       |  | Revisions |   |         | Accrual |  |             | Payment    |  |              | 2004 |       
|           |  |              |       |  |           |   |         |         |  |             |            |  |              |      |       
|Exit costs |  | $            | 7,632 |  |           | $ | (72     | )       |  | $           | 7,560      |  |              | $    | (3,004 | ) |  | $ | 4,556 | 
|           |  |              |       |  |           |   |         |         |  |             |            |  |              |      |       
|           |  | $            | 7,632 |  |           | $ | (72     | )       |  | $           | 7,560      |  |              | $    | (3,004 | ) |  | $ | 4,556 | 
|           |  |              |       |  |           |   |         |         |  |             |            |  |              |      |       



2001 Plan  Activity September 26, 2003
through December 31, 2003


|           |  |               |       |  |             |   |            |              |  |   |       | 
|---------- |  | ------------- | ----- |  | ----------- | - | ---------- | ------------ |  | - | ----- | 
|           |  | 2001 B Plan   |       |  |             |   |           
|           |  | Balance at    |       |  |             |   | Balance at |             
|           |  | September 25, |       |  | 2001 B Plan |   |            | December 31, | 
|           |  | 2003          |       |  | Payment     |   |            | 2003         | 
|           |  |               |       |  |             |   |            |              | 
|Exit costs |  | $             | 8,201 |  |             | $ | (569       | )            |  | $ | 7,632 | 
|           |  |               |       |  |             |   |            |              | 
|           |  | $             | 8,201 |  |             | $ | (569       | )            |  | $ | 7,632 | 
|           |  |               |       |  |             |   |            |              | 

2001 Plan  Activity January 1, 2003
through September 25, 2003


|                            |  |              |       |  |              |   |       |         |  |   |             |            |  |               |        |   |  |   |       | 
|--------------------------- |  | ------------ | ----- |  | ------------ | - | ----- | ------- |  | - | ----------- | ---------- |  | ------------- | ------ | - |  | - | ----- | 
|                            |  | 2001 B Plan  |       |  |              |   |       |         |  |   |            
|                            |  | Balance at   |       |  | Revisions to |   |       |         |  |   |             | Balance at | 
|                            |  | December 31, |       |  | 2001 B       |   |       | Revised |  |   | 2001 B Plan |            |  | September 25, |       
|                            |  | 2002         |       |  | Plan         |   |       | Accrual |  |   | Payment     |            |  | 2003          |       
|                            |  |              |       |  |              |   |       |         |  |   |             |            |  |               |       
|Severance and related costs |  | $            | 1,306 |  |              | $ | (310  | )       |  | $ | 996         |            |  | $             | (996   | ) |  | $ |      | 
|Exit costs                  |  |              | 3,381 |  |              |   | 6,403 |         |  |   | 9,784       |            |  |               | (1,583 | ) |  |   | 8,201 | 
|                            |  |              |       |  |              |   |       |         |  |   |             |            |  |               |       
|                            |  | $            | 4,687 |  |              | $ | 6,093 |         |  | $ | 10,780      |            |  | $             | (2,579 | ) |  | $ | 8,201 | 
|                            |  |              |       |  |              |   |       |         |  |   |             |            |  |               |       



2001 Plan  Activity Year Ended
December 31, 2002


|                            |  |              |        |  |              |   |        |             |  |            |              |   |  |   |       | 
|--------------------------- |  | ------------ | ------ |  | ------------ | - | ------ | ----------- |  | ---------- | ------------ | - |  | - | ----- | 
|                            |  | 2001 B Plan  |        |  |              |   |        |             | 
|                            |  | Balance at   |        |  | Revisions to |   |        |             |  | Balance at |             
|                            |  | December 31, |        |  | 2001 B       |   |        | 2001 B Plan |  |            | December 31, |  
|                            |  | 2001         |        |  | Plan         |   |        | Payment     |  |            | 2002         |  
|                            |  |              |        |  |              |   |        |             |  |            |              |  
|Severance and related costs |  | $            | 19,323 |  |              | $ | (5,725 | )           |  | $          | (12,292      | ) |  | $ | 1,306 | 
|Exit costs                  |  |              | 8,806  |  |              |   | (875   | )           |  |            | (4,550       | ) |  |   | 3,381 | 
|                            |  |              |        |  |              |   |        |             |  |            |              |  
|                            |  | $            | 28,129 |  |              | $ | (6,600 | )           |  | $          | (16,842      | ) |  | $ | 4,687 | 
|                            |  |              |        |  |              |   |        |             |  |            |              |  





98



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)








2000 Plan  Activity Year Ended
December 31, 2004


|                            |  |              |     |  |              |   |     |              |  |   |         |   |  |               |     |  |                |   |    |              |  |   |      |   |  |   |    | 
|--------------------------- |  | ------------ | --- |  | ------------ | - | --- | ------------ |  | - | ------- | - |  | ------------- | --- |  | -------------- | - | -- | ------------ |  | - | ---- | - |  | - | -- | 
|                            |  | Balance at   |     |  | Revisions to |   |     | Revisions to |  |   |         |   |  |               |     |  | Balance at     |  
|                            |  | December 31, |     |  | January      |   |     | Follow-On    |  |   | Revised |   |  | January 2000  |     |  | Follow-On Plan |   |    | December 31, | 
|                            |  | 2003         |     |  | 2000 Plan    |   |     | Plan         |  |   | Accrual |   |  | Plan Payments |     |  | Payments       |   |    | 2004         | 
|                            |  |              |     |  |              |   |     |              |  |   |         |   |  |               |     |  |                |   |    |              | 
|Severance and related costs |  | $            | 16  |  |              | $ | (11 | )            |  | $ |        |   |  | $             | 5   |  |                | $ | (5 | )            |  | $ |     |   |  | $ |   | 
|Exit costs                  |  |              | 248 |  |              |   |    |              |  |   | (2      | ) |  |               | 246 |  |                |   |   |              |  |   | (214 | ) |  |   | 32 | 
|                            |  |              |     |  |              |   |     |              |  |   |         |   |  |               |     |  |                |   |    |              | 
|                            |  | $            | 264 |  |              | $ | (11 | )            |  | $ | (2      | ) |  | $             | 251 |  |                | $ | (5 | )            |  | $ | (214 | ) |  | $ | 32 | 
|                            |  |              |     |  |              |   |     |              |  |   |         |   |  |               |     |  |                |   |    |              | 



2000 Plan  Activity September 26, 2003
through December 31, 2003


|                            |  |               |     |  |               |   |     |                |            |   |              |   |  |   |     | 
|--------------------------- |  | ------------- | --- |  | ------------- | - | --- | -------------- | ---------- | - | ------------ | - |  | - | --- | 
|                            |  | Balance at    |     |  |               |   |     |                | Balance at |  
|                            |  | September 25, |     |  | January 2000  |   |     | Follow-On Plan |            |   | December 31, |  
|                            |  | 2003          |     |  | Plan Payments |   |     | Payments       |            |   | 2003         |  
|                            |  |               |     |  |               |   |     |                |            |   |              |  
|Severance and related costs |  | $             | 40  |  |               | $ | (24 | )              |            | $ |             |   |  | $ | 16  | 
|Exit costs                  |  |               | 421 |  |               |   |    |                |            |   | (173         | ) |  |   | 248 | 
|                            |  |               |     |  |               |   |     |                |            |   |              |  
|                            |  | $             | 461 |  |               | $ | (24 | )              |            | $ | (173         | ) |  | $ | 264 | 
|                            |  |               |     |  |               |   |     |                |            |   |              |  

2000 Plan  Activity January 1, 2003
through September 25, 2003


|                            |  |              |       |  |              |   |     |         |  |              |          |  |            |               |        |   |  |   |     | 
|--------------------------- |  | ------------ | ----- |  | ------------ | - | --- | ------- |  | ------------ | -------- |  | ---------- | ------------- | ------ | - |  | - | --- | 
|                            |  | Balance at   |       |  | Revisions to |   |     |         |  | January 2000 |          |  | Balance at |              
|                            |  | December 31, |       |  | January      |   |     | Revised |  |              | Plan     |  |            | September 25, |       
|                            |  | 2002         |       |  | 2000 Plan    |   |     | Accrual |  |              | Payments |  |            | 2003          |       
|                            |  |              |       |  |              |   |     |         |  |              |          |  |            |               |       
|Severance and related costs |  | $            | 117   |  |              | $ |    |         |  | $            | 117      |  |            | $             | (77    | ) |  | $ | 40  | 
|Exit costs                  |  |              | 1,443 |  |              |   | 421 |         |  |              | 1,864    |  |            |               | (1,443 | ) |  |   | 421 | 
|                            |  |              |       |  |              |   |     |         |  |              |          |  |            |               |       
|                            |  | $            | 1,560 |  |              | $ | 421 |         |  | $            | 1,981    |  |            | $             | (1,520 | ) |  | $ | 461 | 
|                            |  |              |       |  |              |   |     |         |  |              |          |  |            |               |       



2000 Plan  Activity Year Ended
December 31, 2002


|                            |  |              |       |  |              |   |     |              |  |   |         |  |              |          |       |  |                |            |        |              |  |   |        |   |  |   |       | 
|--------------------------- |  | ------------ | ----- |  | ------------ | - | --- | ------------ |  | - | ------- |  | ------------ | -------- | ----- |  | -------------- | ---------- | ------ | ------------ |  | - | ------ | - |  | - | ----- | 
|                            |  | Balance at   |       |  | Revisions to |   |     | Revisions to |  |   |         |  | January 2000 |          |       |  |                | Balance at |       
|                            |  | December 31, |       |  | January      |   |     | Follow-On    |  |   | Revised |  |              | Plan     |       |  | Follow-On Plan |            |        | December 31, | 
|                            |  | 2001         |       |  | 2000 Plan    |   |     | Plan         |  |   | Accrual |  |              | Payments |       |  | Payments       |            |        | 2002         | 
|                            |  |              |       |  |              |   |     |              |  |   |         |  |              |          |       |  |                |            |        |              | 
|Severance and related costs |  | $            | 894   |  |              | $ |    |              |  | $ |        |  |              | $        | 894   |  |                | $          | (476   | )            |  | $ | (301   | ) |  | $ | 117   | 
|Exit costs                  |  |              | 1,714 |  |              |   | 644 |              |  |   | 1,293   |  |              |          | 3,651 |  |                |            | (1,208 | )            |  |   | (1,000 | ) |  |   | 1,443 | 
|                            |  |              |       |  |              |   |     |              |  |   |         |  |              |          |       |  |                |            |        |              | 
|                            |  | $            | 2,608 |  |              | $ | 644 |              |  | $ | 1,293   |  |              | $        | 4,545 |  |                | $          | (1,684 | )            |  | $ | (1,301 | ) |  | $ | 1,560 | 
|                            |  |              |       |  |              |   |     |              |  |   |         |  |              |          |       |  |                |            |        |              | 

99



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|    |             
|--- | ------------
|24. | Income Taxes





|                            |                   |                   |        |                    |                   |   |        |                 |                    |  |   |                   |        |   |   |        |         |  
|--------------------------- | ----------------- | ----------------- | ------ | ------------------ | ----------------- | - | ------ | --------------- | ------------------ |  | - | ----------------- | ------ | - | - | ------ | ------- | -
|                            |                   |                   |        | September 26, 2003 |                   |   |        | January 1, 2003 |                    |  |  
|                            |                   | Year ended        |        |                    | through           |   |        |                 | through            |  |   | Year ended        |       
|                            |                   | December 31, 2004 |        |                    | December 31, 2003 |   |        |                 | September 25, 2003 |  |   | December 31, 2002 |       
|                            |                   |                   |        |                    |                   |   |        |                 |                    |  |   |                   |       
|                            |                   | Successor         |        |                    | Successor         |   |        |                 | Predecessor        |  |   | Predecessor       |       
|Current:                    |                   |                   |        |                    |                   |   |        |                 |                    |  |   |                   |        |   |   |        |        
|                            | Federal           |                   | $      | (19,874            | )                 |   | $      | 4,234           |                    |  |   | $                 | (677   | ) |   | $      | 15,306  |  
|                            | State             |                   |        | 967                |                   |   |        | 1,710           |                    |  |   |                   | 7,540  |   |   |        | 7,074   |  
|                            | Foreign           |                   |        | 18,243             |                   |   |        | 7,497           |                    |  |   |                   | 22,369 |   |   |        | 18,280  |  
|                            |                   |                   |        |                    |                   |   |        |                 |                    |  |   |                   |       
|                            |                   |                   | (664   | )                  |                   |   | 13,441 |                 |                    |  |   | 29,232            |        |   |   | 40,660 |        
|                            |                   |                   |        |                    |                   |   |        |                 |                    |  |   |                   |       
|Deferred expense (benefit): |                   |                   |        |                    |                   |   |        |                 |                    |  |   |                   |        |   |   |        |        
|                            | Federal and state |                   |        | (12,740            | )                 |   |        | (398            | )                  |  |   |                   | 3,639  |   |   |        | 11,014  |  
|                            | Foreign           |                   |        | 6,805              |                   |   |        | (3,233          | )                  |  |   |                   | (5,647 | ) |   |        | (10,695 | )
|                            |                   |                   |        |                    |                   |   |        |                 |                    |  |   |                   |       
|                            |                   |                   | (5,935 | )                  |                   |   | (3,631 | )               |                    |  |   | (2,008            | )      |   |   | 319    |        
|                            |                   |                   |        |                    |                   |   |        |                 |                    |  |   |                   |       
|                            |                   | $                 | (6,599 | )                  |                   | $ | 9,810  |                 |                    |  | $ | 27,224            |        |   | $ | 40,979 |        
|                            |                   |                   |        |                    |                   |   |        |                 |                    |  |   |                   |       





|                                                                 |  |              |         |               |              |   |        |            |               |  |   |              |   |  |   |        |  
|---------------------------------------------------------------- |  | ------------ | ------- | ------------- | ------------ | - | ------ | ---------- | ------------- |  | - | ------------ | - |  | - | ------ | -
|                                                                 |  |              |         | September 26, |              |   |        | January 1, |               |  |  
|                                                                 |  | Year ended   |         |               | 2003 through |   |        |            | 2003 through  |  |   | Year ended   |  
|                                                                 |  | December 31, |         |               | December 31, |   |        |            | September 25, |  |   | December 31, |  
|                                                                 |  | 2004         |         |               | 2003         |   |        |            | 2003          |  |   | 2002         |  
|                                                                 |  |              |         |               |              |   |        |            |               |  |   |              |  
|                                                                 |  | Successor    |         |               | Successor    |   |        |            | Predecessor   |  |   | Predecessor  |  
|Federal income tax provision (benefit) at statutory rate         |  | $            | (23,654 | )             |              | $ | (807   | )          |               |  | $ | 20,914       |   |  | $ | 42,970 |  
|State and local income taxes, net of federal benefit (detriment) |  |              | (4,788  | )             |              |   | (164   | )          |               |  |   | 1,447        |   |  |   | 1,721  |  
|Non-deductible expenses and transaction costs                    |  |              | 78      |               |              |   | 572    |            |               |  |   | 4,943        |   |  |   |       |  
|Deferred taxes recorded on foreign earnings                      |  |              | 11,584  |               |              |   | 6,566  |            |               |  |   |             |   |  |   |       |  
|Foreign earnings taxed at different rates                        |  |              | 4,828   |               |              |   | (1,377 | )          |               |  |   | 270          |   |  |   | (4,749 | )
|Acquisition costs                                                |  |              | (2,077  | )             |              |   | 4,694  |            |               |  |   |             |   |  |   |       |  
|Increase in valuation allowance                                  |  |              | 8,308   |               |              |   |       |            |               |  |   |             |   |  |   |       |  
|Effect of changes in tax rates                                   |  |              | (1,107  | )             |              |   |       |            |               |  |   |             |   |  |   |       |  
|Other                                                            |  |              | 229     |               |              |   | 326    |            |               |  |   | (350         | ) |  |   | 1,037  |  
|                                                                 |  |              |         |               |              |   |        |            |               |  |   |              |  
|                                                                 |  | $            | (6,599  | )             |              | $ | 9,810  |            |               |  | $ | 27,224       |   |  | $ | 40,979 |  
|                                                                 |  |              |         |               |              |   |        |            |               |  |   |              |  

100



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Notes to Consolidated Financial
Statements  (Continued)






101



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                   |                                              |              |          |          |           |   |          |         |  
|-------------------------------------------------- | -------------------------------------------- | ------------ | -------- | -------- | --------- | - | -------- | ------- | -
|                                                   |                                              | December 31, |         
|                                                   |                                              |              |         
|                                                   |                                              | 2004         |          |          | 2003      |  
|                                                   |                                              |              |          |          |           |  
|                                                   |                                              | Successor    |          |          | Successor |  
|Deferred income tax liabilities:                   |                                              |              |          |          |           |   |          |        
|                                                   | Prepaid expenses                             |              | $        | (8,697   | )         |   | $        | (7,589  | )
|                                                   | Unrealized gain on equity investments        |              |          |         |           |   |          | (13,315 | )
|                                                   | Undistributed foreign earnings               |              |          | (105,964 | )         |   |          | (94,787 | )
|                                                   | Depreciation and amortization                |              |          | (40,298  | )         |   |          | (52,884 | )
|                                                   | Deferred revenue and other                   |              |          | (11,668  | )         |   |          | (10,753 | )
|                                                   | Other                                        |              |          | (8,344   | )         |   |          | (2,939  | )
|                                                   |                                              |              |          |          |           |  
|Total deferred income tax liabilities              |                                              |              | (174,971 | )        |           |   | (182,267 | )      
|Deferred income tax assets:                        |                                              |              |          |          |           |   |          |        
|                                                   | Net operating and capital loss carryforwards |              |          | 127,445  |           |   |          | 126,367 |  
|                                                   | Unrealized gain on investments               |              |          | 6,804    |           |   |          |        |  
|                                                   | Accrued expenses and unearned income         |              |          | 35,633   |           |   |          | 35,251  |  
|                                                   | Goodwill, net of amortization                |              |          | 51,010   |           |   |          | 58,083  |  
|                                                   | Other                                        |              |          | 16,639   |           |   |          | 12,588  |  
|                                                   |                                              |              |          |          |           |  
|                                                   |                                              |              | 237,531  |          |           |   | 232,289  |        
|Valuation allowance for deferred income tax assets |                                              |              | (77,547  | )        |           |   | (122,091 | )      
|                                                   |                                              |              |          |          |           |  
|Total deferred income tax assets                   |                                              |              | 159,984  |          |           |   | 110,198  |        
|                                                   |                                              |              |          |          |           |  
|Net deferred income tax liabilities                |                                              | $            | (14,987  | )        |           | $ | (72,069  | )      
|                                                   |                                              |              |          |          |           |  



102



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|                                                            |                                              |              |        |               |              |   |        |            |               |  |   |              |        |   |   |     |         |  
|----------------------------------------------------------- | -------------------------------------------- | ------------ | ------ | ------------- | ------------ | - | ------ | ---------- | ------------- |  | - | ------------ | ------ | - | - | --- | ------- | -
|                                                            |                                              |              |        | September 26, |              |   |        | January 1, |               |  |  
|                                                            |                                              | Year ended   |        |               | 2003 through |   |        |            | 2003 through  |  |   | Year ended   |       
|                                                            |                                              | December 31, |        |               | December 31, |   |        |            | September 25, |  |   | December 31, |       
|                                                            |                                              | 2004         |        |               | 2003         |   |        |            | 2003          |  |   | 2002         |       
|                                                            |                                              |              |        |               |              |   |        |            |               |  |   |              |       
|                                                            |                                              | Successor    |        |               | Successor    |   |        |            | Predecessor   |  |   | Predecessor  |       
|Excess (deficiency) of income tax over financial reporting: |                                              |              |        |               |              |   |        |            |               |  |   |              |        |   |   |     |        
|                                                            | Depreciation and amortization                |              | $      | (5,519        | )            |   | $      | (3,753     | )             |  |   | $            | 6,276  |   |   | $   | (40,145 | )
|                                                            | Net operating and capital loss carryforwards |              |        | (2,657        | )            |   |        | (615       | )             |  |   |              | (5,031 | ) |   |     | 52,309  |  
|                                                            | Unrealized gain on equity investments        |              |        | (11,437       | )            |   |        |           |               |  |   |              |       |   |   |     |        |  
|                                                            | Valuation allowance increase                 |              |        | 8,308         |              |   |        |           |               |  |   |              |       |   |   |     |        |  
|                                                            | Accrued expenses and unearned income         |              |        | (2,776        | )            |   |        | 262        |               |  |   |              | (6,405 | ) |   |     | (4,377  | )
|                                                            | Prepaid expenses                             |              |        | 1,109         |              |   |        | (1,136     | )             |  |   |              | 2,921  |   |   |     | (526    | )
|                                                            | Deferred revenue                             |              |        | 916           |              |   |        | (911       | )             |  |   |              | (877   | ) |   |     | 5,153   |  
|                                                            | Undistributed foreign earnings               |              |        | 11,177        |              |   |        | 3,040      |               |  |   |              |       |   |   |     |        |  
|                                                            | Other items, net                             |              |        | (5,056        | )            |   |        | (518       | )             |  |   |              | 1,108  |   |   |     | (12,094 | )
|                                                            |                                              |              |        |               |              |   |        |            |               |  |   |              |       
|                                                            |                                              | $            | (5,935 | )             |              | $ | (3,631 | )          |               |  | $ | (2,008       | )      |   | $ | 320 |        
|                                                            |                                              |              |        |               |              |   |        |            |               |  |   |              |       





|    |                       
|--- | ----------------------
|25. | Employee Benefit Plans



103



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Notes to Consolidated Financial
Statements  (Continued)


















104



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






|                                  |           |           |            |             |          |   |       |       | 
|--------------------------------- | --------- | --------- | ---------- | ----------- | -------- | - | ----- | ----- | 
|                                  |           |           |            | Weighted-   |         
|                                  |           |           |            | Average     |         
|                                  |           | Number of |            |             | Exercise |  
|                                  |           | Options   |            |             | Price    |  
|                                  |           |           |            |             |          |  
|Outstanding at December 31, 2001  |           |           | 29,884,869 |             |          | $ | 21.44 |      
|                                  | Granted   |           |            | 7,311,605   |          |   |       | 12.78 | 
|                                  | Exercised |           |            | (444,783    | )        |   |       | 11.26 | 
|                                  | Canceled  |           |            | (3,094,059  | )        |   |       | 21.47 | 
|                                  |           |           |            |             |          |  
|Outstanding at December 31, 2002  |           |           | 33,657,632 |             |          |   | 19.69 |      
|                                  | Granted   |           |            | 4,996,689   |          |   |       | 13.40 | 
|                                  | Exercised |           |            | (698,028    | )        |   |       | 8.76  | 
|                                  | Canceled  |           |            | (37,956,293 | )        |   |       | 19.07 | 
|                                  |           |           |            |             |          |  
|Outstanding at September 25, 2003 |           |           |           |             |          | $ |      |      
|                                  |           |           |            |             |          |  



|                                  |           |           |           |           |          |   |       |       | 
|--------------------------------- | --------- | --------- | --------- | --------- | -------- | - | ----- | ----- | 
|                                  |           |           |           | Weighted- |         
|                                  |           |           |           | Average   |         
|                                  |           | Number of |           |           | Exercise |  
|                                  |           | Options   |           |           | Price    |  
|                                  |           |           |           |           |          |  
|Outstanding at September 26, 2003 |           |           |          |           |          | $ |      |      
|                                  | Granted   |           |           | 3,350,000 |          |   |       | 14.50 | 
|                                  | Exercised |           |           |          |          |   |       |      | 
|                                  | Canceled  |           |           |          |          |   |       |      | 
|                                  |           |           |           |           |          |  
|Outstanding at December 31, 2003  |           |           | 3,350,000 |           |          |   | 14.50 |      
|                                  | Granted   |           |           | 505,000   |          |   |       | 14.50 | 
|                                  | Exercised |           |           |          |          |   |       |      | 
|                                  | Canceled  |           |           | (100,000  | )        |   |       | 14.50 | 
|                                  |           |           |           |           |          |  
|Outstanding at December 31, 2004  |           |           | 3,755,000 |           |          | $ | 14.50 |      
|                                  |           |           |           |           |          |  



|                    |           |           |                     |   |           |          |  |         |           |           |  |           |         |  |          |  |         |  |  |   |       | 
|------------------- | --------- | --------- | ------------------- | - | --------- | -------- |  | ------- | --------- | --------- |  | --------- | ------- |  | -------- |  | ------- |  |  | - | ----- | 
|Options Outstanding |           |           | Options Exercisable |  
|                    |           |           |                     |  
|                    |           | Weighted- |                     |   | Weighted- |          |  |         |           | Weighted- | 
|                    |           | Exercise  |                     |   | Average   |          |  | Average |           |           |  |           | Average | 
|Number of           |           |           | Price               |   |           | Exercise |  |         | Remaining |           |  | Number of |         |  | Exercise | 
|Options             |           |           | Range               |   |           | Price    |  |         | Life      |           |  | Options   |         |  | Price    | 
|                    |           |           |                     |   |           |          |  |         |           |           |  |           |         |  |          | 
|                    | 3,755,000 |           |                     | $ | 14.50     |          |  | $       | 14.50     |           |  |           | 8.90    |  |          |  | 700,000 |  |  | $ | 14.50 | 
|                    |           |           |                     |   |           |          |  |         |           |           |  |           |         |  |          | 
|                    | 3,755,000 |           |                     |   |           |          |  | $       | 14.50     |           |  |           | 8.90    |  |          |  | 700,000 |  |  | $ | 14.50 | 
|                    |           |           |                     |   |           |          |  |         |           |           |  |           |         |  |          | 



105



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|    |                                  
|--- | ---------------------------------
|26. | Operations by Geographic Location



|                         |           |              |                |                         |                    |         |         |  |                    |         |         |              |  |         |         |           |  |         |         |         | 
|------------------------ | --------- | ------------ | -------------- | ----------------------- | ------------------ | ------- | ------- |  | ------------------ | ------- | ------- | ------------ |  | ------- | ------- | --------- |  | ------- | ------- | ------- | 
|                         |           | Year ended   |                |                         | September 26, 2003 |         |         |  | January 1, 2003    |         |         | Year ended   | 
|                         |           | December 31, |                |                         | through            |         |         |  | through            |         |         | December 31, | 
|                         |           | 2004         |                |                         | December 31, 2003  |         |         |  | September 25, 2003 |         |         | 2002         | 
|                         |           |              |                |                         |                    |         |         |  |                    |         |         |              | 
|                         |           | Successor    |                |                         | Successor          |         |         |  | Predecessor        |         |         | Predecessor  | 
|Revenues:                |           |              |                |                         |                    |         |         |  |                    |         |         |              |  |         |         |           | 
|                         | Americas: |              |                |                         |                    |         |         |  |                    |         |         |              |  |         |         |           |  |        
|                         |           |              | United States  |                         | $                  | 606,032 |         |  | $                  | 154,946 |         |              |  | $       | 491,598 |           |  | $       | 705,365 |        
|                         |           |              | Other          |                         |                    | 43,092  |         |  |                    | 10,155  |         |              |  |         | 31,048  |           |  |         | 40,904  |        
|                         |           |              |                |                         |                    |         |         |  |                    |         |         |              | 
|                         |           |              |                | Americas                |                    |         | 649,124 |  |                    |         | 165,101 |              |  |         |         | 522,646   |  |         |         | 746,269 | 
|                         | Europe:   |              |                |                         |                    |         |         |  |                    |         |         |              |  |         |         |           |  |        
|                         |           |              | United Kingdom |                         |                    | 410,726 |         |  |                    | 94,876  |         |              |  |         | 254,767 |           |  |         | 335,515 |        
|                         |           |              | Other          |                         |                    | 383,848 |         |  |                    | 86,421  |         |              |  |         | 220,465 |           |  |         | 258,998 |        
|                         |           |              |                |                         |                    |         |         |  |                    |         |         |              | 
|                         |           |              |                | Europe                  |                    |         | 794,574 |  |                    |         | 181,297 |              |  |         |         | 475,232   |  |         |         | 594,513 | 
|Asia-Pacific and Africa: |           |              |                |                         |                    |         |         |  |                    |         |         |              |  |         |         |           | 
|                         |           | Japan        |                |                         | 226,028            |         |         |  | 56,333             |         |         |              |  | 128,489 |         |           |  | 133,745 |        
|                         |           | Other        |                |                         | 112,528            |         |         |  | 28,895             |         |         |              |  | 69,880  |         |           |  | 95,856  |        
|                         |           |              |                |                         |                    |         |         |  |                    |         |         |              | 
|                         |           |              |                | Asia-Pacific and Africa |                    |         | 338,556 |  |                    |         | 85,228  |              |  |         |         | 198,369   |  |         |         | 229,601 | 
|                         |           |              |                |                         |                    |         |         |  |                    |         |         |              | 
|Net revenues             |           |              | 1,782,254      |                         |                    |         | 431,626 |  |                    |         |         | 1,196,247    |  |         |         | 1,570,383 | 
|Reimbursed service costs |           |              | 364,080        |                         |                    |         | 96,255  |  |                    |         |         | 268,683      |  |         |         | 399,650   | 
|                         |           |              |                |                         |                    |         |         |  |                    |         |         |              | 
|Gross revenues           |           | $            | 2,146,334      |                         |                    | $       | 527,881 |  |                    |         | $       | 1,464,930    |  |         | $       | 1,970,033 | 
|                         |           |              |                |                         |                    |         |         |  |                    |         |         |              | 

|                                       |           |                   |                |                         |                   |         |         |  |                   |         |         |         |  |        |         |         |  |  |  |  | 
|-------------------------------------- | --------- | ----------------- | -------------- | ----------------------- | ----------------- | ------- | ------- |  | ----------------- | ------- | ------- | ------- |  | ------ | ------- | ------- |  |  |  |  | 
|                                       |           | As of             |                |                         | As of             |         |         |  | As of             |         |         |        
|                                       |           | December 31, 2004 |                |                         | December 31, 2003 |         |         |  | December 31, 2002 |         |         |        
|                                       |           |                   |                |                         |                   |         |         |  |                   |         |         |        
|                                       |           | Successor         |                |                         | Successor         |         |         |  | Predecessor       |         |         |        
|Property, equipment and software, net: |           |                   |                |                         |                   |         |         |  |                   |         |         |         |  |        |         |         | 
|                                       | Americas: |                   |                |                         |                   |         |         |  |                   |         |         |         |  |        |         |         |  | 
|                                       |           |                   | United States  |                         | $                 | 148,760 |         |  | $                 | 166,694 |         |         |  | $      | 165,131 |         |  |  |  | 
|                                       |           |                   | Other          |                         |                   | 2,203   |         |  |                   | 2,151   |         |         |  |        | 1,729   |         |  |  |  | 
|                                       |           |                   |                |                         |                   |         |         |  |                   |         |         |         | 
|                                       |           |                   |                | Americas                |                   |         | 150,963 |  |                   |         | 168,845 |         |  |        |         | 166,860 |  |  |  |  | 
|                                       | Europe:   |                   |                |                         |                   |         |         |  |                   |         |         |         |  |        |         |         |  | 
|                                       |           |                   | United Kingdom |                         |                   | 140,894 |         |  |                   | 136,884 |         |         |  |        | 127,208 |         |  |  |  | 
|                                       |           |                   | Other          |                         |                   | 17,179  |         |  |                   | 16,531  |         |         |  |        | 12,788  |         |  |  |  | 
|                                       |           |                   |                |                         |                   |         |         |  |                   |         |         |         | 
|                                       |           |                   |                | Europe                  |                   |         | 158,073 |  |                   |         | 153,415 |         |  |        |         | 139,996 |  |  |  |  | 
|Asia-Pacific and Africa:               |           |                   |                |                         |                   |         |         |  |                   |         |         |         |  |        |         |         | 
|                                       |           | Japan             |                |                         | 19,864            |         |         |  | 16,702            |         |         |         |  | 14,453 |         |         |  |  | 
|                                       |           | Other             |                |                         | 7,195             |         |         |  | 6,754             |         |         |         |  | 6,059  |         |         |  |  | 
|                                       |           |                   |                |                         |                   |         |         |  |                   |         |         |         | 
|                                       |           |                   |                | Asia-Pacific and Africa |                   |         | 27,059  |  |                   |         | 23,456  |         |  |        |         | 20,512  |  |  |  |  | 
|                                       |           |                   |                |                         |                   |         |         |  |                   |         |         |         | 
|                                       |           | $                 | 336,095        |                         |                   | $       | 345,716 |  |                   |         | $       | 327,368 |  |        |         |         | 
|                                       |           |                   |                |                         |                   |         |         |  |                   |         |         |         | 

106



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|    |         
|--- | --------
|27. | Segments



Year ended December 31, 2004 
Successor


|                                |                          |             |         |           |            |   |         |             |  |   |              |        |  |              |   |         |   |   |         |           | 
|------------------------------- | ------------------------ | ----------- | ------- | --------- | ---------- | - | ------- | ----------- |  | - | ------------ | ------ |  | ------------ | - | ------- | - | - | ------- | --------- | 
|                                |                          | Product     |         |           | Commercial |   |         | PharmaBio   |  |   |              |        | 
|                                |                          | Development |         |           | Services   |   |         | Development |  |   | Eliminations |        |  | Consolidated |  
|                                |                          |             |         |           |            |   |         |             |  |   |              |        |  |              |  
|Service revenues:               |                          |             |         |           |            |   |         |             |  |   |              |        |  |              |   |         |   |   |         |          
|                                | External                 |             | $       | 1,126,687 |            |   | $       | 602,670     |  |   | $            |       |  |              | $ |        |   |   | $       | 1,729,357 | 
|                                | Intersegment             |             |         |          |            |   |         | 65,687      |  |   |              |       |  |              |   | (65,687 | ) |   |         |          | 
|                                |                          |             |         |           |            |   |         |             |  |   |              |        |  |              |  
|                                | Total net services       |             |         | 1,126,687 |            |   |         | 668,357     |  |   |              |       |  |              |   | (65,687 | ) |   |         | 1,729,357 | 
|Commercial rights and royalties |                          |             |        |           |            |   |        |             |  |   | 62,517       |        |  |              |  |         |   |   | 62,517  |          
|Investment                      |                          |             |        |           |            |   |        |             |  |   | (9,620       | )      |  |              |  |         |   |   | (9,620  | )        
|                                |                          |             |         |           |            |   |         |             |  |   |              |        |  |              |  
|                                | Total net revenues       |             |         | 1,126,687 |            |   |         | 668,357     |  |   |              | 52,897 |  |              |   | (65,687 | ) |   |         | 1,782,254 | 
|                                | Reimbursed service costs |             |         | 309,285   |            |   |         | 61,084      |  |   |              |       |  |              |   | (6,289  | ) |   |         | 364,080   | 
|                                |                          |             |         |           |            |   |         |             |  |   |              |        |  |              |  
|                                | Gross revenues           |             | $       | 1,435,972 |            |   | $       | 729,441     |  |   | $            | 52,897 |  |              | $ | (71,976 | ) |   | $       | 2,146,334 | 
|                                |                          |             |         |           |            |   |         |             |  |   |              |        |  |              |  
|                               
|Contribution                    |                          | $           | 554,405 |           |            | $ | 253,712 |             |  | $ | (84,322      | )      |  | $            |  |         |   | $ | 723,795 |          
|                                |                          |             |         |           |            |   |         |             |  |   |              |        |  |              |  

107



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


September 26, 2003 through December 31,
2003  Successor


|                                |                          |             |         |         |            |   |        |             |  |   |              |        |  |              |   |         |   |   |         |         | 
|------------------------------- | ------------------------ | ----------- | ------- | ------- | ---------- | - | ------ | ----------- |  | - | ------------ | ------ |  | ------------ | - | ------- | - | - | ------- | ------- | 
|                                |                          | Product     |         |         | Commercial |   |        | PharmaBio   |  |   |              |        | 
|                                |                          | Development |         |         | Services   |   |        | Development |  |   | Eliminations |        |  | Consolidated |  
|                                |                          |             |         |         |            |   |        |             |  |   |              |        |  |              |  
|Service revenues:               |                          |             |         |         |            |   |        |             |  |   |              |        |  |              |   |         |   |   |         |        
|                                | External                 |             | $       | 270,247 |            |   | $      | 130,705     |  |   | $            |       |  |              | $ |        |   |   | $       | 400,952 | 
|                                | Intersegment             |             |         |        |            |   |        | 10,458      |  |   |              |       |  |              |   | (10,458 | ) |   |         |        | 
|                                |                          |             |         |         |            |   |        |             |  |   |              |        |  |              |  
|                                | Total net services       |             |         | 270,247 |            |   |        | 141,163     |  |   |              |       |  |              |   | (10,458 | ) |   |         | 400,952 | 
|Commercial rights and royalties |                          |             |        |         |            |   |       |             |  |   | 27,914       |        |  |              |  |         |   |   | 27,914  |        
|Investment                      |                          |             |        |         |            |   |       |             |  |   | 2,760        |        |  |              |  |         |   |   | 2,760   |        
|                                |                          |             |         |         |            |   |        |             |  |   |              |        |  |              |  
|                                | Total net revenues       |             |         | 270,247 |            |   |        | 141,163     |  |   |              | 30,674 |  |              |   | (10,458 | ) |   |         | 431,626 | 
|                                | Reimbursed service costs |             |         | 77,889  |            |   |        | 18,366      |  |   |              |       |  |              |   |        |   |   |         | 96,255  | 
|                                |                          |             |         |         |            |   |        |             |  |   |              |        |  |              |  
|                                | Gross revenues           |             | $       | 348,136 |            |   | $      | 159,529     |  |   | $            | 30,674 |  |              | $ | (10,458 | ) |   | $       | 527,881 | 
|                                |                          |             |         |         |            |   |        |             |  |   |              |        |  |              |  
|Contribution                    |                          | $           | 141,046 |         |            | $ | 55,353 |             |  | $ | 4,040        |        |  | $            |  |         |   | $ | 200,439 |        
|                                |                          |             |         |         |            |   |        |             |  |   |              |        |  |              |  

January 1, 2003 through September 25,
2003  Predecessor


|                                |                          |             |         |         |            |   |         |             |  |   |              |        |  |              |   |         |   |   |         |           | 
|------------------------------- | ------------------------ | ----------- | ------- | ------- | ---------- | - | ------- | ----------- |  | - | ------------ | ------ |  | ------------ | - | ------- | - | - | ------- | --------- | 
|                                |                          | Product     |         |         | Commercial |   |         | PharmaBio   |  |   |              |        | 
|                                |                          | Development |         |         | Services   |   |         | Development |  |   | Eliminations |        |  | Consolidated |  
|                                |                          |             |         |         |            |   |         |             |  |   |              |        |  |              |  
|Service revenues:               |                          |             |         |         |            |   |         |             |  |   |              |        |  |              |   |         |   |   |         |          
|                                | External                 |             | $       | 734,729 |            |   | $       | 362,273     |  |   | $            |       |  |              | $ |        |   |   | $       | 1,097,002 | 
|                                | Intersegment             |             |         |        |            |   |         | 29,777      |  |   |              |       |  |              |   | (29,777 | ) |   |         |          | 
|                                |                          |             |         |         |            |   |         |             |  |   |              |        |  |              |  
|                                | Total net services       |             |         | 734,729 |            |   |         | 392,050     |  |   |              |       |  |              |   | (29,777 | ) |   |         | 1,097,002 | 
|Commercial rights and royalties |                          |             |        |         |            |   |        |             |  |   | 71,072       |        |  |              |  |         |   |   | 71,072  |          
|Investment                      |                          |             |        |         |            |   |        |             |  |   | 28,173       |        |  |              |  |         |   |   | 28,173  |          
|                                |                          |             |         |         |            |   |         |             |  |   |              |        |  |              |  
|                                | Total net revenues       |             |         | 734,729 |            |   |         | 392,050     |  |   |              | 99,245 |  |              |   | (29,777 | ) |   |         | 1,196,247 | 
|                                | Reimbursed service costs |             |         | 225,695 |            |   |         | 42,988      |  |   |              |       |  |              |   |        |   |   |         | 268,683   | 
|                                |                          |             |         |         |            |   |         |             |  |   |              |        |  |              |  
|                                | Gross revenues           |             | $       | 960,424 |            |   | $       | 435,038     |  |   | $            | 99,245 |  |              | $ | (29,777 | ) |   | $       | 1,464,930 | 
|                                |                          |             |         |         |            |   |         |             |  |   |              |        |  |              |  
|Contribution                    |                          | $           | 375,125 |         |            | $ | 142,144 |             |  | $ | 37,455       |        |  | $            |  |         |   | $ | 554,724 |          
|                                |                          |             |         |         |            |   |         |             |  |   |              |        |  |              |  

Year ended December 31, 2002 
Predecessor


|                                |                          |             |         |           |            |   |         |             |  |           |             |        |  |              |        |         |              |   |   |         |   |   |         |           | 
|------------------------------- | ------------------------ | ----------- | ------- | --------- | ---------- | - | ------- | ----------- |  | --------- | ----------- | ------ |  | ------------ | ------ | ------- | ------------ | - | - | ------- | - | - | ------- | --------- | 
|                                |                          | Product     |         |           | Commercial |   |         |             |  | PharmaBio |             |        |  |              |       
|                                |                          | Development |         |           | Services   |   |         | Informatics |  |           | Development |        |  | Eliminations |        |         | Consolidated |  
|                                |                          |             |         |           |            |   |         |             |  |           |             |        |  |              |        |         |              |  
|Service revenues:               |                          |             |         |           |            |   |         |             |  |           |             |        |  |              |        |         |              |   |   |         |   |   |         |          
|                                | External                 |             | $       | 944,861   |            |   | $       | 503,466     |  |           | $           | 20,347 |  |              | $      |        |              |   | $ |        |   |   | $       | 1,468,674 | 
|                                | Intersegment             |             |         |          |            |   |         | 54,548      |  |           |             |       |  |              |        |        |              |   |   | (54,548 | ) |   |         |          | 
|                                |                          |             |         |           |            |   |         |             |  |           |             |        |  |              |        |         |              |  
|                                | Total net services       |             |         | 944,861   |            |   |         | 558,014     |  |           |             | 20,347 |  |              |        |        |              |   |   | (54,548 | ) |   |         | 1,468,674 | 
|Commercial rights and royalties |                          |             |        |           |            |   |        |             |  |           |            |        |  |              | 88,005 |         |              |   |  |         |   |   | 88,005  |          
|Investment                      |                          |             |        |           |            |   |        |             |  |           |            |        |  |              | 13,704 |         |              |   |  |         |   |   | 13,704  |          
|                                |                          |             |         |           |            |   |         |             |  |           |             |        |  |              |        |         |              |  
|                                | Total net revenues       |             |         | 944,861   |            |   |         | 558,014     |  |           |             | 20,347 |  |              |        | 101,709 |              |   |   | (54,548 | ) |   |         | 1,570,383 | 
|                                | Reimbursed service costs |             |         | 312,669   |            |   |         | 86,959      |  |           |             | 22     |  |              |        |        |              |   |   |        |   |   |         | 399,650   | 
|                                |                          |             |         |           |            |   |         |             |  |           |             |        |  |              |        |         |              |  
|                                | Gross revenues           |             | $       | 1,257,530 |            |   | $       | 644,973     |  |           | $           | 20,369 |  |              | $      | 101,709 |              |   | $ | (54,548 | ) |   | $       | 1,970,033 | 
|                                |                          |             |         |           |            |   |         |             |  |           |             |        |  |              |        |         |              |  
|Contribution                    |                          | $           | 477,492 |           |            | $ | 207,711 |             |  | $         | 8,024       |        |  | $            | 17,456 |         |              | $ |  |         |   | $ | 710,683 |          
|                                |                          |             |         |           |            |   |         |             |  |           |             |        |  |              |        |         |              |  

108



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


|              |                                  |              |           |           |              |   |           |           |              |  |   |           |         | 
|------------- | -------------------------------- | ------------ | --------- | --------- | ------------ | - | --------- | --------- | ------------ |  | - | --------- | ------- | 
|              |                                  | As of        |           |           | As of        |   |           |           | As of        | 
|              |                                  | December 31, |           |           | December 31, |   |           |           | December 31, | 
|              |                                  | 2004         |           |           | 2003         |   |           |           | 2002         | 
|              |                                  |              |           |           |              |   |           |           |              | 
|              |                                  | Successor    |           |           | Successor    |   |           |           | Predecessor  | 
|Total Assets: |                                  |              |           |           |              |   |           |           |              |  |   |           |        
|              | Product Development              |              | $         | 1,110,917 |              |   | $         | 1,008,099 |              |  |   | $         | 716,033 | 
|              | Commercial Services              |              |           | 349,557   |              |   |           | 266,021   |              |  |   |           | 384,814 | 
|              | PharmaBio Development            |              |           | 294,378   |              |   |           | 267,572   |              |  |   |           | 247,714 | 
|              | Corporate                        |              |           | 293,110   |              |   |           | 362,470   |              |  |   |           | 637,715 | 
|              | Assets of discontinued operation |              |           |          |              |   |           | 88,549    |              |  |   |           | 67,919  | 
|              |                                  |              |           |           |              |   |           |           |              | 
|              |                                  | $            | 2,047,962 |           |              | $ | 1,992,711 |           |              |  | $ | 2,054,195 |        
|              |                                  |              |           |           |              |   |           |           |              | 

|                                                         |                       |              |         |               |              |   |        |            |               |  |   |              |        |  |   |        |        | 
|-------------------------------------------------------- | --------------------- | ------------ | ------- | ------------- | ------------ | - | ------ | ---------- | ------------- |  | - | ------------ | ------ |  | - | ------ | ------ | 
|                                                         |                       |              |         | September 26, |              |   |        | January 1, |               |  |  
|                                                         |                       | Year ended   |         |               | 2003 through |   |        |            | 2003 through  |  |   | Year ended   |       
|                                                         |                       | December 31, |         |               | December 31, |   |        |            | September 25, |  |   | December 31, |       
|                                                         |                       | 2004         |         |               | 2003         |   |        |            | 2003          |  |   | 2002         |       
|                                                         |                       |              |         |               |              |   |        |            |               |  |   |              |       
|                                                         |                       | Successor    |         |               | Successor    |   |        |            | Predecessor   |  |   | Predecessor  |       
|Expenditures to acquire long-lived assets:               |                       |              |         |               |              |   |        |            |               |  |   |              |        |  |   |        |       
|                                                         | Product Development   |              | $       | 38,571        |              |   | $      | 12,205     |               |  |   | $            | 29,832 |  |   | $      | 34,402 | 
|                                                         | Commercial Services   |              |         | 10,777        |              |   |        | 1,858      |               |  |   |              | 8,759  |  |   |        | 4,656  | 
|                                                         | PharmaBio Development |              |         | 76            |              |   |        | 3          |               |  |   |              | 1      |  |   |        |       | 
|                                                         | Informatics           |              |         |              |              |   |        |           |               |  |   |              |       |  |   |        | 666    | 
|                                                         | Corporate             |              |         | 690           |              |   |        | 713        |               |  |   |              | 551    |  |   |        | 186    | 
|                                                         |                       |              |         |               |              |   |        |            |               |  |   |              |       
|                                                         |                       | $            | 50,114  |               |              | $ | 14,779 |            |               |  | $ | 39,143       |        |  | $ | 39,910 |       
|                                                         |                       |              |         |               |              |   |        |            |               |  |   |              |       
|Depreciation and amortization expense:                   |                       |              |         |               |              |   |        |            |               |  |   |              |        |  |   |        |       
|                                                         | Product Development   |              | $       | 83,471        |              |   | $      | 22,406     |               |  |   | $            | 43,143 |  |   | $      | 60,710 | 
|                                                         | Commercial Services   |              |         | 30,759        |              |   |        | 9,177      |               |  |   |              | 15,521 |  |   |        | 21,926 | 
|                                                         | Informatics           |              |         |              |              |   |        |           |               |  |   |              |       |  |   |        | 2,559  | 
|                                                         | Corporate             |              |         | 10,675        |              |   |        | 2,987      |               |  |   |              | 604    |  |   |        | 953    | 
|                                                         |                       |              |         |               |              |   |        |            |               |  |   |              |       
|Depreciation and amortization excluded from contribution |                       |              | 124,905 |               |              |   | 34,570 |            |               |  |   | 59,268       |        |  |   | 86,148 |       
|                                                         | PharmaBio Development |              |         | 3,454         |              |   |        | 962        |               |  |   |              | 2,210  |  |   |        | 979    | 
|                                                         |                       |              |         |               |              |   |        |            |               |  |   |              |       
|Total depreciation and amortization                      |                       | $            | 128,359 |               |              | $ | 35,532 |            |               |  | $ | 61,478       |        |  | $ | 87,127 |       
|                                                         |                       |              |         |               |              |   |        |            |               |  |   |              |       



|    |                                
|--- | -------------------------------
|28. | Guarantor Financial Information





109



---



##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




Year ended December 31, 2004 (successor)


|                                                                                                         |                                                            |                     |         |         |            |   |         |                |   |   |              |         |  |       |         |        |   |   |           |           |  
|-------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ------------------- | ------- | ------- | ---------- | - | ------- | -------------- | - | - | ------------ | ------- |  | ----- | ------- | ------ | - | - | --------- | --------- | -
|                                                                                                         |                                                            | Quintiles           |         |         | Subsidiary |   |         | Subsidiary     |   |   |              |         | 
|                                                                                                         |                                                            | Transnational Corp. |         |         | Guarantors |   |         | Non-Guarantors |   |   | Eliminations |         |  | Total |        
|                                                                                                         |                                                            |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Net revenues                                                                                             |                                                            | $                   | (507    | )       |            | $ | 611,711 |                |   | $ | 1,172,115    |         |  | $     | (1,065  | )      |   | $ | 1,782,254 |          
|Add reimbursed service costs                                                                             |                                                            |                     |        |         |            |   | 169,233 |                |   |   | 194,847      |         |  |       |        |        |   |   | 364,080   |          
|                                                                                                         |                                                            |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Gross revenues                                                                                           |                                                            |                     | (507    | )       |            |   | 780,944 |                |   |   | 1,366,962    |         |  |       | (1,065  | )      |   |   | 2,146,334 |          
|Costs, expenses and other:                                                                               |                                                            |                     |         |         |            |   |         |                |   |   |              |         |  |       |         |        |   |   |           |          
|                                                                                                         | Costs of revenues                                          |                     |         | 19,703  |            |   |         | 634,768        |   |   |              | 892,973 |  |       |         |       |   |   |           | 1,547,444 |  
|                                                                                                         | Selling, general and administrative                        |                     |         | 69,541  |            |   |         | 179,907        |   |   |              | 388,732 |  |       |         | (1,065 | ) |   |           | 637,115   |  
|                                                                                                         | Interest (income) expense, net                             |                     |         | 63,136  |            |   |         | (27,088        | ) |   |              | 22,530  |  |       |         |       |   |   |           | 58,578    |  
|                                                                                                         | Other (income) expense, net                                |                     |         | (68,620 | )          |   |         | 51,696         |   |   |              | 15,845  |  |       |         |       |   |   |           | (1,079    | )
|                                                                                                         | Transaction and restructuring                              |                     |         | 405     |            |   |         | 2,208          |   |   |              | 3,964   |  |       |         |       |   |   |           | 6,577     |  
|                                                                                                         | Gain on sale of a portion of an investment in a subsidiary |                     |         | (24,688 | )          |   |         |               |   |   |              |        |  |       |         |       |   |   |           | (24,688   | )
|                                                                                                         | Non-operating gain on change of interest transaction       |                     |         | (10,030 | )          |   |         |               |   |   |              |        |  |       |         |       |   |   |           | (10,030   | )
|                                                                                                         |                                                            |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|                                                                                                         |                                                            |                     | 49,447  |         |            |   | 841,491 |                |   |   | 1,324,044    |         |  |       | (1,065  | )      |   |   | 2,213,917 |          
|                                                                                                         |                                                            |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|(Loss) income before income taxes                                                                        |                                                            |                     | (49,954 | )       |            |   | (60,547 | )              |   |   | 42,918       |         |  |       |        |        |   |   | (67,583   | )        
|Income tax (benefit) expense                                                                             |                                                            |                     | (2,705  | )       |            |   | (29,739 | )              |   |   | 25,845       |         |  |       |        |        |   |   | (6,599    | )        
|                                                                                                         |                                                            |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|(Loss) income before minority interests and equity in (losses)
    earnings of unconsolidated affiliates |                                                            |                     | (47,249 | )       |            |   | (30,808 | )              |   |   | 17,073       |         |  |       |        |        |   |   | (60,984   | )        
|Minority interests and equity in (losses) earnings of
    unconsolidated affiliates                      |                                                            |                     |        |         |            |   | (156    | )              |   |   | (764         | )       |  |       | (1,095  | )      |   |   | (2,015    | )        
|Subsidiary income                                                                                        |                                                            |                     | 46,582  |         |            |   | (15,515 | )              |   |   | 1,913        |         |  |       | (32,980 | )      |   |   |          |          
|                                                                                                         |                                                            |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Income (loss) from continuing operations                                                                 |                                                            |                     | (667    | )       |            |   | (46,479 | )              |   |   | 18,222       |         |  |       | (34,075 | )      |   |   | (62,999   | )        
|Income from discontinued operation                                                                       |                                                            |                     |        |         |            |   | 1,080   |                |   |   | 8,540        |         |  |       |        |        |   |   | 9,620     |          
|Gain from sale of discontinued operation, net of income taxes                                            |                                                            |                     | 1,710   |         |            |   | 15,292  |                |   |   | 37,420       |         |  |       |        |        |   |   | 54,422    |          
|                                                                                                         |                                                            |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Net income (loss)                                                                                        |                                                            | $                   | 1,043   |         |            | $ | (30,107 | )              |   | $ | 64,182       |         |  | $     | (34,075 | )      |   | $ | 1,043     |          
|                                                                                                         |                                                            |                     |         |         |            |   |         |                |   |   |              |         |  |       |        

110



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


September 26, 2003 through December 31, 2003
(successor)


|                                                                                                |                                     |                     |         |         |            |   |         |                |   |   |              |         |   |       |         |   |  |   |         |         |  
|----------------------------------------------------------------------------------------------- | ----------------------------------- | ------------------- | ------- | ------- | ---------- | - | ------- | -------------- | - | - | ------------ | ------- | - | ----- | ------- | - |  | - | ------- | ------- | -
|                                                                                                |                                     | Quintiles           |         |         | Subsidiary |   |         | Subsidiary     |   |   |              |         |  
|                                                                                                |                                     | Transnational Corp. |         |         | Guarantors |   |         | Non-Guarantors |   |   | Eliminations |         |   | Total |        
|                                                                                                |                                     |                     |         |         |            |   |         |                |   |   |              |         |   |       |        
|Net revenues                                                                                    |                                     | $                   | 963     |         |            | $ | 153,807 |                |   | $ | 276,856      |         |   | $     |        |   |  | $ | 431,626 |        
|Add reimbursed service costs                                                                    |                                     |                     |        |         |            |   | 47,573  |                |   |   | 48,682       |         |   |       |        |   |  |   | 96,255  |        
|                                                                                                |                                     |                     |         |         |            |   |         |                |   |   |              |         |   |       |        
|Gross revenues                                                                                  |                                     |                     | 963     |         |            |   | 201,380 |                |   |   | 325,538      |         |   |       |        |   |  |   | 527,881 |        
|Costs, expenses and other:                                                                      |                                     |                     |         |         |            |   |         |                |   |   |              |         |   |       |         |   |  |   |         |        
|                                                                                                | Costs of revenues                   |                     |         | 5,509   |            |   |         | 148,619        |   |   |              | 207,884 |   |       |         |  |  |   |         | 362,012 |  
|                                                                                                | Selling, general and administrative |                     |         | 12,625  |            |   |         | 47,625         |   |   |              | 94,438  |   |       |         |  |  |   |         | 154,688 |  
|                                                                                                | Interest (income) expense, net      |                     |         | 16,919  |            |   |         | (6,688         | ) |   |              | 5,659   |   |       |         |  |  |   |         | 15,890  |  
|                                                                                                | Other (income) expense, net         |                     |         | (14,272 | )          |   |         | 14,586         |   |   |              | (2,717  | ) |       |         |  |  |   |         | (2,403  | )
|                                                                                                | Transaction and restructuring       |                     |         |        |            |   |         |               |   |   |              |        |   |       |         |  |  |   |         |        |  
|                                                                                                |                                     |                     |         |         |            |   |         |                |   |   |              |         |   |       |        
|                                                                                                |                                     |                     | 20,781  |         |            |   | 204,142 |                |   |   | 305,264      |         |   |       |        |   |  |   | 530,187 |        
|                                                                                                |                                     |                     |         |         |            |   |         |                |   |   |              |         |   |       |        
|(Loss) income before income taxes                                                               |                                     |                     | (19,818 | )       |            |   | (2,762  | )              |   |   | 20,274       |         |   |       |        |   |  |   | (2,306  | )      
|Income tax expense (benefit)                                                                    |                                     |                     | 8,795   |         |            |   | (1,474  | )              |   |   | 2,489        |         |   |       |        |   |  |   | 9,810   |        
|                                                                                                |                                     |                     |         |         |            |   |         |                |   |   |              |         |   |       |        
|Income (loss) before minority interests and equity in earnings
    of unconsolidated affiliates |                                     |                     | (28,613 | )       |            |   | (1,288  | )              |   |   | 17,785       |         |   |       |        |   |  |   | (12,116 | )      
|Minority interests and equity in earnings of unconsolidated
    affiliates                      |                                     |                     |        |         |            |   | 13      |                |   |   | (123         | )       |   |       |        |   |  |   | (110    | )      
|Subsidiary income                                                                               |                                     |                     | 21,186  |         |            |   | 1,018   |                |   |   | 57           |         |   |       | (22,261 | ) |  |   |        |        
|                                                                                                |                                     |                     |         |         |            |   |         |                |   |   |              |         |   |       |        
|Income (loss) from continuing operations                                                        |                                     |                     | (7,427  | )       |            |   | (257    | )              |   |   | 17,719       |         |   |       | (22,261 | ) |  |   | (12,226 | )      
|Income from discontinued operation                                                              |                                     |                     |        |         |            |   | 538     |                |   |   | 4,261        |         |   |       |        |   |  |   | 4,799   |        
|                                                                                                |                                     |                     |         |         |            |   |         |                |   |   |              |         |   |       |        
|Net income (loss)                                                                               |                                     | $                   | (7,427  | )       |            | $ | 281     |                |   | $ | 21,980       |         |   | $     | (22,261 | ) |  | $ | (7,427  | )      
|                                                                                                |                                     |                     |         |         |            |   |         |                |   |   |              |         |   |       |        

111



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


January 1, 2003 through September 25, 2003
(predecessor)


|                                                                                                         |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |         |   |  |   |           |         |  
|-------------------------------------------------------------------------------------------------------- | ----------------------------------- | ------------------- | ------- | ------- | ---------- | - | ------- | -------------- | - | - | ------------ | ------- |  | ----- | ------- | - |  | - | --------- | ------- | -
|                                                                                                         |                                     | Quintiles           |         |         | Subsidiary |   |         | Subsidiary     |   |   |              |         | 
|                                                                                                         |                                     | Transnational Corp. |         |         | Guarantors |   |         | Non-Guarantors |   |   | Eliminations |         |  | Total |        
|                                                                                                         |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Net revenues                                                                                             |                                     | $                   | (3,233  | )       |            | $ | 495,684 |                |   | $ | 703,796      |         |  | $     |        |   |  | $ | 1,196,247 |        
|Add reimbursed service costs                                                                             |                                     |                     |        |         |            |   | 136,663 |                |   |   | 132,020      |         |  |       |        |   |  |   | 268,683   |        
|                                                                                                         |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Gross revenues                                                                                           |                                     |                     | (3,233  | )       |            |   | 632,347 |                |   |   | 835,816      |         |  |       |        |   |  |   | 1,464,930 |        
|Costs, expenses and other:                                                                               |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |         |   |  |   |           |        
|                                                                                                         | Costs of revenues                   |                     |         | 6,519   |            |   |         | 422,104        |   |   |              | 540,851 |  |       |         |  |  |   |           | 969,474 |  
|                                                                                                         | Selling, general and administrative |                     |         | 32,747  |            |   |         | 129,308        |   |   |              | 235,263 |  |       |         |  |  |   |           | 397,318 |  
|                                                                                                         | Interest (income) expense, net      |                     |         | (3,111  | )          |   |         | (22,021        | ) |   |              | 14,758  |  |       |         |  |  |   |           | (10,374 | )
|                                                                                                         | Other (income) expense, net         |                     |         | (33,379 | )          |   |         | 16,624         |   |   |              | 11,364  |  |       |         |  |  |   |           | (5,391  | )
|                                                                                                         | Transaction and restructuring       |                     |         | 48,537  |            |   |         | (563           | ) |   |              | 6,174   |  |       |         |  |  |   |           | 54,148  |  
|                                                                                                         |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|                                                                                                         |                                     |                     | 51,313  |         |            |   | 545,452 |                |   |   | 808,410      |         |  |       |        |   |  |   | 1,405,175 |        
|                                                                                                         |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|(Loss) income before income taxes                                                                        |                                     |                     | (54,546 | )       |            |   | 86,895  |                |   |   | 27,406       |         |  |       |        |   |  |   | 59,755    |        
|Income tax expense (benefit)                                                                             |                                     |                     | (11,497 | )       |            |   | 25,344  |                |   |   | 13,377       |         |  |       |        |   |  |   | 27,224    |        
|                                                                                                         |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Income (loss) before minority interests and equity in (losses)
    earnings of unconsolidated affiliates |                                     |                     | (43,049 | )       |            |   | 61,551  |                |   |   | 14,029       |         |  |       |        |   |  |   | 32,531    |        
|Minority interests and equity in (losses) earnings of
    unconsolidated affiliates                      |                                     |                     |        |         |            |   | (24     | )              |   |   | 28           |         |  |       |        |   |  |   | 4         |        
|Subsidiary income                                                                                        |                                     |                     | 80,210  |         |            |   | (16,554 | )              |   |   | (1,440       | )       |  |       | (62,216 | ) |  |   |          |        
|                                                                                                         |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Income (loss) from continuing operations                                                                 |                                     |                     | 37,161  |         |            |   | 44,973  |                |   |   | 12,617       |         |  |       | (62,216 | ) |  |   | 32,535    |        
|Income from discontinued operation                                                                       |                                     |                     |        |         |            |   | 778     |                |   |   | 3,848        |         |  |       |        |   |  |   | 4,626     |        
|                                                                                                         |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Net income (loss)                                                                                        |                                     | $                   | 37,161  |         |            | $ | 45,751  |                |   | $ | 16,465       |         |  | $     | (62,216 | ) |  | $ | 37,161    |        
|                                                                                                         |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        

112



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


Year ended December 31, 2002 (predecessor)


|                                                                                                                                       |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |         |   |  |   |           |           |  
|-------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | ------------------- | ------- | ------- | ---------- | - | ------- | -------------- | - | - | ------------ | ------- |  | ----- | ------- | - |  | - | --------- | --------- | -
|                                                                                                                                       |                                     | Quintiles           |         |         | Subsidiary |   |         | Subsidiary     |   |   |              |         | 
|                                                                                                                                       |                                     | Transnational Corp. |         |         | Guarantors |   |         | Non-Guarantors |   |   | Eliminations |         |  | Total |        
|                                                                                                                                       |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Net revenues                                                                                                                           |                                     | $                   | (2,647  | )       |            | $ | 718,854 |                |   | $ | 854,176      |         |  | $     |        |   |  | $ | 1,570,383 |          
|Add reimbursed service costs                                                                                                           |                                     |                     |        |         |            |   | 205,289 |                |   |   | 194,361      |         |  |       |        |   |  |   | 399,650   |          
|                                                                                                                                       |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Gross revenues                                                                                                                         |                                     |                     | (2,647  | )       |            |   | 924,143 |                |   |   | 1,048,537    |         |  |       |        |   |  |   | 1,970,033 |          
|Costs, expenses and other:                                                                                                             |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |         |   |  |   |           |          
|                                                                                                                                       | Costs of revenues                   |                     |         | 6,351   |            |   |         | 638,622        |   |   |              | 700,525 |  |       |         |  |  |   |           | 1,345,498 |  
|                                                                                                                                       | Selling, general and administrative |                     |         | 48,563  |            |   |         | 181,344        |   |   |              | 278,196 |  |       |         |  |  |   |           | 508,103   |  
|                                                                                                                                       | Interest (income) expense, net      |                     |         | (5,069  | )          |   |         | (28,305        | ) |   |              | 19,191  |  |       |         |  |  |   |           | (14,183   | )
|                                                                                                                                       | Other (income) expense, net         |                     |         | (29,186 | )          |   |         | 18,451         |   |   |              | 15,221  |  |       |         |  |  |   |           | 4,486     |  
|                                                                                                                                       | Transaction and restructuring       |                     |         | 3,359   |            |   |         |               |   |   |              |        |  |       |         |  |  |   |           | 3,359     |  
|                                                                                                                                       |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|                                                                                                                                       |                                     |                     | 24,018  |         |            |   | 810,112 |                |   |   | 1,013,133    |         |  |       |        |   |  |   | 1,847,263 |          
|                                                                                                                                       |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|(Loss) income before income taxes                                                                                                      |                                     |                     | (26,665 | )       |            |   | 114,031 |                |   |   | 35,404       |         |  |       |        |   |  |   | 122,770   |          
|Income tax expense (benefit)                                                                                                           |                                     |                     | (1,870  | )       |            |   | 31,873  |                |   |   | 10,976       |         |  |       |        |   |  |   | 40,979    |          
|                                                                                                                                       |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Income (loss) before minority interests and equity in (losses)
    earnings of unconsolidated affiliates                               |                                     |                     | (24,795 | )       |            |   | 82,158  |                |   |   | 24,428       |         |  |       |        |   |  |   | 81,791    |          
|Minority interests and equity in (losses) earnings of
    unconsolidated affiliates                                                    |                                     |                     |        |         |            |   | (543    | )              |   |   | (26          | )       |  |       |        |   |  |   | (569      | )        
|Equity in subsidiary income                                                                                                            |                                     |                     | 106,459 |         |            |   | (23,872 | )              |   |   | (7,280       | )       |  |       | (75,307 | ) |  |   |          |          
|                                                                                                                                       |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Income (loss) from continuing operations                                                                                               |                                     |                     | 81,664  |         |            |   | 57,743  |                |   |   | 17,122       |         |  |       | (75,307 | ) |  |   | 81,222    |          
|Income from discontinued operation                                                                                                     |                                     |                     |        |         |            |   | 750     |                |   |   | (308         | )       |  |       |        |   |  |   | 442       |          
|Cumulative effect on prior years (to December 31, 2001) of
    changing to a different method of recognizing deferred income
    taxes |                                     |                     | 45,659  |         |            |   |        |                |   |   |             |         |  |       |        |   |  |   | 45,659    |          
|                                                                                                                                       |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        
|Net income (loss)                                                                                                                      |                                     | $                   | 127,323 |         |            | $ | 58,493  |                |   | $ | 16,814       |         |  | $     | (75,307 | ) |  | $ | 127,323   |          
|                                                                                                                                       |                                     |                     |         |         |            |   |         |                |   |   |              |         |  |       |        

113



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QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




As of December 31, 2004 (successor)


|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |         | 
|------------------------------------------ | ---------------------------------------------------- | ------------------- | --------- | --------- | ---------- | - | --------- | -------------- | - | - | ------------ | ------- | - | ----- | ---------- | ---------- | - | - | --------- | ------- | 
|                                           |                                                      | Quintiles           |           |           | Subsidiary |   |           | Subsidiary     |   |   |              |         |  
|                                           |                                                      | Transnational Corp. |           |           | Guarantors |   |           | Non-Guarantors |   |   | Eliminations |         |   | Total |           
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Assets                                     |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |        
|Current assets:                            |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |        
|                                           | Cash and cash equivalents                            |                     | $         | 17,581    |            |   | $         | 155,142        |   |   | $            | 362,957 |   |       | $          |           |   |   | $         | 535,680 | 
|                                           | Trade accounts receivable and unbilled services, net |                     |           |          |            |   |           | 122,567        |   |   |              | 177,840 |   |       |            |           |   |   |           | 300,407 | 
|                                           | Other current assets                                 |                     |           | 10,688    |            |   |           | 19,160         |   |   |              | 49,399  |   |       |            |           |   |   |           | 79,247  | 
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total current assets                       |                                                      |                     | 28,269    |           |            |   | 296,869   |                |   |   | 590,196      |         |   |       |           |            |   |   | 915,334   |        
|Property and equipment, net                |                                                      |                     | 1,680     |           |            |   | 115,776   |                |   |   | 173,689      |         |   |       |           |            |   |   | 291,145   |        
|Intangibles and other assets:              |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |        
|                                           | Investments                                          |                     |           | 22,219    |            |   |           | 375,121        |   |   |              | 1,274   |   |       |            |           |   |   |           | 398,614 | 
|                                           | Goodwill and other identifiable intangibles, net     |                     |           | 2,980     |            |   |           | 174,383        |   |   |              | 213,107 |   |       |            |           |   |   |           | 390,470 | 
|                                           | Deposits and other assets                            |                     |           | 24,200    |            |   |           | 11,022         |   |   |              | 17,177  |   |       |            |           |   |   |           | 52,399  | 
|                                           | Investments in subsidiaries                          |                     |           | 1,654,469 |            |   |           | (247,132       | ) |   |              | 75,217  |   |       |            | (1,482,554 | ) |   |           |        | 
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total intangibles and other assets         |                                                      |                     | 1,703,868 |           |            |   | 313,394   |                |   |   | 306,775      |         |   |       | (1,482,554 | )          |   |   | 841,483   |        
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total assets                               |                                                      | $                   | 1,733,817 |           |            | $ | 726,039   |                |   | $ | 1,070,660    |         |   | $     | (1,482,554 | )          |   | $ | 2,047,962 |        
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|                                          
|Liabilities and Shareholders Equity       |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |        
|Current liabilities:                       |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |        
|                                           | Accounts payable and accrued expenses                |                     | $         | 32,834    |            |   | $         | 96,508         |   |   | $            | 218,325 |   |       | $          |           |   |   | $         | 347,667 | 
|                                           | Credit arrangements                                  |                     |           | 3,100     |            |   |           | 669            |   |   |              | 16,550  |   |       |            |           |   |   |           | 20,319  | 
|                                           | Unearned income                                      |                     |           |          |            |   |           | 73,036         |   |   |              | 126,414 |   |       |            |           |   |   |           | 199,450 | 
|                                           | Other current liabilities                            |                     |           | 32,768    |            |   |           | 6,243          |   |   |              | (6,664  | ) |       |            |           |   |   |           | 32,347  | 
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total current liabilities                  |                                                      |                     | 68,702    |           |            |   | 176,456   |                |   |   | 354,625      |         |   |       |           |            |   |   | 599,783   |        
|Long-term liabilities:                     |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |        
|                                           | Credit arrangements, less current portion            |                     |           | 753,024   |            |   |           | 2,932          |   |   |              | 18,606  |   |       |            |           |   |   |           | 774,562 | 
|                                           | Minority interest                                    |                     |           |          |            |   |           |               |   |   |              | 27,705  |   |       |            | 10,845     |   |   |           | 38,550  | 
|                                           | Other liabilities                                    |                     |           | 61,535    |            |   |           | (23,706        | ) |   |              | 29,147  |   |       |            |           |   |   |           | 66,976  | 
|                                           | Net intercompany payables                            |                     |           | 282,465   |            |   |           | (818,801       | ) |   |              | 536,336 |   |       |            |           |   |   |           |        | 
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total long-term liabilities                |                                                      |                     | 1,097,024 |           |            |   | (839,575  | )              |   |   | 611,794      |         |   |       | 10,845     |            |   |   | 880,088   |        
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total liabilities                          |                                                      |                     | 1,165,726 |           |            |   | (663,119  | )              |   |   | 966,419      |         |   |       | 10,845     |            |   |   | 1,479,871 |        
|Total shareholders equity                 |                                                      |                     | 568,091   |           |            |   | 1,389,158 |                |   |   | 104,241      |         |   |       | (1,493,399 | )          |   |   | 568,091   |        
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total liabilities and shareholders equity |                                                      | $                   | 1,733,817 |           |            | $ | 726,039   |                |   | $ | 1,070,660    |         |   | $     | (1,482,554 | )          |   | $ | 2,047,962 |        
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           

114



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


As of December 31, 2003 (successor)


|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |         | 
|------------------------------------------ | ---------------------------------------------------- | ------------------- | --------- | --------- | ---------- | - | --------- | -------------- | - | - | ------------ | ------- | - | ----- | ---------- | ---------- | - | - | --------- | ------- | 
|                                           |                                                      | Quintiles           |           |           | Subsidiary |   |           | Subsidiary     |   |   |              |         |  
|                                           |                                                      | Transnational Corp. |           |           | Guarantors |   |           | Non-Guarantors |   |   | Eliminations |         |   | Total |           
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Assets                                    
|Current assets:                            |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |        
|                                           | Cash and cash equivalents                            |                     | $         | (7,138    | )          |   | $         | 188,430        |   |   | $            | 192,330 |   |       | $          |           |   |   | $         | 373,622 | 
|                                           | Trade accounts receivable and unbilled services, net |                     |           |          |            |   |           | 84,148         |   |   |              | 152,994 |   |       |            |           |   |   |           | 237,142 | 
|                                           | Other current assets                                 |                     |           | 5,885     |            |   |           | 23,093         |   |   |              | 44,452  |   |       |            |           |   |   |           | 73,430  | 
|                                           | Assets of discontinued operation                     |                     |           |          |            |   |           | 1,501          |   |   |              | 87,048  |   |       |            |           |   |   |           | 88,549  | 
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total current assets                       |                                                      |                     | (1,253    | )         |            |   | 297,172   |                |   |   | 476,824      |         |   |       |           |            |   |   | 772,743   |        
|Property and equipment, net                |                                                      |                     | 1,863     |           |            |   | 125,301   |                |   |   | 158,666      |         |   |       |           |            |   |   | 285,830   |        
|Intangibles and other assets:              |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |        
|                                           | Investments                                          |                     |           | 20,147    |            |   |           | 339,797        |   |   |              | 1,143   |   |       |            |           |   |   |           | 361,087 | 
|                                           | Goodwill and other identifiable intangibles, net     |                     |           | 13,429    |            |   |           | 255,209        |   |   |              | 247,940 |   |       |            |           |   |   |           | 516,578 | 
|                                           | Deposits and other assets                            |                     |           | 27,156    |            |   |           | 12,158         |   |   |              | 17,159  |   |       |            |           |   |   |           | 56,473  | 
|                                           | Investments in subsidiaries                          |                     |           | 1,738,852 |            |   |           | (201,283       | ) |   |              | 77,107  |   |       |            | (1,614,676 | ) |   |           |        | 
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total intangibles and other assets         |                                                      |                     | 1,799,584 |           |            |   | 405,881   |                |   |   | 343,349      |         |   |       | (1,614,676 | )          |   |   | 934,138   |        
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total assets                               |                                                      | $                   | 1,800,194 |           |            | $ | 828,354   |                |   | $ | 978,839      |         |   | $     | (1,614,676 | )          |   | $ | 1,992,711 |        
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|                                          
|Liabilities and Shareholders Equity      
|Current liabilities:                       |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |        
|                                           | Accounts payable and accrued expenses                |                     | $         | 58,482    |            |   | $         | 63,162         |   |   | $            | 191,055 |   |       |            |           |   |   | $         | 312,699 | 
|                                           | Credit arrangements                                  |                     |           | 3,100     |            |   |           | 736            |   |   |              | 16,834  |   |       |            |           |   |   |           | 20,670  | 
|                                           | Unearned income                                      |                     |           |          |            |   |           | 76,126         |   |   |              | 115,129 |   |       |            |           |   |   |           | 191,255 | 
|                                           | Other current liabilities                            |                     |           | 58,047    |            |   |           | 3,669          |   |   |              | (33,636 | ) |       |            |           |   |   |           | 28,080  | 
|                                           | Liabilities of discontinued operation                |                     |           |          |            |   |           | 5,696          |   |   |              | 1,385   |   |       |            |           |   |   |           | 7,081   | 
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total current liabilities                  |                                                      |                     | 119,629   |           |            |   | 149,389   |                |   |   | 290,767      |         |   |       |           |            |   |   | 559,785   |        
|Long-term liabilities:                     |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |            |            |   |   |           |        
|                                           | Credit arrangements, less current portion            |                     |           | 756,125   |            |   |           | 3,593          |   |   |              | 13,869  |   |       |            |           |   |   |           | 773,587 | 
|                                           | Minority interest                                    |                     |           |          |            |   |           |               |   |   |              | 1,380   |   |       |            |           |   |   |           | 1,380   | 
|                                           | Other liabilities                                    |                     |           | 98,924    |            |   |           | (8,375         | ) |   |              | 32,312  |   |       |            |           |   |   |           | 122,861 | 
|                                           | Net intercompany payables                            |                     |           | 290,418   |            |   |           | (774,401       | ) |   |              | 483,983 |   |       |            |           |   |   |           |        | 
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total long-term liabilities                |                                                      |                     | 1,145,467 |           |            |   | (779,183  | )              |   |   | 531,544      |         |   |       |           |            |   |   | 897,828   |        
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total liabilities                          |                                                      |                     | 1,265,096 |           |            |   | (629,794  | )              |   |   | 822,311      |         |   |       |           |            |   |   | 1,457,613 |        
|Total shareholders equity                 |                                                      |                     | 535,098   |           |            |   | 1,458,148 |                |   |   | 156,528      |         |   |       | (1,614,676 | )          |   |   | 535,098   |        
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           
|Total liabilities and shareholders equity |                                                      | $                   | 1,800,194 |           |            | $ | 828,354   |                |   | $ | 978,839      |         |   | $     | (1,614,676 | )          |   | $ | 1,992,711 |        
|                                           |                                                      |                     |           |           |            |   |           |                |   |   |              |         |   |       |           

115



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




Year ended December 31, 2004 (successor)


|                                                                                                                                  |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |   |         |   |   |         |         |  
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------- | ------- | ------- | ---------- | - | ------- | -------------- | - | - | ------------ | ------- | - | ----- | - | ------- | - | - | ------- | ------- | -
|                                                                                                                                  |                                                                          | Quintiles           |         |         | Subsidiary |   |         | Subsidiary     |   |   |              |         |  
|                                                                                                                                  |                                                                          | Transnational Corp. |         |         | Guarantors |   |         | Non-Guarantors |   |   | Eliminations |         |   | Total |  
|                                                                                                                                  |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Operating activities:                                                                                                             |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |   |         |   |   |         |        
|                                                                                                                                  | Net income                                                               |                     | $       | 1,043   |            |   | $       | (30,107        | ) |   | $            | 64,182  |   |       | $ | (34,075 | ) |   | $       | 1,043   |  
|                                                                                                                                  | (Income) loss from discontinued operation                                |                     |         |        |            |   |         | (1,080         | ) |   |              | (8,540  | ) |       |   |        |   |   |         | (9,620  | )
|                                                                                                                                  | Gain from the sale of discontinued operation, net of income taxes        |                     |         | (1,710  | )          |   |         | (15,292        | ) |   |              | (37,420 | ) |       |   |        |   |   |         | (54,422 | )
|                                                                                                                                  |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|                                                                                                                                  | (Loss) income from continuing operations                                 |                     |         | (667    | )          |   |         | (46,479        | ) |   |              | 18,222  |   |       |   | (34,075 | ) |   |         | (62,999 | )
|Adjustments to reconcile (loss) income from continuing
    operations to net cash (used in) provided by operating
    activities: |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |   |         |   |   |         |        
|                                                                                                                                  | Depreciation and amortization                                            |                     |         | 10,249  |            |   |         | 58,899         |   |   |              | 59,211  |   |       |   |        |   |   |         | 128,359 |  
|                                                                                                                                  | Amortization of debt issuance costs                                      |                     |         | 3,353   |            |   |         | 212            |   |   |              |        |   |       |   |        |   |   |         | 3,565   |  
|                                                                                                                                  | Amortization of commercial rights and royalties assets                   |                     |         |        |            |   |         | 16,985         |   |   |              |        |   |       |   |        |   |   |         | 16,985  |  
|                                                                                                                                  | Restructuring charge (payments) accrual, net                             |                     |         | 381     |            |   |         | (933           | ) |   |              | (2,890  | ) |       |   |        |   |   |         | (3,442  | )
|                                                                                                                                  | Loss (gain) from sales and impairments of investments, net               |                     |         | 492     |            |   |         | 8,464          |   |   |              |        |   |       |   |        |   |   |         | 8,956   |  
|                                                                                                                                  | Loss (gain) on disposals of property and equipment, net                  |                     |         | 15      |            |   |         | 4,181          |   |   |              | 792     |   |       |   |        |   |   |         | 4,988   |  
|                                                                                                                                  | Gain from sale of certain assets                                         |                     |         | (4,792  | )          |   |         |               |   |   |              | (1,175  | ) |       |   |        |   |   |         | (5,967  | )
|                                                                                                                                  | Gain from sale of a portion of an investment in a subsidiary             |                     |         | (24,688 | )          |   |         |               |   |   |              |        |   |       |   |        |   |   |         | (24,688 | )
|                                                                                                                                  | Non-operating gain on change of interest transaction                     |                     |         | (10,030 | )          |   |         |               |   |   |              |        |   |       |   |        |   |   |         | (10,030 | )
|                                                                                                                                  | Provision for deferred income tax expense                                |                     |         | 5,053   |            |   |         | (2,167         | ) |   |              | 555     |   |       |   |        |   |   |         | 3,441   |  
|                                                                                                                                  | Change in accounts receivable, unbilled services and unearned
    income |                     |         | (2,006  | )          |   |         | (41,327        | ) |   |              | (7,509  | ) |       |   |        |   |   |         | (50,842 | )
|                                                                                                                                  | Change in other operating assets and liabilities                         |                     |         | 1,741   |            |   |         | (29,157        | ) |   |              | (354    | ) |       |   | 1,095   |   |   |         | (26,675 | )
|                                                                                                                                  | Investment in subsidiaries and intercompany                              |                     |         | 35,702  |            |   |         | 13,401         |   |   |              | (82,083 | ) |       |   | 32,980  |   |   |         |        |  
|                                                                                                                                  | Other                                                                    |                     |         | 13      |            |   |         | 605            |   |   |              | (5      | ) |       |   |        |   |   |         | 613     |  
|                                                                                                                                  |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Net cash (used in) provided by operating activities                                                                               |                                                                          |                     | 14,816  |         |            |   | (17,316 | )              |   |   | (15,236      | )       |   |       |  |         |   |   | (17,736 | )      
|Investing activities:                                                                                                             |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |   |         |   |   |         |        
|Acquisition of property and equipment                                                                                             |                                                                          |                     | (1,021  | )       |            |   | (21,024 | )              |   |   | (28,069      | )       |   |       |  |         |   |   | (50,114 | )      
|Payment of transaction costs in Transaction                                                                                       |                                                                          |                     | (20,367 | )       |            |   |        |                |   |   |             |         |   |       |  |         |   |   | (20,367 | )      
|Acquisition of businesses, net of cash acquired                                                                                   |                                                                          |                     |        |         |            |   |        |                |   |   | (2,299       | )       |   |       |  |         |   |   | (2,299  | )      
|Acquisition of commercial rights and royalties                                                                                    |                                                                          |                     |        |         |            |   | (53,000 | )              |   |   |             |         |   |       |  |         |   |   | (53,000 | )      
|Proceeds from disposal of discontinued operation, net of expenses                                                                 |                                                                          |                     | (11,176 | )       |            |   | 31,534  |                |   |   | 149,944      |         |   |       |  |         |   |   | 170,302 |        
|Proceeds from sale of certain assets                                                                                              |                                                                          |                     |        |         |            |   |        |                |   |   | 9,218        |         |   |       |  |         |   |   | 9,218   |        
|Proceeds from sale of minority interest in subsidiary, net of
    expenses                                                        |                                                                          |                     | 35,963  |         |            |   |        |                |   |   |             |         |   |       |  |         |   |   | 35,963  |        
|Proceeds from disposition of property and equipment                                                                               |                                                                          |                     | 1,449   |         |            |   | 42      |                |   |   | 5,039        |         |   |       |  |         |   |   | 6,530   |        
|Proceeds from (purchases of) debt securities, net                                                                                 |                                                                          |                     | (1,042  | )       |            |   | 693     |                |   |   |             |         |   |       |  |         |   |   | (349    | )      
|Purchases of equity securities and other investments                                                                              |                                                                          |                     | (732    | )       |            |   | (14,175 | )              |   |   | (1           | )       |   |       |  |         |   |   | (14,908 | )      
|Proceeds from sale of equity securities and other investments                                                                     |                                                                          |                     | 64      |         |            |   | 40,586  |                |   |   |             |         |   |       |  |         |   |   | 40,650  |        
|Other                                                                                                                             |                                                                          |                     | 250     |         |            |   |        |                |   |   |             |         |   |       |  |         |   |   | 250     |        
|                                                                                                                                  |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Net cash provided by investing activities                                                                                         |                                                                          |                     | 3,388   |         |            |   | (15,344 | )              |   |   | 133,832      |         |   |       |  |         |   |   | 121,876 |        
|Financing activities:                                                                                                             |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |   |         |   |   |         |        
|Principal payments on credit arrangements, net                                                                                    |                                                                          |                     | (3,374  | )       |            |   | (649    | )              |   |   | (14,814      | )       |   |       |  |         |   |   | (18,837 | )      
|Dividend from discontinued operation                                                                                              |                                                                          |                     | 10,874  |         |            |   |        |                |   |   |             |         |   |       |  |         |   |   | 10,874  |        
|Intercompany with parent companies                                                                                                |                                                                          |                     | (985    | )       |            |   |        |                |   |   |             |         |   |       |  |         |   |   | (985    | )      
|Proceeds from change in interest transaction                                                                                      |                                                                          |                     |        |         |            |   |        |                |   |   | 41,773       |         |   |       |  |         |   |   | 41,773  |        
|                                                                                                                                  |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Net cash provided by (used in) financing activities                                                                               |                                                                          |                     | 6,515   |         |            |   | (649    | )              |   |   | 26,959       |         |   |       |  |         |   |   | 32,825  |        
|Effect of foreign currency exchange rate changes on cash                                                                          |                                                                          |                     |        |         |            |   | 21      |                |   |   | 25,072       |         |   |       |  |         |   |   | 25,093  |        
|                                                                                                                                  |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Increase (decrease) in cash and cash equivalents                                                                                  |                                                                          |                     | 24,719  |         |            |   | (33,288 | )              |   |   | 170,627      |         |   |       |  |         |   |   | 162,058 |        
|Cash and cash equivalents at beginning of period                                                                                  |                                                                          |                     | (7,138  | )       |            |   | 188,430 |                |   |   | 192,330      |         |   |       |  |         |   |   | 373,622 |        
|                                                                                                                                  |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Cash and cash equivalents at end of period                                                                                        |                                                                          | $                   | 17,581  |         |            | $ | 155,142 |                |   | $ | 362,957      |         |   | $     |  |         |   | $ | 535,680 |        
|                                                                                                                                  |                                                                          |                     |         |         |            |   |         |                |   |   |              |         |   |       |  

116



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


September 26, 2003 through December 31, 2003
(successor)


|                                                                                                                    |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |   |         |   |   |            |         |  
|------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------- | ---------- | ------- | ---------- | - | ------- | -------------- | - | - | ------------ | ------ | - | ----- | - | ------- | - | - | ---------- | ------- | -
|                                                                                                                    |                                                                          | Quintiles           |            |         | Subsidiary |   |         | Subsidiary     |   |   |              |        |  
|                                                                                                                    |                                                                          | Transnational Corp. |            |         | Guarantors |   |         | Non-Guarantors |   |   | Eliminations |        |   | Total |  
|                                                                                                                    |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |  
|Operating activities:                                                                                               |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |   |         |   |   |            |        
|                                                                                                                    | Net (loss) income                                                        |                     | $          | (7,427  | )          |   | $       | 281            |   |   | $            | 21,980 |   |       | $ | (22,261 | ) |   | $          | (7,427  | )
|                                                                                                                    | Income from discontinued operation                                       |                     |            |        |            |   |         | (538           | ) |   |              | (4,261 | ) |       |   |        |   |   |            | (4,799  | )
|                                                                                                                    |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |  
|                                                                                                                    | (Loss) income from continuing operation                                  |                     |            | (7,427  | )          |   |         | (257           | ) |   |              | 17,719 |   |       |   | (22,261 | ) |   |            | (12,226 | )
|Adjustments to reconcile (loss) income from continuing
    operations to net cash provided by operating activities: |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |   |         |   |   |            |        
|                                                                                                                    | Depreciation and amortization                                            |                     |            | 3,153   |            |   |         | 17,166         |   |   |              | 15,213 |   |       |   |        |   |   |            | 35,532  |  
|                                                                                                                    | Amortization of debt issuance costs                                      |                     |            | 878     |            |   |         |               |   |   |              |       |   |       |   |        |   |   |            | 878     |  
|                                                                                                                    | Restructuring charge (payments) accrual, net                             |                     |            | (27     | )          |   |         | (433           | ) |   |              | (1,482 | ) |       |   |        |   |   |            | (1,942  | )
|                                                                                                                    | Loss (gain) from sales and impairments of investments, net               |                     |            | (1,149  | )          |   |         | (1,803         | ) |   |              |       |   |       |   |        |   |   |            | (2,952  | )
|                                                                                                                    | Provision for (benefit from) deferred income tax expense                 |                     |            | (387    | )          |   |         | (75            | ) |   |              | 1,167  |   |       |   |        |   |   |            | 705     |  
|                                                                                                                    | Loss (gain) on sale of property and equipment, net                       |                     |            |        |            |   |         | 48             |   |   |              | (172   | ) |       |   |        |   |   |            | (124    | )
|                                                                                                                    | Change in accounts receivable, unbilled services and unearned
    income |                     |            | 53      |            |   |         | 30,372         |   |   |              | 9,786  |   |       |   |        |   |   |            | 40,211  |  
|                                                                                                                    | Change in other operating assets and liabilities                         |                     |            | 53,862  |            |   |         | (24,447        | ) |   |              | 6,704  |   |       |   |        |   |   |            | 36,119  |  
|                                                                                                                    | Investment in subsidiaries and intercompany                              |                     |            | (38,086 | )          |   |         | 10,506         |   |   |              | 5,319  |   |       |   | 22,261  |   |   |            |        |  
|                                                                                                                    | Other                                                                    |                     |            |        |            |   |         | (191           | ) |   |              |       |   |       |   |        |   |   |            | (191    | )
|                                                                                                                    |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |  
|Net cash provided by operating activities                                                                           |                                                                          |                     | 10,870     |         |            |   | 30,886  |                |   |   | 54,254       |        |   |       |  |         |   |   | 96,010     |        
|Investing activities:                                                                                               |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |   |         |   |   |            |        
|Acquisition of property and equipment                                                                               |                                                                          |                     | (586       | )       |            |   | (6,774  | )              |   |   | (7,419       | )      |   |       |  |         |   |   | (14,779    | )      
|Repurchase of common stock in Transaction                                                                           |                                                                          |                     | (1,617,567 | )       |            |   |        |                |   |   |             |        |   |       |  |         |   |   | (1,617,567 | )      
|Payment of transaction costs in Transaction                                                                         |                                                                          |                     | (64,734    | )       |            |   |        |                |   |   |             |        |   |       |  |         |   |   | (64,734    | )      
|Acquisition of businesses, net of cash acquired                                                                     |                                                                          |                     |           |         |            |   |        |                |   |   | (3,363       | )      |   |       |  |         |   |   | (3,363     | )      
|Acquisition of commercial rights and royalties                                                                      |                                                                          |                     |           |         |            |   | (3,000  | )              |   |   |             |        |   |       |  |         |   |   | (3,000     | )      
|Proceeds from disposition of property and equipment                                                                 |                                                                          |                     |           |         |            |   | 310     |                |   |   | 1,650        |        |   |       |  |         |   |   | 1,960      |        
|Proceeds from (purchases of) debt securities, net                                                                   |                                                                          |                     | (1,212     | )       |            |   | 326     |                |   |   |             |        |   |       |  |         |   |   | (886       | )      
|Purchases of equity securities and other investments                                                                |                                                                          |                     | 24,013     |         |            |   | (30,023 | )              |   |   | (10          | )      |   |       |  |         |   |   | (6,020     | )      
|Proceeds from sale of equity securities and other investments                                                       |                                                                          |                     |           |         |            |   | 7,633   |                |   |   |             |        |   |       |  |         |   |   | 7,633      |        
|                                                                                                                    |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |  
|Net cash (used in) provided by investing activities                                                                 |                                                                          |                     | (1,660,086 | )       |            |   | (31,528 | )              |   |   | (9,142       | )      |   |       |  |         |   |   | (1,700,756 | )      
|Financing activities:                                                                                               |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |   |         |   |   |            |        
|Principal payments on credit arrangements, net                                                                      |                                                                          |                     | (775       | )       |            |   | (338    | )              |   |   | (4,534       | )      |   |       |  |         |   |   | (5,647     | )      
|Proceeds from issuance of debt, net of expenses, in Transaction                                                     |                                                                          |                     | 734,529    |         |            |   | (1,096  | )              |   |   |             |        |   |       |  |         |   |   | 733,433    |        
|Capital contribution                                                                                                |                                                                          |                     | 390,549    |         |            |   |        |                |   |   |             |        |   |       |  |         |   |   | 390,549    |        
|Dividend from discontinued operation                                                                                |                                                                          |                     | 8,336      |         |            |   |        |                |   |   |             |        |   |       |  |         |   |   | 8,336      |        
|                                                                                                                    |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |  
|Net cash provided by (used in) financing activities                                                                 |                                                                          |                     | 1,132,639  |         |            |   | (1,434  | )              |   |   | (4,534       | )      |   |       |  |         |   |   | 1,126,671  |        
|Effect of foreign currency exchange rate changes on cash                                                            |                                                                          |                     |           |         |            |   | 1       |                |   |   | 9,735        |        |   |       |  |         |   |   | 9,736      |        
|                                                                                                                    |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |  
|(Decrease) increase in cash and cash equivalents                                                                    |                                                                          |                     | (516,577   | )       |            |   | (2,075  | )              |   |   | 50,313       |        |   |       |  |         |   |   | (468,339   | )      
|Cash and cash equivalents at beginning of period                                                                    |                                                                          |                     | 509,439    |         |            |   | 190,505 |                |   |   | 142,017      |        |   |       |  |         |   |   | 841,961    |        
|                                                                                                                    |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |  
|Cash and cash equivalents at end of period                                                                          |                                                                          | $                   | (7,138     | )       |            | $ | 188,430 |                |   | $ | 192,330      |        |   | $     |  |         |   | $ | 373,622    |        
|                                                                                                                    |                                                                          |                     |            |         |            |   |         |                |   |   |              |        |   |       |  

117



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


January 1, 2003 through September 25, 2003
(predecessor)


|                                                                                                                                  |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |   |         |         |   |         |         |        | 
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | --------------------------------------- | ------- | ------- | ---------- | - | -------- | -------------- | ------ | - | ------------ | -------- | ------ | ----- | - | ------- | ------- | - | ------- | ------- | ------ | 
|                                                                                                                                  |                                                                          | Quintiles                               |         |         | Subsidiary |   |          | Subsidiary     |        |   |              |          |       
|                                                                                                                                  |                                                                          | Transnational Corp.                     |         |         | Guarantors |   |          | Non-Guarantors |        |   | Eliminations |          |        | Total |  
|                                                                                                                                  |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |  
|Operating activities:                                                                                                             |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |   |         |         |   |         |        
|                                                                                                                                  | Net (loss) income                                                        |                                         | $       | 37,161  |            |   | $        | 45,751         |        |   | $            | 16,465   |        |       | $ | (62,216 | )       |   | $       | 37,161  |       
|                                                                                                                                  | Income from discontinued operation                                       |                                         |         |        |            |   |          | (778           | )      |   |              | (3,848   | )      |       |   |        |         |   |         | (4,626  | )     
|                                                                                                                                  |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |  
|                                                                                                                                  |                                                                          | (Loss) income from continuing operation |         |         | 37,161     |   |          |                | 44,973 |   |              |          | 12,617 |       |   |         | (62,216 | ) |         |         | 32,535 | 
|Adjustments to reconcile (loss) income from continuing
    operations to net cash provided by (used in) operating
    activities: |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |   |         |         |   |         |        
|                                                                                                                                  | Depreciation and amortization                                            |                                         |         | 1,034   |            |   |          | 27,503         |        |   |              | 32,941   |        |       |   |        |         |   |         | 61,478  |       
|                                                                                                                                  | Transaction costs                                                        |                                         |         | 44,057  |            |   |          |               |        |   |              |         |        |       |   |        |         |   |         | 44,057  |       
|                                                                                                                                  | Restructuring charge (payments) accrual, net                             |                                         |         | (634    | )          |   |          | (2,050         | )      |   |              | 2,967    |        |       |   |        |         |   |         | 283     |       
|                                                                                                                                  | Loss (gain) from sales and impairments of investments, net               |                                         |         | 2,661   |            |   |          | (30,746        | )      |   |              |         |        |       |   |        |         |   |         | (28,085 | )     
|                                                                                                                                  | (Gain) loss on disposals of property and equipment, net                  |                                         |         | (828    | )          |   |          | (32            | )      |   |              | 477      |        |       |   |        |         |   |         | (383    | )     
|                                                                                                                                  | Provision for (benefit from) deferred income tax expense                 |                                         |         | 11,696  |            |   |          | (1,414         | )      |   |              | 2,310    |        |       |   |        |         |   |         | 12,592  |       
|                                                                                                                                  | Change in accounts receivable, unbilled services and unearned
    income |                                         |         | 2,253   |            |   |          | (1,201         | )      |   |              | 24,507   |        |       |   |        |         |   |         | 25,559  |       
|                                                                                                                                  | Change in other operating assets and liabilities                         |                                         |         | (39,617 | )          |   |          | 50,981         |        |   |              | 5,431    |        |       |   |        |         |   |         | 16,795  |       
|                                                                                                                                  | Investment in subsidiaries and intercompany                              |                                         |         | 450,361 |            |   |          | (334,278       | )      |   |              | (178,299 | )      |       |   | 62,216  |         |   |         |        |       
|                                                                                                                                  | Other                                                                    |                                         |         | 350     |            |   |          | (254           | )      |   |              | 210      |        |       |   |        |         |   |         | 306     |       
|                                                                                                                                  |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |  
|Net cash provided by (used in) operating activities                                                                               |                                                                          |                                         | 508,494 |         |            |   | (246,518 | )              |        |   | (96,839      | )        |        |       |  |         |         |   | 165,137 |        
|Investing activities:                                                                                                             |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |   |         |         |   |         |        
|Acquisition of property and equipment                                                                                             |                                                                          |                                         | (277    | )       |            |   | (18,375  | )              |        |   | (20,491      | )        |        |       |  |         |         |   | (39,143 | )      
|Payment of transaction costs in Transaction                                                                                       |                                                                          |                                         | (2,896  | )       |            |   |         |                |        |   |             |          |        |       |  |         |         |   | (2,896  | )      
|Acquisition of businesses, net of cash acquired                                                                                   |                                                                          |                                         |        |         |            |   |         |                |        |   | (1,379       | )        |        |       |  |         |         |   | (1,379  | )      
|Acquisition of intangible assets                                                                                                  |                                                                          |                                         |        |         |            |   | (500     | )              |        |   | (3,239       | )        |        |       |  |         |         |   | (3,739  | )      
|Acquisition of commercial rights and royalties                                                                                    |                                                                          |                                         |        |         |            |   | (17,710  | )              |        |   |             |          |        |       |  |         |         |   | (17,710 | )      
|Proceeds from disposition of property and equipment                                                                               |                                                                          |                                         |        |         |            |   | 1,330    |                |        |   | 4,889        |          |        |       |  |         |         |   | 6,219   |        
|Proceeds from (purchases of) debt securities, net                                                                                 |                                                                          |                                         | (1,353  | )       |            |   | 26,620   |                |        |   |             |          |        |       |  |         |         |   | 25,267  |        
|Purchases of equity securities and other investments                                                                              |                                                                          |                                         | (6,320  | )       |            |   | (4,471   | )              |        |   | (39          | )        |        |       |  |         |         |   | (10,830 | )      
|Proceeds from sale of equity securities and other investments                                                                     |                                                                          |                                         | 1,391   |         |            |   | 60,533   |                |        |   | 2            |          |        |       |  |         |         |   | 61,926  |        
|                                                                                                                                  |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |  
|Net cash (used in) provided by investing activities                                                                               |                                                                          |                                         | (9,455  | )       |            |   | 47,427   |                |        |   | (20,257      | )        |        |       |  |         |         |   | 17,715  |        
|Financing activities:                                                                                                             |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |   |         |         |   |         |        
|Principal payments on credit arrangements                                                                                         |                                                                          |                                         |        |         |            |   | (595     | )              |        |   | (12,653      | )        |        |       |  |         |         |   | (13,248 | )      
|Dividend from discontinued operation                                                                                              |                                                                          |                                         | 3,138   |         |            |   |         |                |        |   |             |          |        |       |  |         |         |   | 3,138   |        
|Issuance of common stock, net (predecessor)                                                                                       |                                                                          |                                         | 7,042   |         |            |   |         |                |        |   |             |          |        |       |  |         |         |   | 7,042   |        
|                                                                                                                                  |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |  
|Net cash provided by (used in) financing activities                                                                               |                                                                          |                                         | 10,180  |         |            |   | (595     | )              |        |   | (12,653      | )        |        |       |  |         |         |   | (3,068  | )      
|Effect of foreign currency exchange rate changes on cash                                                                          |                                                                          |                                         |        |         |            |   | 142      |                |        |   | 17,780       |          |        |       |  |         |         |   | 17,922  |        
|                                                                                                                                  |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |  
|(Decrease) increase in cash and cash equivalents                                                                                  |                                                                          |                                         | 509,219 |         |            |   | (199,544 | )              |        |   | (111,969     | )        |        |       |  |         |         |   | 197,706 |        
|Cash and cash equivalents at beginning of period                                                                                  |                                                                          |                                         | 220     |         |            |   | 390,049  |                |        |   | 253,986      |          |        |       |  |         |         |   | 644,255 |        
|                                                                                                                                  |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |  
|Cash and cash equivalents at end of period                                                                                        |                                                                          | $                                       | 509,439 |         |            | $ | 190,505  |                |        | $ | 142,017      |          |        | $     |  |         |         | $ | 841,961 |        
|                                                                                                                                  |                                                                          |                                         |         |         |            |   |          |                |        |   |              |          |        |       |  

118



---



##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)


Year ended December 31, 2002 (predecessor)


|                                                                                                             |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |   |         |   |   |          |         |  
|------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | ------- | ------- | ---------- | - | ------- | -------------- | - | - | ------------ | ------- | - | ----- | - | ------- | - | - | -------- | ------- | -
|                                                                                                             |                                                                                                                                        | Quintiles           |         |         | Subsidiary |   |         | Subsidiary     |   |   |              |         |  
|                                                                                                             |                                                                                                                                        | Transnational Corp. |         |         | Guarantors |   |         | Non-Guarantors |   |   | Eliminations |         |   | Total |  
|                                                                                                             |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Operating activities:                                                                                        |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |   |         |   |   |          |        
|                                                                                                             | Net income                                                                                                                             |                     | $       | 127,323 |            |   | $       | 58,493         |   |   | $            | 16,814  |   |       | $ | (75,307 | ) |   | $        | 127,323 |  
|                                                                                                             | (Income) loss from discontinued operation                                                                                              |                     |         |        |            |   |         | (750           | ) |   |              | 308     |   |       |   |        |   |   |          | (442    | )
|                                                                                                             | Cumulative effect on prior years (to December 31, 2001) of
    changing to a different period of recognizing deferred income
    taxes |                     |         | (45,659 | )          |   |         |               |   |   |              |        |   |       |   |        |   |   |          | (45,659 | )
|                                                                                                             |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|                                                                                                             | Income from continuing operations                                                                                                      |                     |         | 81,664  |            |   |         | 57,743         |   |   |              | 17,122  |   |       |   | (75,307 | ) |   |          | 81,222  |  
|Adjustments to reconcile income from continuing operations to
    net cash provided by operating activities: |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |   |         |   |   |          |        
|                                                                                                             | Depreciation and amortization                                                                                                          |                     |         | 2,410   |            |   |         | 42,662         |   |   |              | 42,055  |   |       |   |        |   |   |          | 87,127  |  
|                                                                                                             | Restructuring charge (payments) accrual, net                                                                                           |                     |         | (2,609  | )          |   |         | (5,817         | ) |   |              | (12,732 | ) |       |   |        |   |   |          | (21,158 | )
|                                                                                                             | Loss (gain) from sales and impairments of investments, net                                                                             |                     |         | 1,870   |            |   |         | (16,531        | ) |   |              | 951     |   |       |   |        |   |   |          | (13,710 | )
|                                                                                                             | Loss (gain) on disposals of property and equipment, net                                                                                |                     |         | 30      |            |   |         | 1,411          |   |   |              | 958     |   |       |   |        |   |   |          | 2,399   |  
|                                                                                                             | Provision for (benefit from) deferred income tax expense                                                                               |                     |         | 4,408   |            |   |         | (237           | ) |   |              | (1,707  | ) |       |   |        |   |   |          | 2,464   |  
|                                                                                                             | Change in accounts receivable, unbilled services and unearned
    income                                                               |                     |         | (3,243  | )          |   |         | 39,966         |   |   |              | 55,935  |   |       |   |        |   |   |          | 92,658  |  
|                                                                                                             | Change in other operating assets and liabilities                                                                                       |                     |         | 41,892  |            |   |         | (34,275        | ) |   |              | 5,398   |   |       |   |        |   |   |          | 13,015  |  
|                                                                                                             | Investment in subsidiaries and intercompany                                                                                            |                     |         | (65,551 | )          |   |         | (60,186        | ) |   |              | 50,430  |   |       |   | 75,307  |   |   |          |        |  
|                                                                                                             |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Net cash provided by operating activities                                                                    |                                                                                                                                        |                     | 60,871  |         |            |   | 24,736  |                |   |   | 158,410      |         |   |       |  |         |   |   | 244,017  |        
|Investing activities:                                                                                        |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |   |         |   |   |          |        
|Acquisition of property and equipment                                                                        |                                                                                                                                        |                     | (880    | )       |            |   | (18,133 | )              |   |   | (20,897      | )       |   |       |  |         |   |   | (39,910  | )      
|Acquisition of businesses, net of cash acquired                                                              |                                                                                                                                        |                     |        |         |            |   | (5,499  | )              |   |   | (21,733      | )       |   |       |  |         |   |   | (27,232  | )      
|Acquisition of intangible assets                                                                             |                                                                                                                                        |                     |        |         |            |   |        |                |   |   | (2,541       | )       |   |       |  |         |   |   | (2,541   | )      
|Advances to customer                                                                                         |                                                                                                                                        |                     |        |         |            |   | (70,000 | )              |   |   |             |         |   |       |  |         |   |   | (70,000  | )      
|Acquisition of commercial rights and royalties                                                               |                                                                                                                                        |                     |        |         |            |   | (15,790 | )              |   |   |             |         |   |       |  |         |   |   | (15,790  | )      
|Proceeds from disposition of property and equipment                                                          |                                                                                                                                        |                     |        |         |            |   | (264    | )              |   |   | 6,554        |         |   |       |  |         |   |   | 6,290    |        
|Proceeds from (purchases of) debt securities, net                                                            |                                                                                                                                        |                     | (1,981  | )       |            |   | 767     |                |   |   |             |         |   |       |  |         |   |   | (1,214   | )      
|Purchases of equity securities and other investments                                                         |                                                                                                                                        |                     | (25,499 | )       |            |   | 7,894   |                |   |   | (494         | )       |   |       |  |         |   |   | (18,099  | )      
|Proceeds from sale of equity securities and other investments                                                |                                                                                                                                        |                     | 148     |         |            |   | 27,313  |                |   |   |             |         |   |       |  |         |   |   | 27,461   |        
|Advances to unconsolidated affiliates                                                                        |                                                                                                                                        |                     | (10,000 | )       |            |   |        |                |   |   | (328         | )       |   |       |  |         |   |   | (10,328  | )      
|                                                                                                             |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Net cash used in investing activities                                                                        |                                                                                                                                        |                     | (38,212 | )       |            |   | (73,712 | )              |   |   | (39,439      | )       |   |       |  |         |   |   | (151,363 | )      
|Financing activities:                                                                                        |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |   |         |   |   |          |        
|Principal payments on credit arrangements                                                                    |                                                                                                                                        |                     |        |         |            |   | (616    | )              |   |   | (14,858      | )       |   |       |  |         |   |   | (15,474  | )      
|Dividend from discontinued operation                                                                         |                                                                                                                                        |                     | 1,169   |         |            |   |        |                |   |   |             |         |   |       |  |         |   |   | 1,169    |        
|Issuance of common stock, net (predecessor)                                                                  |                                                                                                                                        |                     | 9,641   |         |            |   |        |                |   |   |             |         |   |       |  |         |   |   | 9,641    |        
|Repurchase of common stock                                                                                   |                                                                                                                                        |                     | (27,024 | )       |            |   |        |                |   |   |             |         |   |       |  |         |   |   | (27,024  | )      
|                                                                                                             |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Net cash used in financing activities                                                                        |                                                                                                                                        |                     | (16,214 | )       |            |   | (616    | )              |   |   | (14,858      | )       |   |       |  |         |   |   | (31,688  | )      
|Effect of foreign currency exchange rate changes on cash                                                     |                                                                                                                                        |                     |        |         |            |   | (384    | )              |   |   | 18,610       |         |   |       |  |         |   |   | 18,226   |        
|                                                                                                             |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Increase (decrease) in cash and cash equivalents                                                             |                                                                                                                                        |                     | 6,445   |         |            |   | (49,976 | )              |   |   | 122,723      |         |   |       |  |         |   |   | 79,192   |        
|Cash and cash equivalents at beginning of period                                                             |                                                                                                                                        |                     | (6,225  | )       |            |   | 440,025 |                |   |   | 131,263      |         |   |       |  |         |   |   | 565,063  |        
|                                                                                                             |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |  
|Cash and cash equivalents at end of period                                                                   |                                                                                                                                        | $                   | 220     |         |            | $ | 390,049 |                |   | $ | 253,986      |         |   | $     |  |         |   | $ | 644,255  |        
|                                                                                                             |                                                                                                                                        |                     |         |         |            |   |         |                |   |   |              |         |   |       |  

119



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)




|    |                                     
|--- | ------------------------------------
|29. | Quarterly Financial Data (Unaudited)



|                                                       |  |               |         |   |                |   |         |               |  |   |                |   |  |   |         |  
|------------------------------------------------------ |  | ------------- | ------- | - | -------------- | - | ------- | ------------- |  | - | -------------- | - |  | - | ------- | -
|                                                       |  | 2004          |        
|                                                       |  |               |        
|                                                       |  | First Quarter |         |   | Second Quarter |   |         | Third Quarter |  |   | Fourth Quarter |  
|                                                       |  |               |         |   |                |   |         |               |  |   |                |  
|                                                       |  | Successor     |         |   | Successor      |   |         | Successor     |  |   | Successor      |  
|Gross revenues                                         |  | $             | 505,653 |   |                | $ | 508,072 |               |  | $ | 535,512        |   |  | $ | 597,097 |  
|Loss from continuing operations before income taxes    |  |               | (18,038 | ) |                |   | (4,074  | )             |  |   | (33,468        | ) |  |   | (12,003 | )
|Loss from continuing operations                        |  |               | (17,568 | ) |                |   | (18,408 | )             |  |   | (18,821        | ) |  |   | (8,202  | )
|Income (loss) from discontinued operation              |  |               | 1,861   |   |                |   | 8,280   |               |  |   | (521           | ) |  |   |        |  
|Gain from sale of discontinued operation, net of taxes |  |               |        |   |                |   |        |               |  |   | 53,802         |   |  |   | 620     |  
|                                                       |  |               |         |   |                |   |         |               |  |   |                |  
|Net (loss) income                                      |  | $             | (15,707 | ) |                | $ | (10,128 | )             |  | $ | 34,460         |   |  | $ | (7,582  | )
|                                                       |  |               |         |   |                |   |         |               |  |   |                |  

|                                                             |  |               |               |                      |                |   |               |                    |  |   |               |           |  |  |           |        |   |  |   |         |  
|------------------------------------------------------------ |  | ------------- | ------------- | -------------------- | -------------- | - | ------------- | ------------------ |  | - | ------------- | --------- |  |  | --------- | ------ | - |  | - | ------- | -
|                                                             |  | 2003          |              
|                                                             |  |               |              
|                                                             |  |               |               |                      | September 26   |   |               |                   
|                                                             |  |               |               |                      | through        |   |               |                   
|                                                             |  |               |               | July 1, 2003 through |                |   |               | September 30,      |  |   | Fourth        |          
|                                                             |  | First Quarter |               |                      | Second Quarter |   |               | September 25, 2003 |  |   |               | 2003      |  |  | Quarter   |       
|                                                             |  |               |               |                      |                |   |               |                    |  |   |               |           |  |  |           |       
|                                                             |  | Predecessor   |               |                      | Predecessor    |   |               | Predecessor        |  |   |               | Successor |  |  | Successor |       
|Gross revenues                                               |  | $             | 497,895       |                      |                | $ | 505,195       |                    |  | $ | 461,840       |           |  |  | $         | 22,712 |   |  | $ | 505,169 |  
|Income (loss) from continuing operations before income taxes |  |               | 34,054        |                      |                |   | 40,866        |                    |  |   | (15,165       | )         |  |  |           | 1,308  |   |  |   | (3,614  | )
|Income (loss) from continuing operations                     |  |               | 21,561        |                      |                |   | 26,355        |                    |  |   | (15,381       | )         |  |  |           | 859    |   |  |   | (13,085 | )
|Income (loss) from discontinued operation                    |  |               | 3,595         |                      |                |   | 3,242         |                    |  |   | (2,211        | )         |  |  |           | (40    | ) |  |   | 4,839   |  
|                                                             |  |               |               |                      |                |   |               |                    |  |   |               |           |  |  |           |       
|Net income (loss)                                            |  | $             | 25,156        |                      |                | $ | 29,597        |                    |  | $ | (17,592       | )         |  |  | $         | 819    |   |  | $ | (8,246  | )
|                                                             |  |               |               |                      |                |   |               |                    |  |   |               |           |  |  |           |       
|Range of stock prices                                        |  | $             | 11.990-13.210 |                      |                | $ | 12.190-14.250 |                    |  | $ | 13.660-14.490 |           |  |  |           | N/A    |   |  |   | N/A     |  



|    |                  
|--- | -----------------
|30. | Subsequent Events





120



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##### 



QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES


Notes to Consolidated Financial
Statements  (Continued)






121



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##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












122



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














123



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##### 





|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes In and Disagreements With Accountants on
    Accounting and Financial Disclosure





|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures





|         |                  
|-------- | -----------------
|Item 9B. | Other Information



124



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##### 



PART III




|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



|                          |  |                                                                                |  |     |    |            |          |  |      | 
|------------------------- |  | ------------------------------------------------------------------------------ |  | --- | -- | ---------- | -------- |  | ---- | 
|                          |  |                                                                                |  |     |    | First Year |         
|                          |  |                                                                                |  |     |    | Elected    |         
|Name                      |  | Position with Company                                                          |  | Age |    |            | Director | 
|                          |  |                                                                                |  |     |    |            |          | 
|Dennis B. Gillings, Ph.D. |  | Executive Chairman, Chief Executive Officer and Director                       |  |     | 60 |            |          |  | 1982 | 
|John D. Ratliff           |  | Executive Vice President and Chief Financial Officer                           |  |     | 45 |            |          |  | N/A  | 
|John S. Russell           |  | Executive Vice President, General Counsel and Chief
    Administrative Officer |  |     | 50 |            |          |  | N/A  | 
|Ronald J. Wooten          |  | Executive Vice President, Corporate Development                                |  |     | 45 |            |          |  | N/A  | 
|Oppel Greeff, M.D.        |  | President and CEO, AAA Region                                                  |  |     | 56 |            |          |  | N/A  | 
|Michael Mortimer          |  | Executive Vice President, Global Human Resources                               |  |     | 44 |            |          |  | N/A  | 
|Richard M. Cashin, Jr.    |  | Director                                                                       |  |     | 51 |            |          |  | 2003 | 
|Clateo Castellini(3)      |  | Director                                                                       |  |     | 69 |            |          |  | 2004 | 
|Jonathan J. Coslet(1)(2)  |  | Director                                                                       |  |     | 40 |            |          |  | 2004 | 
|Jack M. Greenberg(1)(2)   |  | Director                                                                       |  |     | 62 |            |          |  | 2004 | 
|Robert A. Ingram(2)(3)    |  | Director                                                                       |  |     | 62 |            |          |  | 2004 | 
|S. Iswaran(2)             |  | Director                                                                       |  |     | 42 |            |          |  | 2003 | 
|Jacques Nasser(2)         |  | Director                                                                       |  |     | 58 |            |          |  | 2003 | 
|James S. Rubin(1)(3)      |  | Director                                                                       |  |     | 37 |            |          |  | 2003 | 






|    |                                                 
|--- | ------------------------------------------------
|(1) | Member of Audit Committee                       
|   
|(2) | Member of Compensation and Nominations Committee
|   
|(3) | Member of Quality/ Regulatory Committee         

Dennis B. Gillings, Ph.D.


125



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##### 



John D. Ratliff


John S. Russell


Ronald J. Wooten


Oppel Greeff, M.D.


Michael Mortimer


Richard M. Cashin, Jr.


126



---



##### 



Clateo Castellini


Jonathan J. Coslet


Jack M. Greenberg


Robert A. Ingram


S. Iswaran


127



---



##### 





Jacques Nasser


James S. Rubin


Nomination of Directors






128



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##### 



Code of Ethics


www.quintiles.com www.quintiles.com




|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation



Summary Compensation Table


|                      |                                                          |                     |      |              |                        |            |           |         |      |   |              |         |        |        |         |           |              |   |   |          |      |  |              |         |      |  |         |         |  |   |         |           |     
|--------------------- | -------------------------------------------------------- | ------------------- | ---- | ------------ | ---------------------- | ---------- | --------- | ------- | ---- | - | ------------ | ------- | ------ | ------ | ------- | --------- | ------------ | - | - | -------- | ---- |  | ------------ | ------- | ---- |  | ------- | ------- |  | - | ------- | --------- | ----
|                      |                                                          | Annual Compensation |      |              | Long Term Compensation |            |           |        
|                      |                                                          |                     |      |              |                        |            |           |        
|                      |                                                          |                     |      |              |                        | Number of  |           |         |      |   |             
|                      |                                                          |                     |      |              |                        | Shares of  |           |         |      |   |             
|                      |                                                          |                     |      |              |                        | Common     |           |         |      |   |             
|                      |                                                          |                     |      |              |                        | Stock      |           |         |      |   |             
|                      |                                                          |                     |      |              |                        | Underlying |           |         |      |   |             
|                      |                                                          |                     |      | Restricted   |                        |            | Options   |         |      |   |              |        
|Name and              |                                                          |                     |      | Other Annual |                        |            | Stock     |         |      |   |              |         | Pharma |        |         | All Other |             
|Principal Position    |                                                          | Year                |      |              | Salary                 |            |           | Bonus   |      |   | Compensation |         |        | Awards |         |           | Quintiles(1) |   |   | Services |      |  | Compensation |        
|                      |                                                          |                     |      |              |                        |            |           |         |      |   |              |         |        |        |         |           |              |   |   |          |      |  |              |        
|Dennis B. Gillings(2) |                                                          |                     | 2004 |              |                        | $          | 1,000,000 |         |      | $ | 650,000      |         |        | $      | 81,380  | (3)       |              | $ |  |          |      |  |             |         |      |  |        |         |  | $ | 503,549 | (4)      
|                      | Executive Chairman and                                   |                     |      | 2003         |                        |            |           | 706,061 |      |   |              | 0       |        |        |         |          | (5)          |   |   |         |      |  |              | 242,692 | (6)  |  |         |        |  |   |         | 1,705,704 | (7) 
|                      | Chief Executive Officer                                  |                     |      | 2002         |                        |            |           | 600,000 | (8)  |   |              | 80,067  | (9)    |        |         |          | (5)          |   |   |         |      |  |              | 339,733 | (10) |  |         |        |  |   |         | 847,422   | (11)
|John D. Ratliff(12)   |                                                          |                     | 2004 |              |                        | $          | 219,697   |         |      | $ | 125,000      |         |        | $      | 628,956 | (13)      |              | $ |  | (14)     |      |  |             |         |      |  | 150,000 |         |  | $ | 405     | (15)     
|                      | Executive Vice President and
    Chief Financial Officer |                     |      |              |                        |            |           |         |      |   |              |         |        |        |         |           |              |   |   |          |      |  |              |         |      |  |         |         |  |   |         |           |     
|John S. Russell       |                                                          |                     | 2004 |              |                        | $          | 400,000   | (16)    |      | $ | 150,000      |         |        | $      | 738     | (17)      |              | $ |  | (18)     |      |  |             |         |      |  |        |         |  | $ | 76,206  | (19)     
|                      | Executive Vice President,                                |                     |      | 2003         |                        |            |           | 316,227 | (20) |   |              | 709,000 |        |        |         |          | (5)          |   |   | 0        | (21) |  |              | 97,076  |      |  |         | 225,000 |  |   |         | 590,587   | (22)
|                      | General Counsel, and Chief                               |                     |      | 2002         |                        |            |           | 283,250 | (23) |   |              | 24,694  | (24)   |        |         | 394       | (25)         |   |   |         |      |  |              | 142,743 |      |  |         |        |  |   |         | 10,058    | (26)
|                      | Administrative Officer                                   |                     |      |              |                        |            |           |         |      |   |              |         |        |        |         |           |              |   |   |          |      |  |              |         |      |  |         |         |  |   |         |           |     
|Ronald J. Wooten(27)  |                                                          |                     | 2004 |              |                        | $          | 400,000   | (28)    |      | $ | 600,000      | (29)    |        | $      |        | (5)       |              | $ |  | (30)     |      |  |             |         |      |  |        |         |  | $ | 60,565  | (31)     
|                      | Executive Vice President,                                |                     |      | 2003         |                        |            |           | 295,833 | (32) |   | $            | 825,000 |        |        |         |          | (5)          |   |   | 0        | (33) |  |              | 54,363  |      |  |         | 225,000 |  |   |         | 252,288   | (34)
|                      | Corporate Development                                    |                     |      |              |                        |            |           |         |      |   |              |         |        |        |         |           |              |   |   |          |      |  |              |         |      |  |         |         |  |   |         |           |     
|Oppel Greeff(35)      |                                                          |                     | 2004 |              |                        | $          | 400,000   | (36)    |      | $ | 150,000      | (37)    |        | $      | 52,457  | (38)      |              | $ |  | (39)     |      |  |             |         |      |  |        |         |  | $ | 88,842  | (40)     
|                      | President and CEO, AAA                                   |                     |      | 2003         |                        |            |           | 333,864 | (41) |   |              | 690,000 |        |        |         | 51,357    | (42)         |   |   |         | (43) |  |              | 97,076  |      |  |         | 225,000 |  |   |         | 389,053   | (44)
|                      | Region                                                   |                     |      |              |                        |            |           |         |      |   |              |         |        |        |         |           |              |   |   |          |      |  |              |         |      |  |         |         |  |   |         |           |     
|James L. Bierman(45)  |                                                          |                     | 2004 |              |                        | $          | 275,000   |         |      | $ | 4,715,582    |         |        | $      |        | (5)       |              |   |  |          |      |  |             |         |      |  |        |         |  | $ | 9,846   | (46)     
|                      | Former Executive Vice                                    |                     |      | 2003         |                        |            |           | 371,000 |      |   |              | 92,750  |        |        |         |          | (5)          |   |   |         |      |  |              | 97,076  |      |  |         |        |  |   |         | 595,235   | (47)
|                      | President, Chief Financial                               |                     |      | 2002         |                        |            |           | 365,750 |      |   |              | 65,956  |        |        |         |          | (5)          |   |   |         |      |  |              | 144,387 |      |  |         |        |  |   |         | 5,782     | (48)
|                      | Officer                                                  |                     |      |              |                        |            |           |         |      |   |              |         |        |        |         |           |              |   |   |          |      |  |              |         |      |  |         |         |  |   |         |           |     






| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | In connection with the Pharma Services transaction, all options
    to purchase shares of our common stock, or the Quintiles
    options, became fully vested and exercisable.
    Messrs. Russell and Wooten and Dr. Greeff were each
    given the opportunity to roll over the in-the-money
    value of their Quintiles options for a combination of
    shares of common stock and Series A Preferred Stock of
    Pharma Services, referred to together as the Pharma Services
    Units. The in-the-money value of such options means
    the excess of $14.50 over the exercise price of the option to
    purchase shares of our common stock, multiplied by the number of
    shares subject to each such option, less any applicable
    withholding taxes. Messrs. Russell and Wooten and
    Dr. Greeff elected to roll over $300,000, $232,028 and
    $361,569, respectively, of the in-the-money value of
    their Quintiles options to acquire Pharma Services Units. Apart
    from the rollover arrangements described above, in connection
    with the Pharma Services transaction, Dr. Gillings rolled
    over $1,456,768 of the value of his

129



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##### 



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | Quintiles options (other than those options issued to
    Dr. Gillings as reimbursement for the business use of his
    airplane) to acquire Pharma Services Units. Quintiles options
    held by named executive officers prior to the Pharma Services
    transaction and not rolled over for Pharma Services Units,
    including those held by Mr. Bierman, were canceled in
    exchange for a cash payment equal to the in-the-money
    value of such options. The value of the Quintiles options
    rolled over in the Pharma Services transaction is reflected in
    the All Other Compensation column for fiscal year
    2003.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (2) | Dr. Gillings became our Executive Chairman and Chief
    Executive Officer effective September 25, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (3) | Includes $11,664 for automobile allowance, $47,093 for country
    club dues and $22,623 for reimbursement of taxes incurred by
    Dr. Gillings as a result of the Companys payment of
    country club dues.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (4) | Includes $9,225 of matching contributions under the 401(k) Plan,
    $10,051 for the present value of the benefit to
    Dr. Gillings of the premiums we paid in prior years under a
    split-dollar life insurance arrangement (we paid no premiums in
    2004), $3,564 of other life insurance premiums and $480,709
    relating to the repurchase of shares of Series A Preferred
    Stock of Pharma Services for which Dr. Gillings deferred
    receipt in connection with his initial purchase thereof. See
    Item 13, Certain Relationships and Related
    Transactions, for additional information regarding the
    repurchase of such shares.                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (5) | Perquisites and other personal benefits received did not exceed
    the lesser of $50,000 or 10% of salary and bonus compensation
    for the named executive officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (6) | In 2003, Dr. Gillings used his own airplane to provide
    extensive business-related travel services for himself and other
    of our employees. To reimburse Dr. Gillings for the
    business use of his airplane prior to the Pharma Services
    transaction, we made cash payments of $2,328,724, which is in
    addition to the amounts shown in the table, and on
    March 17, 2003, we granted Dr. Gillings Quintiles
    options with an aggregate Black-Scholes value of approximately
    $350,000. These options to purchase 49,869 shares at
    an exercise price of $12.27 per share are not included in
    the table because they were not treated as long-term
    compensation. To reimburse Dr. Gillings for the use of his
    airplane after the Pharma Services transaction, we made a cash
    payment of $1,096,455, which is in addition to the amounts shown
    in the table. The terms of our arrangement to reimburse
    Dr. Gillings for business use of his airplane are described
    in Item 13, Certain Relationships and Related
    Transactions.
|
| | (7) | Includes $5,625 of matching contributions under the 401(k) Plan,
    $105 of estimated forfeitures allocated under the profit sharing
    portion of the 401(k) Plan, $240,884 for the present value
    of the benefit to Dr. Gillings of the premiums we paid in
    prior years under a split-dollar life insurance arrangement (we
    paid no premiums in 2003) (see Item 13, Certain
    Relationships and Related Transactions, for additional
    information), $2,322 of other life insurance premiums and
    $1,456,768 related to the cancellation of options (other than
    those options issued to Dr. Gillings for the use of his
    airplane) in connection with the Pharma Services transaction,
    all of which Dr. Gillings used to acquire Pharma Services
    Units.                                                                                                                                                                                                                                                                                              
|
| | (8) | Includes $540,000 deferred during 2002 pursuant to our Elective
    Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (9) | Includes $31,875 deferred during 2002 pursuant to our Elective
    Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | In 2002, Dr. Gillings used his own airplane to provide
    extensive business-related travel services for himself and other
    of our employees. To reimburse Dr. Gillings for these
    services, the Human Resources and Compensation Committee of our
    former Board of Directors authorized cash payments up to
    approximately $1.4 million, which is in addition to the
    amounts shown in this table. We also granted Quintiles options
    to Dr. Gillings with an aggregate Black-Scholes value of
    approximately $1.4 million in quarterly installments with
    an exercise price on March 31, 2002 of $17.75 per
    share; on June 15, 2002 of $13.09 per share; on
    September 16, 2002 of $9.76 per share; and on
    December 16, 2002 of $12.11 per share. These options
    to purchase 190,250 shares are not included in the
    table because they were not treated as long-term compensation.

130



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|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(11) | Includes $1,688 of matching contributions under the
    401(k) portion of the ESOP and 401(k) Plan, $158 for
    the estimated value of forfeitures allocated under the ESOP
    portion of the ESOP and 401(k) Plan, $843,255 for the
    present value of the benefit to Dr. Gillings of the
    premiums we paid under a split-dollar life insurance arrangement
    and $2,322 of other life insurance premiums.                                                                                                                                                                                                                                                                                                                                              
|    
|(12) | Mr. Ratliff became the Companys Executive Vice
    President and Chief Financial Officer in June 2004. We have not
    provided information about any compensation paid to
    Mr. Ratliff for any periods in which he did not serve as an
    executive officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|(13) | Includes $424,860 representing the difference between the
    discounted price paid by Mr. Ratliff upon his purchase of
    restricted shares of Pharma Services common stock pursuant to
    the Pharma Services Plan and the fair market value of such
    shares and $204,096 for reimbursement of taxes incurred by
    Mr. Ratliff as a result of such purchase.                                                                                                                                                                                                                                                                                                                                                                                             
|    
|(14) | As of December 31, 2004, Mr. Ratliff held 300,000
    restricted shares of Pharma Services common stock. The aggregate
    fair market value of such shares at the end of fiscal year 2004
    was $1,062,000. These restricted shares vest, but remain subject
    to repurchase, over five years from the date of purchase, with
    20% of such shares vesting on each anniversary of the date of
    purchase. Dividends will be paid on the restricted shares on the
    same basis as common stock to the extent declared by the Pharma
    Services Board of Directors. Mr. Ratliff purchased these
    restricted shares at a discount to fair market value, and the
    aggregate value of the discount is reflected under Other Annual
    Compensation.
|    
|(15) | Includes $405 in life insurance premiums.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|(16) | Includes $20,000 deferred during 2004 pursuant to our Elective
    Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|(17) | Includes $738 for reimbursement of taxes incurred by
    Mr. Russell as a result of our payment of his tax
    preparation expenses. Perquisites and other personal benefits
    received by Mr. Russell did not exceed the lesser of
    $50,000 or 10% of his salary and bonus.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|(18) | As of December 31, 2004, Mr. Russell held 450,000
    restricted shares of Pharma Services common stock. The aggregate
    fair market value of such shares at the end of fiscal year 2004
    was $1,593,000. These restricted shares vest, but remain subject
    to repurchase, over five years from the date of purchase, with
    20% of such shares vesting on each anniversary of the date of
    purchase. Dividends will be paid on the restricted shares on the
    same basis as common stock to the extent declared by the Pharma
    Services Board of Directors.                                                                                                                                                                                    
|    
|(19) | Includes $9,225 in matching contributions under the
    401(k) Plan, $2,392 in life insurance premiums and $64,589
    relating to the repurchase of shares of Series A Preferred
    Stock of Pharma Services for which Mr. Russell deferred
    receipt in connection with his initial purchase thereof. See
    Item 13, Certain Relationships and Related
    Transactions, for additional information regarding the
    repurchase of such shares.                                                                                                                                                                                                                                                                                                         
|    
|(20) | Includes $15,215 deferred during 2003 pursuant to our Elective
    Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|(21) | Pharma Services granted Mr. Russell the right to
    purchase 450,000 shares of its restricted common stock
    at a purchase price of $0.2438, or fair market value, per share.
    $0 represents the dollar value at the date of the grant, less
    the amounts paid by Mr. Russell for the award.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    
|(22) | Includes $9,000 in matching contributions under the
    401(k) Plan, $105 for the estimated forfeitures allocated
    under the profit sharing portion of the 401(k) Plan, $1,225
    in life insurance premiums, $579,110 related to the cancellation
    of Quintiles options in connection with the Pharma Services
    transaction, $300,000 of which Mr. Russell used to acquire
    Pharma Services Units and $1,147 in disqualifying dispositions
    under the Employee Stock Purchase Plan as a result of the Pharma
    Services transaction.                                                                                                                                                                                                           
|    
|(23) | Includes $28,325 deferred during 2002 pursuant to our Elective
    Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|(24) | Includes $945 deferred during 2002 pursuant to our Elective
    Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

131



---



##### 





|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(25) | Includes $394 for reimbursement of taxes incurred by
    Mr. Russell as a result of our payment of his tax
    preparation expenses. Perquisites and other personal benefits
    received by Mr. Russell did not exceed the lesser of
    $50,000 or 10% of his salary and bonus.                                                                                                                                                                                                                                                                                            
|    
|(26) | Includes $8,250 in matching contributions under the
    401(k) portion of the ESOP and 401(k) Plan, $603 for
    the estimated value of forfeitures allocated under the ESOP
    portion of the ESOP and 401(k) Plan and $1,205 in life
    insurance premiums.                                                                                                                                                                                                                                                                                                              
|    
|(27) | Mr. Wooten became the Companys Executive Vice
    President, Corporate Development in June 2003. We have not
    provided information about any compensation paid to
    Mr. Wooten for any periods in which he did not serve as an
    executive officer.                                                                                                                                                                                                                                                                                                                  
|    
|(28) | Includes $40,000 deferred during 2004 pursuant to our Elective
    Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    
|(29) | Includes approximately $120,000 deferred during 2004 pursuant to
    our Elective Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|(30) | As of December 31, 2004, Mr. Wooten held 450,000
    restricted shares of Pharma Services common stock. The aggregate
    fair market value of such shares at the end of fiscal year 2004
    was $1,593,000. These restricted shares vest, but remain subject
    to repurchase, over five years from the date of purchase, with
    20% of such shares vesting on each anniversary of the date of
    purchase. Dividends will be paid on the restricted shares on the
    same basis as common stock to the extent declared by the Pharma
    Services Board of Directors.
|    
|(31) | Includes $9,225 in matching contributions under the
    401(k) Plan, $1,575 in life insurance premiums and $49,765
    relating to the repurchase of shares of Series A Preferred
    Stock of Pharma Services for which Mr. Wooten deferred
    receipt in connection with his initial purchase thereof. See
    Item 13, Certain Relationships and Related
    Transactions, for additional information regarding the
    repurchase of such shares.                                                                                                                     
|    
|(32) | Includes $28,490 deferred during 2003 pursuant to our Elective
    Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    
|(33) | Pharma Services granted Mr. Wooten the right to
    purchase 450,000 shares of its restricted common
    stock, at a purchase price of $0.2438, or fair market value, per
    share. $0 represents the dollar value at the date of the grant,
    less the amounts paid by Mr. Wooten for the award.                                                                                                                                                                                                                                                                         
|    
|(34) | Includes $9,000 in matching contributions under the
    401(k) Plan, $105 for the estimated forfeitures allocated
    under the profit sharing portion of the 401(k) Plan, $850
    in life insurance premiums and $242,333 related to the
    cancellation of Quintiles options in connection with the Pharma
    Services transaction, $232,028 of which Mr. Wooten used to
    acquire Pharma Services Units.                                                                                                                                                             
|    
|(35) | Dr. Greeff became an executive officer in 2003. We have not
    provided information about any compensation paid to
    Dr. Greeff for any periods in which he did not serve as an
    executive officer.                                                                                                                                                                                                                                                                                                                                                                    
|    
|(36) | Includes $55,200 deferred during 2004 pursuant to our Elective
    Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    
|(37) | Includes approximately $12,000 deferred during 2004 pursuant to
    our Elective Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|(38) | Includes $2,541 for automobile allowance, $2,021 for tax
    preparation, $46,152 for relocation expenses, $1,200 for the
    purchase of a personal computer and $543 relating to the
    reimbursement of taxes incurred by Dr. Greeff in connection
    with our payment of his tax preparation and relocation expenses.                                                                                                                                                                                                                                                  
|    
|(39) | As of December 31, 2004, Dr. Greeff held 450,000
    restricted shares of Pharma Services common stock. The aggregate
    fair market value of such shares at the end of fiscal year 2004
    was $1,593,000. These restricted shares vest, but remain subject
    to repurchase, over five years from the date of purchase, with
    20% of such shares vesting on each anniversary of the date of
    purchase. Dividends will be paid on the restricted shares on the
    same basis as common stock to the extent declared by the Pharma
    Services Board of Directors.
|    
|(40) | Includes $9,225 in matching contributions under the
    401(k) Plan, $2,322 in life insurance premiums and $77,295
    relating to the repurchase of shares of Series A Preferred
    Stock of Pharma Services for which Dr. Greeff deferred
    receipt in connection with his initial purchase thereof. See
    Item 13,                                                                                                                                                                                                                                                   

132



---



##### 



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | Certain Relationships and Related Transactions, for
    additional information regarding the repurchase of such shares.                                                                                                                                                                                                                                                                                                                                                     
|    
|(41) | Includes $44,291 deferred during 2003 pursuant to our Elective
    Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                
|    
|(42) | Includes $40,000 for housing allowance, $10,164 for automobile
    allowance, $750 for tax preparation services and $443 relating
    to the reimbursement of taxes incurred by Dr. Greeff in
    connection with our payment of his tax preparation expenses..                                                                                                                                                                                                               
|    
|(43) | Pharma Services granted Dr. Greeff the right to
    purchase 450,000 shares of its restricted common
    stock, at a purchase price of $0.2438, or fair market value, per
    share. $0 represents the dollar value at the date of the grant,
    less the amounts paid by Dr. Greeff for the award.                                                                                                                                                                          
|    
|(44) | Includes $9,000 in matching contributions under the
    401(k) Plan, $105 for estimated forfeitures allocated under
    the profit sharing portion of the 401(k) Plan, $2,322 in
    life insurance premiums and $377,626 related to the cancellation
    of Quintiles options in connection with the Pharma Services
    transaction, $361,569 of which Dr. Greeff used to acquire
    Pharma Services Units.                                                                
|    
|(45) | Mr. Bierman resigned as Executive Vice President and Chief
    Financial Officer effective June 30, 2004.                                                                                                                                                                                                                                                                                                                                                                     
|    
|(46) | Includes $9,225 in matching contributions under the
    401(k) Plan and $621 in life insurance premiums.                                                                                                                                                                                                                                                                                                                                                                      
|    
|(47) | Includes $8,533 of matching contributions under the
    401(k) Plan, $105 for the estimated forfeitures allocated
    under the profit sharing portion of the 401(k) Plan, $1,242
    in life insurance premiums, $580,632 related to the cancellation
    of Quintiles options in connection with the Pharma Services
    transaction and $4,723 in disqualifying dispositions under the
    Employee Stock Purchase Plan as a result of the Pharma Services
    transaction.
|    
|(48) | Includes $3,938 in matching contributions under the
    401(k) portion of the ESOP and 401(k) Plan, $603 for
    the estimated value of forfeitures allocated under the ESOP
    portion of the ESOP and 401(k) Plan and $1,242 in life
    insurance premiums.                                                                                                                                                                                                               

133



---



##### 



Option Grants In Last Fiscal Year


Pharma Services Holding, Inc.




|                   |  |                   |         |                  |                  |  |             |                  |  |                  |            |  |                |        |         |  |         |  |     |  |  |  |     | 
|------------------ |  | ----------------- | ------- | ---------------- | ---------------- |  | ----------- | ---------------- |  | ---------------- | ---------- |  | -------------- | ------ | ------- |  | ------- |  | --- |  |  |  | --- | 
|                   |  |                   |         |                  |                  |  |             |                  |  | Potential        |           
|                   |  |                   |         | Realizable Value |                 
|                   |  | Individual Grants |         |                  | at Assumed       | 
|                   |  |                   |         |                  | Annual Rates of  | 
|                   |  | Number of         |         |                  |                  |  | Stock Price |                 
|                   |  | Securities        |         |                  | Percent of Total |  |             |                  |  | Appreciation for |           
|                   |  | Underlying        |         |                  | Options Granted  |  |             | Exercise or Base |  |                  |            |  | Option Term(1) |       
|                   |  | Options           |         |                  | to Employees in  |  |             | Price per        |  |                  | Expiration |  |                |        |        
|Name               |  | Granted           |         |                  | Fiscal Year(2)   |  |             | Share($)         |  |                  | Date       |  |                | 5% ($) |         |  | 10% ($) | 
|                   |  |                   |         |                  |                  |  |             |                  |  |                  |            |  |                |        |         |  |         | 
|Dennis B. Gillings |  |                   | 0       |                  |                  |  | N/A         |                  |  |                  | N/A        |  |                |        | N/A     |  |         |  | N/A |  |  |  | N/A | 
|John D. Ratliff    |  |                   | 150,000 | (3)              |                  |  | 29.7        | %                |  |                  | 14.50      |  |                |        | 7/16/14 |  |         |  | 0   |  |  |  | 0   | 
|John S. Russell    |  |                   | 0       |                  |                  |  | N/A         |                  |  |                  | N/A        |  |                |        | N/A     |  |         |  | N/A |  |  |  | N/A | 
|Ronald J. Wooten   |  |                   | 0       |                  |                  |  | N/A         |                  |  |                  | N/A        |  |                |        | N/A     |  |         |  | N/A |  |  |  | N/A | 
|Oppel Greeff       |  |                   | 0       |                  |                  |  | N/A         |                  |  |                  | N/A        |  |                |        | N/A     |  |         |  | N/A |  |  |  | N/A | 
|James L. Bierman   |  |                   | 0       |                  |                  |  | N/A         |                  |  |                  | N/A        |  |                |        | N/A     |  |         |  | N/A |  |  |  | N/A | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Potential realizable value of each grant is calculated assuming
    that market price of the underlying security appreciates at
    annualized rates of 5% and 10%, respectively, over the
    respective term of the grant. The assumed annual rates of
    appreciation of 5% and 10% would result in the price of the
    Pharma Services common stock, which was $3.54 on
    December 31, 2004, increasing to $5.77 and $9.18 per
    share for the options expiring July 16, 2014. Because the
    exercise price per share of $14.50 is significantly greater than
    these appreciated prices, at stock price appreciation rates of
    both 5% and 10%, the options will have potential realizable
    values of zero.
|   
|(2) | Options to purchase an aggregate of 505,000 shares of
    Pharma Services common stock were granted to employees during
    2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(3) | Nonqualified stock options granted July 16, 2004. Shares
    subject to the options granted vest over the next five years,
    with 20% of such shares vesting on June 14 of each year
    beginning June 14, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

134



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##### 



Aggregated Option Exercises In Last Fiscal Year


and Fiscal Year End Option Values


Pharma Services Holding, Inc.




|                   |  |              |   |  |              |                        |                   |             |                      |                      |               |  |  |                 |         |  |                   |  |   |  |  |  |   | 
|------------------ |  | ------------ | - |  | ------------ | ---------------------- | ----------------- | ----------- | -------------------- | -------------------- | ------------- |  |  | --------------- | ------- |  | ----------------- |  | - |  |  |  | - | 
|                   |  |              |   |  |              | Number of Securities   |                   |             | Value of Unexercised |                     
|                   |  |              |   |  |              | Underlying Unexercised |                   |             | In-the-Money         |                     
|                   |  | Shares       |   |  |              |                        | Options at FY-End |             |                      | Options at FY-End(1) |              
|                   |  | Acquired on  |   |  | Value        |                        |                   |             |                      |                      |               | 
|Name               |  | Exercise (#) |   |  | Realized ($) |                        |                   | Exercisable |                      |                      | Unexercisable |  |  | Exercisable ($) |         |  | Unexercisable ($) | 
|                   |  |              |   |  |              |                        |                   |             |                      |                      |               |  |  |                 |         |  |                   | 
|Dennis B. Gillings |  |              |  |  |              |                        |                  |             |                      |                      |              |  |  |                 |        |  |                   |  |  |  |  |  |  | 
|John D. Ratliff    |  |              |  |  |              |                        |                  |             |                      |                      |              |  |  |                 | 150,000 |  |                   |  |  |  |  |  |  | 
|John S. Russell    |  |              |  |  |              |                        |                  |             |                      |                      | 45,000        |  |  |                 | 180,000 |  |                   |  |  |  |  |  |  | 
|Ronald J. Wooten   |  |              |  |  |              |                        |                  |             |                      |                      | 45,000        |  |  |                 | 180,000 |  |                   |  |  |  |  |  |  | 
|Oppel Greeff       |  |              |  |  |              |                        |                  |             |                      |                      | 45,000        |  |  |                 | 180,000 |  |                   |  |  |  |  |  |  | 
|James L. Bierman   |  |              |  |  |              |                        |                  |             |                      |                      |              |  |  |                 |        |  |                   |  |  |  |  |  |  | 






|    |                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The value of the options is based upon the difference between
    the exercise price and the fair market value per share on
    December 31, 2004, $3.54. As of December 31, 2004,
    shares of Pharma Services common stock were not publicly traded.

Director Compensation








135



---



##### 



Employment Agreements




Employment Agreement with Dr. Gillings.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | participation in all of our general benefit programs and group
    health coverage for the respective lifetimes of
    Dr. Gillings and his wife;                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | reimbursement for expenses, at the rate of $10,794 per
    hour, related to the use of the airplane owned and operated by
    GF Management Company, Inc., or GFM, a company controlled by
    Dr. Gillings, for business- related travel (estimated to be
    approximately 700 hours per year); and                                                                                                                                                                                                                                                       
|
| |  | our agreement to modify, revise, and/or terminate, to the extent
    permitted by applicable law, certain insurance arrangements
    providing death benefits to Dr. Gillings and certain
    irrevocable life insurance trusts created by Dr. Gillings,
    as reasonably necessary or appropriate, in a manner that will
    ultimately result in death benefits no less favorable to the
    trusts and Dr. Gillings than those that would have been
    provided had such arrangements prior to September 25, 2003
    remained in place without change.







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | his permanent disability;                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | a material breach of the new employment agreement by us or by
    Pharma Services;                                                                                                                                                                                                                                                                                                                                                            
|
| |  | his improper termination by us for cause if cause is found not
    to exist;                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | a change in his position of Executive Chairman;                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | the consummation of an underwritten public offering of common
    stock of Pharma Services registered under the Securities Act
    that, together with the consummation of any other prior
    underwritten public offering of Pharma Services common stock,
    results in gross proceeds to Pharma Services of at least
    $100 million in the aggregate, or a Qualified
    Offering; or                                                  
|
| |  | a sale of securities representing at least 75% of the voting
    power of the common stock of Pharma Services or of all, or
    substantially all, of the assets of Pharma Services, each
    referred to as a Sale of Pharma Services, except when
    Dr. Gillings is one of the stockholders of Pharma Services
    holding a majority of the outstanding shares of Pharma Services
    common stock or votes in favor of such transaction;





| |   |                         
| | - | ------------------------
| |  | cause;                  
|
| |  | a Qualified Offering; or

136



---



##### 





| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a sale of Pharma Services, except when Dr. Gillings is not
    one of the stockholders of Pharma Services holding a majority of
    the outstanding shares of Pharma Services common stock or if he
    does not vote in favor of such transaction.







| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | compete with us, Pharma Services or any of our subsidiaries in
    any geographic area in which we or they do business;                                   
|
| |  | solicit or interfere with our, Pharma Services or any of
    our subsidiaries relationship with any person or entity
    doing business with us or them;
|
| |  | offer employment to any person employed by us, Pharma Services
    or any of our subsidiaries; or                                                         
|
| |  | disclose any of our confidential information                                                                                                              



Employment Agreements With Messrs. Ratliff, Russell and
Wooten and Dr. Greeff










137



---



##### 









| |   |                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | by 90 days written notice of our intent not to renew
    the agreement;                                                                                                                                                                                      
|
| |  | without cause upon 90 days written notice
    (60 days written notice under Mr. Ratliffs
    agreement); or                                                                                                                                                
|
| |  | immediately for cause, defined to include the executives
    death, disability, material breach of the agreement, acts or
    omissions that are materially harmful to our interests, or any
    other reason recognized as cause under applicable
    law.





| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | by 90 days written notice of intent not to renew;                                                              
|
| |  | without cause upon 90 days written notice
    (60 days written notice under Mr. Ratliffs
    agreement); or  
|
| |  | because of our material breach which is not cured within
    30 days of receiving notice of the breach from him.









138



---



##### 







Letter Agreement with Mr. Bierman.








Compensation Committee Interlocks and Insider
Participation






139



---



##### 













|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters

PRINCIPAL STOCKHOLDERS






140



---



##### 





|                                                                             |  |              |            |  |                 |  |        |        |  |  |            |  |  |  |       |  
|---------------------------------------------------------------------------- |  | ------------ | ---------- |  | --------------- |  | ------ | ------ |  |  | ---------- |  |  |  | ----- | -
|                                                                             |  | Common Stock |            |  | Preferred Stock | 
|                                                                             |  | (Voting)     |            |  | (Non-Voting)    | 
|                                                                             |  |              |            |  |                 | 
|                                                                             |  | Number       |            |  |                 |  | Number |        |  | 
|                                                                             |  | of           |            |  |                 |  | of     |        |  | 
|                                                                             |  | Shares       |            |  | Percent(1)      |  |        | Shares |  |  | Percent(2) | 
|                                                                             |  |              |            |  |                 |  |        |        |  |  |            | 
|One Equity Partners LLC(3)                                                   |  |              | 45,416,357 |  |                 |  | 35.61  | %      |  |  | 165,097    |  |  |  | 40.19 | %
|Temasek Holdings (Private) Limited(4)                                        |  |              | 18,457,752 |  |                 |  | 14.47  | %      |  |  | 67,097     |  |  |  | 16.33 | %
|TPG Advisors III, Inc.(5)                                                    |  |              | 18,457,752 |  |                 |  | 14.47  | %      |  |  | 67,097     |  |  |  | 16.33 | %
|Dennis B. Gillings, Ph.D.(6)                                                 |  |              | 24,943,777 |  |                 |  | 19.56  | %      |  |  | 69,883     |  |  |  | 17.01 | %
|John D. Ratliff(7)                                                           |  |              | 375,000    |  |                 |  | *      |        |  |  |           |  |  |  |      |  
|John S. Russell(8)                                                           |  |              | 556,525    |  |                 |  | *      |        |  |  | 224        |  |  |  | *     |  
|Oppel Greeff, M.D.(9)                                                        |  |              | 885,009    |  |                 |  | *      |        |  |  | 1,419      |  |  |  | *     |  
|Ronald Wooten(10)                                                            |  |              | 542,585    |  |                 |  | *      |        |  |  | 173        |  |  |  | *     |  
|Richard M. Cashin, Jr.(11)                                                   |  |              | 45,293,306 |  |                 |  | 35.51  | %      |  |  | 164,649    |  |  |  | 40.08 | %
|Clateo Castellini(12)                                                        |  |              | 111,525    |  |                 |  | *      |        |  |  | 224        |  |  |  | *     |  
|Jonathan J. Coslet(13)                                                       |  |              |           |  |                 |  |       |        |  |  |           |  |  |  |      |  
|Jack M. Greenberg(14)                                                        |  |              | 111,525    |  |                 |  | *      |        |  |  | 224        |  |  |  | *     |  
|Robert A. Ingram(15)                                                         |  |              | 50,000     |  |                 |  | *      |        |  |  |           |  |  |  |      |  
|S. Iswaran(16)                                                               |  |              | 18,457,752 |  |                 |  | 14.47  | %      |  |  | 67,097     |  |  |  | 16.33 | %
|Jacques Nasser(17)                                                           |  |              | 44,370,418 |  |                 |  | 34.79  | %      |  |  | 161,294    |  |  |  | 39.27 | %
|James S. Rubin(18)                                                           |  |              | 44,288,384 |  |                 |  | 34.73  | %      |  |  | 160,996    |  |  |  | 39.19 | %
|James L. Bierman                                                             |  |              |           |  |                 |  |       |        |  |  |           |  |  |  |      |  
|All directors and current executive officers as a group
    (14 persons)(19) |  |              | 91,878,068 |  |                 |  | 71.95  | %      |  |  | 304,418    |  |  |  | 74.11 | %
|                                                                             |  |              |            |  |                 |  |        |        |  |  |            | 






| |   |             
| | - | ------------
| | * | Less than 1%



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The percentage amount is based on 127,535,979 shares of
    common stock outstanding as of February 11, 2005. This
    amount includes 8,528,500 shares of restricted common stock
    held by certain members of management and our Board of Directors
    under the Pharma Services Plan, which are subject to certain
    repurchase rights exercisable by Pharma Services.                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (2) | The percentage amount is based on 410,770 shares of
    preferred stock outstanding as of February 11, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (3) | Includes 454,615 shares of common stock and
    1,652 shares of preferred stock held by OEP Co-Investors,
    LLC, an entity affiliated with One Equity. Includes
    1,025,430 shares of common stock and 3,728 shares of
    preferred stock held by Mr. Cashin, the Chairman of One
    Equity, 102,543 shares of common stock and 373 shares
    of preferred stock held by Mr. Nasser, a senior partner of
    One Equity, and 20,508 shares of common stock and
    75 shares of preferred stock held by Mr. Rubin, a
    partner of One Equity. One Equity disclaims beneficial ownership
    of all shares held by Messrs. Cashin, Nasser and Rubin. The
    principal business address of One Equity is 320 Park
    Avenue, 18th Floor, New York, New York 10022.

141



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| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (4) | The shares of common stock and shares of preferred stock
    indicated as beneficially owned by Temasek are directly held by
    Temasek Life Sciences Investments Private Limited. The foregoing
    entity is affiliated with Temasek. The principal business
    address of Temasek and of Temasek Life Sciences Investments
    Private Limited is 60 B. Orchard Road #06-18, Tower 2
    The Atrium Orchard Singapore 238891.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (5) | The shares of common stock and shares of preferred stock
    indicated as beneficially owned by TPG Advisors III,
    Inc. are directly held by TPG Quintiles Holdco LLC. The
    foregoing entity is affiliated with TPG Advisors III,
    Inc. The principal business address of TPG Advisors III,
    Inc. and TPG Quintiles Holdco LLC is 301 Commerce Street,
    Suite 3300, Fort Worth, Texas 76102.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (6) | Includes 4,195,155 shares of common stock subject to a
    repurchase right exercisable by Pharma Services under certain
    circumstances (such restricted amount to be reduced to zero over
    a period of five years from the original date of issuance). Also
    includes 1,656 shares of preferred stock that
    Dr. Gillings purchased but deferred receipt.
    Dr. Gillings does not currently exercise voting or
    investment control over such preferred shares, but he could
    receive the shares, including full power to vote and dispose of
    them, in the next sixty days under certain circumstances. Also
    includes: (i) 39,678 shares of common stock and
    144 shares of preferred stock owned by
    Dr. Gillings daughter; (ii) 713,699 shares
    of common stock and 2,595 shares of preferred stock owned
    by the Gillings Family Limited Partnership, of which
    Dr. Gillings and his wife are the general partners;
    (iii) 42,227 shares of common stock and
    195 shares of preferred stock owned by the GFEF Limited
    Partnership, of which Dr. Gillings is the general partner;
    (iv) 771,027 shares of common stock and
    2,806 shares of preferred stock owned by
    Dr. Gillings wife; (v) 163,556 shares of
    common stock and 757 shares of preferred stock owned by the
    Gillings Family Foundation, of which Dr. Gillings is the
    general partner; and (vi) 1,000,000 shares of common
    stock owned by the Dennis B. Gillings Grantor Retained Annuity
    Trust, of which Dr. Gillings is trustee. Dr. Gillings
    shares voting and investment power over certain of these shares.
    Dr. Gillings disclaims beneficial ownership of all shares
    owned by his wife and daughter, all shares in the Gillings
    Family Limited Partnership, all shares owned by the Gillings
    Family Foundation, all shares owned by the GFEF Limited
    Partnership and all shares owned by the Dennis B. Gillings
    Grantor Retained Annuity Trust, except to the extent of his
    interest therein.
|
| | (7) | Includes 375,000 shares of restricted common stock acquired
    pursuant to the Pharma Services Plan that are subject to a
    repurchase right exercisable by Pharma Services under certain
    circumstances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (8) | Includes 45,000 shares subject to presently exercisable
    stock options. Also includes 61,525 shares of common stock
    and 224 shares of preferred stock subject to repurchase
    rights exercisable by Pharma Services under certain
    circumstances through March 25, 2005. Mr. Russell has
    deferred receipt of the 224 shares of preferred stock and
    does not currently exercise voting or investment control over
    such shares. Mr. Russell disclaims beneficial ownership of
    such shares of preferred stock. Also includes
    450,000 shares of restricted common stock acquired pursuant
    to the Pharma Services Plan that are subject to a repurchase
    right exercisable by Pharma Services under certain circumstances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (9) | Includes 45,000 shares subject to presently exercisable
    stock options. Also includes 390,009 shares of common stock
    and 1,419 shares of preferred stock held by The Oppel
    Greeff Family Trust subject to repurchase rights exercisable by
    Pharma Services under certain circumstances through
    March 25, 2005. Dr. Greeff has deferred receipt of 270
    of such shares of preferred stock and does not currently
    exercise voting or investment control over these shares.
    Dr. Greeff disclaims beneficial ownership of such shares of
    preferred stock. Also includes 450,000 shares of restricted
    common stock acquired pursuant to the Pharma Services Plan that
    are subject to a repurchase right exercisable by Pharma Services
    under certain circumstances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Includes 45,000 shares subject to presently exercisable
    stock options. Also includes 47,585 shares of common stock
    and 173 shares of preferred stock subject to repurchase
    rights exercisable by Pharma Services under certain
    circumstances through March 25, 2005. Mr. Wooten has
    deferred receipt of the 173 shares of preferred stock and
    does not currently exercise voting or investment control over
    these shares. Mr. Wooten disclaims beneficial ownership of
    such shares of preferred stock. Also

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|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | includes 450,000 shares of restricted common stock acquired
    pursuant to the Pharma Services Plan that are subject to a
    repurchase right exercisable by Pharma Services under certain
    circumstances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    
|(11) | Includes 43,813,659 shares of common stock and
    159,268 shares of preferred stock held by One Equity, of
    which Mr. Cashin is the Chairman. Includes
    454,615 shares of common stock and 1,652 shares of
    preferred stock held by OEP Co-Investors, LLC, an entity
    affiliated with One Equity. Mr. Cashin disclaims beneficial
    ownership of any shares held by either One Equity or
    OEP Co-Investors, LLC, except to the extent of his
    pecuniary interest therein. Mr. Cashins principal
    business address is 320 Park Avenue, 18th Floor, New
    York, New York 10022.                                                                                                                                                                                                                                                     
|    
|(12) | Includes 50,000 shares of restricted common stock acquired
    pursuant to the Pharma Services Plan that are subject to a
    repurchase right exercisable by Pharma Services under certain
    circumstances. Mr. Castellinis principal business
    address is Via Foletti 6, 6900 Massagno, Switzerland.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|(13) | Mr. Coslet does not exercise voting or investment control
    over, and disclaims beneficial ownership of, the shares held by
    TPG Advisors III, Inc. Mr, Coslets principal business
    address is 301 Commerce Street, Suite 3300,
    Fort Worth, Texas 76102.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    
|(14) | Includes 46,525 shares of restricted common stock acquired
    pursuant to the Pharma Services Plan that are subject to a
    repurchase right exercisable by Pharma Services under certain
    circumstances. Also includes 61,525 shares of common stock
    owned by the Greenberg Irrevocable Descendants Trust, or the
    Greenberg Trust, and 3,475 shares of restricted stock
    acquired pursuant to the Pharma Services Plan owned by the
    Greenberg Trust which are subject to a repurchase right
    exercisable by Pharma Services under certain circumstances.
    Mr. Greenberg disclaims beneficial ownership of the shares
    owned by the Greenberg Trust, except to the extent of his
    pecuniary interest therein. Mr. Greenbergs principal
    business address is 333 W. Wacker Drive,
    Suite 1015, Chicago, Illinois 60606.
|    
|(15) | Includes 50,000 shares of restricted common stock acquired
    pursuant to the Pharma Services Plan that are subject to a
    repurchase right exercisable by Pharma Services under certain
    circumstances. Mr. Ingrams principal business address
    of Five Moore Drive, Research Triangle Park, North Carolina
    27709.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|(16) | Includes 18,457,752 shares of common stock and
    67,097 shares of preferred stock held by Temasek, of which
    Mr. Iswaran is a Managing Director. Mr. Iswaran
    disclaims beneficial ownership of such shares, except to the
    extent of his pecuniary interest therein.
    Mr. Iswarans principal business address is
    c/o Temasek Holdings (Private) Limited, 60 B. Orchard
    Road #06-18, Tower 2 The Atrium Orchard Singapore
    238891.                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|(17) | Includes 43,813,259 shares of common stock and
    159,268 shares of preferred stock held by One Equity, of
    which Mr. Nasser is a senior partner. Includes
    454,615 shares of common stock and 1,652 shares of
    preferred stock held by OEP Co-Investors, LLC, an entity
    affiliated with One Equity. Mr. Nasser disclaims beneficial
    ownership of any shares held by either One Equity or
    OEP Co-Investors, LLC, except to the extent of his
    pecuniary interest therein. Mr. Nassers principal
    business address is 100 Bloomfield Hills Parkway,
    Suite 175, Bloomfield Hills, Michigan 48304.                                                                                                                                                                                                                             
|    
|(18) | Includes 43,813,259 shares of common stock and
    159,268 shares of preferred stock held by One Equity, of
    which Mr. Rubin is a partner. Includes 454,615 shares
    of common stock and 1,652 shares of preferred stock held by
    OEP Co-Investors, LLC, an entity affiliated with One
    Equity. Mr. Rubin disclaims beneficial ownership of any
    shares held by either One Equity or OEP Co-Investors, LLC,
    except to the extent of his pecuniary interest therein.
    Mr. Rubins principal business address is 320 Park
    Avenue, 18th Floor, New York, New York 10022.                                                                                                                                                                                                                                                               
|    
|(19) | Includes shares of restricted common stock and beneficially
    owned shares as described in footnotes (6)-(18). Also includes
    75 shares of preferred stock, 395,508 shares of common
    stock, 375,000 shares of which are restricted common stock
    acquired pursuant to the Pharma Services Plan subject to a
    repurchase right exercisable by Pharma Services under certain
    circumstances, and 32,500 shares of common stock subject to
    presently exercisable stock options held by Michael Mortimer,
    who became an executive officer of the Company as of
    February 9, 2005.                                                                                                                                                                                                                                                   

143



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Stockholders Agreement






| |                      
| | ---------------------
| | Transfer Restrictions











| |                     
| | --------------------
| | Corporate Governance





Registration Rights Agreement




144



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##### 





Exchange Agreement




Equity Compensation Plans




|                                                           |  |                   |           |     |                  |            |       |                      |  |  |           |    
|---------------------------------------------------------- |  | ----------------- | --------- | --- | ---------------- | ---------- | ----- | -------------------- |  |  | --------- | ---
|                                                           |  |                   |           |     |                  | Number of  |      
|                                                           |  |                   |           |     |                  | Securities |      
|                                                           |  | Number of         |           |     | Weighted         |            |       | Remaining Available  | 
|                                                           |  | Securities to Be  |           |     | Average Exercise |            |       | for Future Issuance  | 
|                                                           |  | Issued upon       |           |     | Price of         |            |       | Under Equity         | 
|                                                           |  | Exercise of       |           |     | Outstanding      |            |       | Compensation Plans   | 
|                                                           |  | Outstanding       |           |     | Options,         |            |       | (Excluding           | 
|                                                           |  | Options, Warrants |           |     | Warrants and     |            |       | Securities Reflected | 
|Plan Category                                              |  | and Rights        |           |     | Rights           |            |       | in Column (a))       | 
|                                                           |  |                   |           |     |                  |            |       |                      | 
|                                                           |  | (a)               |           |     | (b)              |            |       | (c)                  | 
|Equity compensation plans approved by security holders     |  |                   | 3,755,000 | (1) |                  | $          | 14.50 |                      |  |  | 2,192,708 | (2)
|Equity compensation plans not approved by security holders |  |                   | N/A       |     |                  |            | N/A   |                      |  |  | N/A       |    
|Total                                                      |  |                   | 3,755,000 |     |                  | $          | 14.50 |                      |  |  | 2,192,708 |    






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes 3,755,000 shares issuable upon exercise of
    outstanding options granted under the Pharma Services Plan. Does
    not include 8,353,500 restricted shares of Pharma Services
    common stock granted under the Pharma Services Plan that are
    issued and outstanding as of December 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(2) | As of December 31, 2004, Pharma Services has a total of
    14,452,208 shares of its common stock reserved for issuance
    under the Pharma Services Plan, 4,817,403 shares of which
    are reserved for issuance as options to purchase shares of
    Pharma Services common stock and 9,634,805 shares of which
    are reserved for issuance as restricted shares. The amount shown
    above includes 1,062,403 shares of common stock remaining
    for future issuance as options under the Pharma Services Plan,
    assuming solely for the purposes hereof that the total number of
    shares reserved for issuance as options under the Pharma
    Services Plan is reduced by all outstanding but unexercised
    options, and 1,130,305 shares of common stock remaining for
    future issuance as restricted shares under the Pharma Services
    Plan.

145



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##### 





|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions

Director Share Purchases




Repurchase of Pharma Services Series A Preferred
Stock












Fee Agreements




146



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##### 



Other Transactions












|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



|                      |  |              |       |  |      |   |       | 
|--------------------- |  | ------------ | ----- |  | ---- | - | ----- | 
|Fiscal Year           |  | 2004         |       |  | 2003 |  
|                      |  |              |       |  |      |  
|                      |  | in thousands |      
|Audit Fees(1)         |  | $            | 2,530 |  |      | $ | 1,700 | 
|Audit-Related Fees(2) |  |              | 516   |  |      |   | 611   | 
|Tax Fees(3)           |  |              | 4,278 |  |      |   | 2,627 | 
|All Other Fees(4)     |  |              | 4     |  |      |   | 4     | 
|                      |  |              |       |  |      |  
|Total                 |  | $            | 7,328 |  |      | $ | 4,942 | 
|                      |  |              |       |  |      |  






|    |                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Audit fees consist of fees for the audit of our financial
    statements, the review of the interim financial statements
    included in our quarterly reports on Form 10-Q, reviews of
    internal controls and other professional services provided in
    connection with statutory and regulatory filings or engagements.

147



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##### 





|    |                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Audit-Related Fees consist of services related to mergers,
    acquisitions and divestitures, primarily the Bioglan transaction
    in 2004, the Pharma Services transaction in 2003 and related
    regulatory filings.
|   
|(3) | Tax Fees consist of fees for tax compliance, tax advice and tax
    planning services.                                                                                                                                  
|   
|(4) | All Other Fees consist of miscellaneous accounting research and
    online tools.                                                                                                                                       



148



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##### 



PART IV




|         |                                        
|-------- | ---------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules

Financial Statements


|                                                                                                                                                                                                                                                                                                             |  |           |     | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------- | --- | 
|                                                                                                                                                                                                                                                                                                             |  | Form 10-K |    
|Financial Statements                                                                                                                                                                                                                                                                                         |  | Page      |    
|                                                                                                                                                                                                                                                                                                             |  |           |    
|Consolidated Statements of Operations for the year ended
    December 31, 2004 (successor), the periods from
    September 26, 2003 through December 31, 2003
    (successor), January 1, 2003 through September 25,
    2003 (predecessor) and the year ended December 31, 2002
    (predecessor)           |  |           | 57  | 
|Consolidated Balance Sheets as of December 31, 2004
    (successor) and 2003 (successor)                                                                                                                                                                                                                     |  |           | 58  | 
|Consolidated Statements of Cash Flows for the year ended
    December 31, 2004 (successor), the periods from
    September 26, 2003 through December 31, 2003
    (successor), January 1, 2003 through September 25,
    2003 (predecessor) and the year ended December 31, 2002
    (predecessor)           |  |           | 60  | 
|Consolidated Statements of Shareholders Equity for the
    year ended December 31, 2004 (successor), the periods from
    September 26, 2003 through December 31, 2003
    (successor), January 1, 2003 through September 25,
    2003 (predecessor) and the year ended December 31, 2002
    (predecessor) |  |           | 62  | 
|Notes to Consolidated Financial Statements                                                                                                                                                                                                                                                                   |  |           | 63  | 
|Reports of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                     |  |           | 122 | 

Financial Statement Schedules


Exhibits


|        |   |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                              
|------- | - | --- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |     | Description
|        |   |     |            
|        | 2 | .01 |             | Agreement and Plan of Merger, dated April 10, 2003, by and
    among Pharma Services Holding, Inc., Pharma Services Acquisition
    Corp., and Quintiles Transnational Corp. (incorporated herein by
    reference to Exhibit 2.01 to our Current Report on
    Form 8-K dated April 10, 2003, as filed with the
    Securities and Exchange Commission on April 11, 2003)                                                   
|        | 2 | .02 |             | Amendment No. 1 to Agreement and Plan of Merger, dated as
    of August 18, 2003, by and among Pharma Services Holding,
    Inc., Pharma Services Acquisition Corp. and Quintiles
    Transnational Corp. (incorporated herein by reference to
    Exhibit 2.02 to our Annual Report on Form 10-K for the
    fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)
|        | 3 | .01 |             | Restated Articles of Incorporation of Quintiles Transnational
    Corp. (incorporated herein by reference to Exhibit 3.1 to
    our Quarterly Report on Form 10-Q for the period ended
    September 30, 2003, as filed with the Securities and
    Exchange Commission on November 14, 2003)                                                                                                                                
|        | 3 | .02 |             | Amended and Restated Bylaws of Pharma Services Acquisition
    Corp., as Adopted by Quintiles Transnational Corp. (incorporated
    herein by reference to Exhibit 3.2 to our Quarterly Report
    on Form 10-Q for the period ended September 30, 2003,
    as filed with the Securities and Exchange Commission on
    November 14, 2003)                                                                                  
|        | 4 | .01 |             | Specimen Stock Certificate (incorporated herein by reference to
    Exhibit 4.1 to our Quarterly Report on Form 10-Q for
    the period ended September 30, 2003, as filed with the
    Securities and Exchange Commission on November 14, 2003)                                                                                                                                                                             

149



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|        |    |      |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- | -- | ---- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      | Description
|        |    |      |            
|        | 4  | .02  |             | Indenture, dated as of September 25, 2003, among Quintiles
    Transnational Corp., the Subsidiary Guarantors named therein and
    Wells Fargo Bank Minnesota, N.A., as Trustee (incorporated
    herein by reference to Exhibit 4.2 to our Quarterly Report
    on Form 10-Q for the period ended September 30, 2003,
    as filed with the Securities and Exchange Commission on
    November 14, 2003)                                                                                                                                                                                                                                                                                                                                                                               
|        | 4  | .03  |             | Registration Rights Agreement, dated as of September 25,
    2003, among Quintiles Transnational Corp. and Citigroup Global
    Markets Inc., as Representative of the Initial Purchasers named
    therein (incorporated herein by reference to Exhibit 4.3 to
    our Quarterly Report on Form 10-Q for the period ended
    September 30, 2003, as filed with the Securities and
    Exchange Commission on November 14, 2003)                                                                                                                                                                                                                                                                                                                                                        
|        | 4  | .04  |             | Form of Global Note (included as Exhibit A to
    Exhibit 4.02 hereto)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10 | .01  |             | Credit Agreement, dated September 25, 2003, among Quintiles
    Transnational Corp., Pharma Services Holding, Inc. and Pharma
    Services Intermediate Holding Corp., as Parent Guarantors, the
    Lenders referred to therein, Citigroup Global Markets Inc., as
    Sole Lead Arranger and Sole Bookrunner, Citicorp North America,
    Inc., as Administrative Agent, ABN AMRO Bank N.V. and Banc One
    Mezzanine Corporation, as Co-Syndication Agents and Residential
    Funding Corporation (DBA GMAC  RFC Health Capital),
    as Documentation Agent (incorporated herein by reference to
    Exhibit 10.1 to our Quarterly Report on Form 10-Q for
    the period ended September 30, 2003, as filed with the
    Securities and Exchange Commission on November 14, 2003)
|        | 10 | .02  |             | Amendment No. 1, dated June 22, 2004, to Credit
    Agreement, dated September 25, 2003, among Quintiles
    Transnational Corp., the Lenders referred to therein and
    Citicorp North America, Inc., as Administrative Agent                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10 | .03* |             | Executive Employment Agreement, dated September 25, 2003,
    among Dennis B. Gillings, Ph.D., Pharma Services Holding,
    Inc. and Quintiles Transnational Corp. (incorporated herein by
    reference to Exhibit 10.2 to our Quarterly Report on
    Form 10-Q for the period ended September 30, 2003, as
    filed with the Securities and Exchange Commission on
    November 14, 2003)                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .04* |             | Executive Employment Agreement, dated June 14, 2004, among
    John D. Ratliff and Quintiles Transnational Corp. (incorporated
    herein by reference to Exhibit 10.1 to our Quarterly Report
    on Form 10-Q for the period ended June 30, 2004, as
    filed with the Securities and Exchange Commission on
    August 13, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .05* |             | Executive Employment Agreement, dated December 3, 1998, by
    and between John S. Russell and Quintiles Transnational Corp.
    (incorporated herein by reference to Exhibit 10.10 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 1999, as filed with the Securities and
    Exchange Commission on March 30, 2000)                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10 | .06* |             | Amendment to Executive Employment Agreement, dated
    October 26, 1999, by and between John S. Russell and
    Quintiles Transnational Corp. (incorporated herein by reference
    to Exhibit 10.11 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 1999, as filed with the
    Securities and Exchange Commission on March 30, 2000)                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .07* |             | Amendment to Executive Employment Agreement, dated
    November 14, 2003, by and between John S. Russell and
    Quintiles Transnational Corp. (incorporated herein by reference
    to Exhibit 10.14 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .08* |             | Letter dated November 3, 2003 to John S. Russell from
    Pharma Services Holding, Inc. re. Opportunity to Purchase
    Shares (incorporated herein by reference to Exhibit 10.15
    to our Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                      

150



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##### 



|        |    |      |             |                                                                                                                                                                                                                                                                                                                                                                 
|------- | -- | ---- | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      | Description
|        |    |      |            
|        | 10 | .09* |             | Letter dated November 3, 2003 to John S. Russell from
    Pharma Services Holding, Inc. re. Stock Option (incorporated
    herein by reference to Exhibit 10.16 to our Annual Report
    on Form 10-K for the fiscal year ended December 31,
    2003, as filed with the Securities and Exchange Commission on
    March 1, 2004)                               
|        | 10 | .10* |             | Executive Employment Agreement, dated July 25, 2000, by and
    between Ron Wooten and Quintiles Transnational Corp.
    (incorporated herein by reference to Exhibit 10.17 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)                   
|        | 10 | .11* |             | Amendment to Executive Employment Agreement, dated
    November 5, 2003, by and between Ron Wooten and Quintiles
    Transnational Corp. (incorporated herein by reference to
    Exhibit 10.18 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)   
|        | 10 | .12* |             | Letter dated November 13, 2003 to Ron Wooten from Quintiles
    Transnational Corp. re. Amendment to Executive Employment
    Agreement (incorporated herein by reference to
    Exhibit 10.19 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)    
|        | 10 | .13* |             | Letter dated October 30, 2003 to Ron Wooten from Pharma
    Services Holding, Inc. re. Opportunity to Purchase Shares
    (incorporated herein by reference to Exhibit 10.20 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)                  
|        | 10 | .14* |             | Letter dated October 30, 2003 to Ron Wooten from Pharma
    Services Holding, Inc. re. Stock Option (incorporated herein by
    reference to Exhibit 10.21 to our Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003,
    as filed with the Securities and Exchange Commission on
    March 1, 2004)                                    
|        | 10 | .15* |             | Executive Employment Agreement, dated February 8, 2002, by
    and between Oppel Greeff and Quintiles Transnational Corp.
    (incorporated herein by reference to Exhibit 10.07 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)              
|        | 10 | .16* |             | Amendment to Executive Employment Agreement, dated
    November 17, 2003, by and between Oppel Greeff and
    Quintiles Transnational Corp. (incorporated herein by reference
    to Exhibit 10.08 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)
|        | 10 | .17* |             | Letter dated December 5, 2003 to Oppel Greeff from
    Quintiles Transnational Corp. re. Amendment to Executive
    Employment Agreement (incorporated herein by reference to
    Exhibit 10.09 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)   
|        | 10 | .18* |             | Letter dated October 30, 2003 to Oppel Greeff from Pharma
    Services Holding, Inc. re. Opportunity to Purchase Shares
    (incorporated herein by reference to Exhibit 10.10 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)                
|        | 10 | .19* |             | Letter dated October 30, 2003 to Oppel Greeff from Pharma
    Services Holding, Inc. re. Stock Option (incorporated herein by
    reference to Exhibit 10.11 to our Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003,
    as filed with the Securities and Exchange Commission on
    March 1, 2004)                                  
|        | 10 | .20* |             | Executive Employment Agreement, dated June 1, 2003, by and
    between Michael Mortimer and Quintiles Transnational Corp.                                                                                                                                                                                                                                       
|        | 10 | .21* |             | Amendment to Executive Employment Agreement, dated
    January 9, 2004, by and between Michael Mortimer and
    Quintiles Transnational Corp.                                                                                                                                                                                                                   

151



---



##### 



|        |    |      |             |                                                                                                                                                                                                                                                                                                                                                                                                      
|------- | -- | ---- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      | Description
|        |    |      |            
|        | 10 | .22* |             | Executive Employment Agreement, dated June 16, 1998, by and
    between James L. Bierman and Quintiles Transnational Corp.
    (incorporated herein by reference to Exhibit 10.09 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 1999, as filed with the Securities and
    Exchange Commission on March 30, 2000)                                                 
|        | 10 | .23* |             | Amendment to Executive Employment Agreement, dated
    March 31, 2003, by and between James L. Bierman and
    Quintiles Transnational Corp. (incorporated herein by reference
    to Exhibit 10.18 to our Annual Report on Form 10-K/A
    for the fiscal year ended December 31, 2002, as filed with
    the Securities and Exchange Commission on April 29, 2003)                                 
|        | 10 | .24* |             | Letter Agreement, dated January 21, 2004, to James L.
    Bierman from Quintiles Transnational Corp. re. Remaining
    Employment (incorporated herein by reference to
    Exhibit 10.06 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)                                               
|        | 10 | .25* |             | Letter dated December 6, 2004 to John D. Ratliff from
    Quintiles Transnational Corp. re. Purchase of Pharma Shares                                                                                                                                                                                                                                                                                
|        | 10 | .26* |             | Letter dated February 22, 2005 to Robert A. Ingram from
    Quintiles Transnational Corp. re. Purchase of Pharma Shares                                                                                                                                                                                                                                                                              
|        | 10 | .27* |             | Letter dated February 22, 2005 to John D. Ratliff from
    Quintiles Transnational Corp. re. Purchase of Pharma Shares                                                                                                                                                                                                                                                                               
|        | 10 | .28* |             | Letter dated February 22, 2005 to Michael Mortimer from
    Quintiles Transnational Corp. re. Purchase of Pharma Shares                                                                                                                                                                                                                                                                              
|        | 10 | .29* |             | Quintiles Transnational Corp. Elective Deferred Compensation
    Plan, as amended and restated (incorporated herein by reference
    to Exhibit 10.14 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 1999, as filed with the
    Securities and Exchange Commission on March 30, 2000)                                                                                 
|        | 10 | .30* |             | Quintiles Transnational Corp. Elective Deferred Compensation
    Plan (Amended and Restated for Deferrals On and After
    January 1, 2005)                                                                                                                                                                                                                                                          
|        | 10 | .31* |             | Pharma Services Holding, Inc. Stock Incentive Plan (incorporated
    herein by reference to Exhibit 10.23 to our Annual Report
    on Form 10-K for the fiscal year ended December 31,
    2003, as filed with the Securities and Exchange Commission on
    March 1, 2004)                                                                                                                          
|        | 10 | .32* |             | Form of Stock Option Agreement under the Pharma Services
    Holding, Inc. Stock Incentive Plan (incorporated herein by
    reference to Exhibit 10.2 to our Quarterly Report on
    Form 10-Q for the period ended September 30, 2004, as
    filed with the Securities and Exchange Commission on
    November 12, 2004)                                                                           
|        | 10 | .33* |             | Form of Restricted Stock Purchase Agreement under the Pharma
    Services Holding, Inc. Stock Incentive Plan (incorporated herein
    by reference to Exhibit 10.3 to our Quarterly Report on
    Form 10-Q for the period ended September 30, 2004, as
    filed with the Securities and Exchange Commission on
    November 12, 2004)                                                              
|        | 10 | .34* |             | Summary of Material Terms of PharmaBio Development Bonus Plan
    (incorporated herein by reference to Exhibit 10.4 to our
    Quarterly Report on Form 10-Q for the period ended
    September 30, 2004, as filed with the Securities and
    Exchange Commission on November 12, 2004)                                                                                                             
|        | 10 | .35* |             | Quintiles Transnational Corp. Performance Incentive Plan                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .36  |             | Agreement and Plan of Merger, dated as of January 22, 2000,
    among Quintiles Transnational Corp., Healtheon/ WebMD
    Corporation, Pine Merger Corp., Envoy Corporation and QFinance,
    Inc. (incorporated herein by reference to Exhibit 2.01 to
    our Current Report on Form 8-K, dated January 25,
    2000, as filed with the Securities and Exchange Commission on
    January 25, 2000)

152



---



##### 



|        |    |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | -- | --- | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     | Description
|        |    |     |            
|        | 10 | .37 |             | Settlement Agreement, dated October 12, 2001, by and among
    Quintiles Transnational Corp., WebMD Corporation and Envoy
    Corporation (incorporated herein by reference to
    Exhibit 10.01 to our Quarterly Report on Form 10-Q for
    the period ended September 30, 2001, as filed with the
    Securities and Exchange Commission on November 1, 2001)                                                                                          
|        | 10 | .38 |             | Agreement of Lease, dated April 24, 2003, entered into
    between Shibbolet (Proprietary) Limited and Quintiles
    Clindepharm (Proprietary) Limited (incorporated herein by
    reference to Exhibit 10.28 to our Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003,
    as filed with the Securities and Exchange Commission on
    March 1, 2004)                                                                           
|        | 10 | .39 |             | Agreement of Lease, dated December 13, 1999, entered into
    between Shibbolet (Proprietary) Limited and Quintiles
    Clindepharm (Proprietary) Limited (incorporated herein by
    reference to Exhibit 10.29 to our Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003,
    as filed with the Securities and Exchange Commission on
    March 1, 2004)                                                                        
|        | 10 | .40 |             | Memorandum of Agreement of Lease, dated March 13, 2000,
    between Rosenpark Eiendomme CC and Quintiles Clindepharm (PTY)
    Limited (incorporated herein by reference to Exhibit 10.30
    to our Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)                                                                                               
|        | 10 | .41 |             | Asset Purchase Agreement, dated June 8, 2004, by and among
    Quintiles Transnational Corp., Quintiles Bermuda Ltd., Quintiles
    Ireland Limited, Bioglan Pharmaceuticals Company and Bradley
    Pharmaceuticals, Inc., as amended August 10, 2004
    (incorporated herein by reference to Exhibit 2.01 to our
    Current Report on Form 8-K dated August 10, 2004, as
    filed with the Securities and Exchange Commission on
    August 20, 2004)
|        | 21 | .01 |             | Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 24 | .01 |             | Power of Attorney (included on the signature pages hereto)                                                                                                                                                                                                                                                                                                                                                                                                
|        | 31 | .01 |             | Certification Pursuant to Rule 13a-14/15d-14, As Adopted
    Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                    
|        | 31 | .02 |             | Certification Pursuant to Rule 13a-14/15d-14, As Adopted
    Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                    
|        | 32 | .01 |             | Certification Pursuant to 18 U.S.C. Section 1350, As
    Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act
    of 2002                                                                                                                                                                                                                                                                                                                            
|        | 32 | .02 |             | Certification Pursuant to 18 U.S.C. Section 1350, As
    Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act
    of 2002                                                                                                                                                                                                                                                                                                                            






|    |  |                                              
|--- |  | ---------------------------------------------
|*   |  | Executive compensation plans and arrangements
|   
|(b) |  | See (a)(3) above.                            
|   
|(c) |  | See (a)(2) above.                            

153



---



##### 



SIGNATURES






| |                              
| | -----------------------------
| | QUINTILES TRANSNATIONAL CORP.



| |     |                                  
| | --- | ---------------------------------
| | By: | /s/ Dennis B. Gillings,
    Ph.D.

| |                                               
| | ----------------------------------------------
| |                                               
| | Dennis B. Gillings, Ph.D.                     
| | Executive Chairman and Chief Executive Officer



154



---



##### 



SIGNATURES AND POWER OF ATTORNEY






|                                                               |  |                                                                                                                         |  |               |  | 
|-------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | 
|Signature                                                      |  | Title                                                                                                                   |  | Date         
|                                                               |  |                                                                                                                         |  |              
|                                                              
|/s/ Dennis B.
    Gillings, Ph.D.Dennis
    B. Gillings, Ph.D. |  | Executive Chairman, Chief Executive Officer and Director
    (principal executive officer)                              |  | March 7, 2005
|                                                              
|/s/ John D. RatliffJohn
    D. Ratliff                         |  | Executive Vice President and Chief Financial Officer (principal
    financial officer and principal accounting officer) |  | March 7, 2005
|                                                              
|/s/ Richard M.
    Cashin, Jr.Richard
    M. Cashin, Jr.       |  | Director                                                                                                                |  | March 7, 2005
|                                                              
|/s/ Clateo CastelliniClateo
    Castellini                     |  | Director                                                                                                                |  | March 7, 2005
|                                                              
|/s/ Jonathan CosletJonathan
    Coslet                         |  | Director                                                                                                                |  | March 7, 2005
|                                                              
|/s/ Jack M. GreenbergJack
    M. Greenberg                     |  | Director                                                                                                                |  | March 7, 2005
|                                                              
|/s/ Robert A. IngramRobert
    A. Ingram                       |  | Director                                                                                                                |  | March 7, 2005
|                                                              
|S.
    Iswaran                                                 |  | Director                                                                                                                |  | March  , 2005
|                                                              
|/s/ Jacques NasserJacques
    Nasser                           |  | Director                                                                                                                |  | March 7, 2005
|                                                              
|/s/ James S. RubinJames
    S. Rubin                           |  | Director                                                                                                                |  | March 7, 2005

155



---



##### 



EXHIBIT INDEX


|        |    |      |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- | -- | ---- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      | Description
|        |    |      |            
|        | 2  | .01  |             | Agreement and Plan of Merger, dated April 10, 2003, by and
    among Pharma Services Holding, Inc., Pharma Services Acquisition
    Corp., and Quintiles Transnational Corp. (incorporated herein by
    reference to Exhibit 2.01 to our Current Report on
    Form 8-K dated April 10, 2003, as filed with the
    Securities and Exchange Commission on April 11, 2003)                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 2  | .02  |             | Amendment No. 1 to Agreement and Plan of Merger, dated as
    of August 18, 2003, by and among Pharma Services Holding,
    Inc., Pharma Services Acquisition Corp. and Quintiles
    Transnational Corp. (incorporated herein by reference to
    Exhibit 2.02 to our Annual Report on Form 10-K for the
    fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)                                                                                                                                                                                                                                                                                                                                                            
|        | 3  | .01  |             | Restated Articles of Incorporation of Quintiles Transnational
    Corp. (incorporated herein by reference to Exhibit 3.1 to
    our Quarterly Report on Form 10-Q for the period ended
    September 30, 2003, as filed with the Securities and
    Exchange Commission on November 14, 2003)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 3  | .02  |             | Amended and Restated Bylaws of Pharma Services Acquisition
    Corp., as Adopted by Quintiles Transnational Corp. (incorporated
    herein by reference to Exhibit 3.2 to our Quarterly Report
    on Form 10-Q for the period ended September 30, 2003,
    as filed with the Securities and Exchange Commission on
    November 14, 2003)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 4  | .01  |             | Specimen Stock Certificate (incorporated herein by reference to
    Exhibit 4.1 to our Quarterly Report on Form 10-Q for
    the period ended September 30, 2003, as filed with the
    Securities and Exchange Commission on November 14, 2003)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 4  | .02  |             | Indenture, dated as of September 25, 2003, among Quintiles
    Transnational Corp., the Subsidiary Guarantors named therein and
    Wells Fargo Bank Minnesota, N.A., as Trustee (incorporated
    herein by reference to Exhibit 4.2 to our Quarterly Report
    on Form 10-Q for the period ended September 30, 2003,
    as filed with the Securities and Exchange Commission on
    November 14, 2003)                                                                                                                                                                                                                                                                                                                                                                               
|        | 4  | .03  |             | Registration Rights Agreement, dated as of September 25,
    2003, among Quintiles Transnational Corp. and Citigroup Global
    Markets Inc., as Representative of the Initial Purchasers named
    therein (incorporated herein by reference to Exhibit 4.3 to
    our Quarterly Report on Form 10-Q for the period ended
    September 30, 2003, as filed with the Securities and
    Exchange Commission on November 14, 2003)                                                                                                                                                                                                                                                                                                                                                        
|        | 4  | .04  |             | Form of Global Note (included as Exhibit A to
    Exhibit 4.02 hereto)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10 | .01  |             | Credit Agreement, dated September 25, 2003, among Quintiles
    Transnational Corp., Pharma Services Holding, Inc. and Pharma
    Services Intermediate Holding Corp., as Parent Guarantors, the
    Lenders referred to therein, Citigroup Global Markets Inc., as
    Sole Lead Arranger and Sole Bookrunner, Citicorp North America,
    Inc., as Administrative Agent, ABN AMRO Bank N.V. and Banc One
    Mezzanine Corporation, as Co-Syndication Agents and Residential
    Funding Corporation (DBA GMAC  RFC Health Capital),
    as Documentation Agent (incorporated herein by reference to
    Exhibit 10.1 to our Quarterly Report on Form 10-Q for
    the period ended September 30, 2003, as filed with the
    Securities and Exchange Commission on November 14, 2003)
|        | 10 | .02  |             | Amendment No. 1, dated June 22, 2004, to Credit
    Agreement, dated September 25, 2003, among Quintiles
    Transnational Corp., the Lenders referred to therein and
    Citicorp North America, Inc., as Administrative Agent                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10 | .03* |             | Executive Employment Agreement, dated September 25, 2003,
    among Dennis B. Gillings, Ph.D., Pharma Services Holding,
    Inc. and Quintiles Transnational Corp. (incorporated herein by
    reference to Exhibit 10.2 to our Quarterly Report on
    Form 10-Q for the period ended September 30, 2003, as
    filed with the Securities and Exchange Commission on
    November 14, 2003)                                                                                                                                                                                                                                                                                                                                                                                            



---



##### 



|        |    |      |             |                                                                                                                                                                                                                                                                                                                                                                    
|------- | -- | ---- | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      | Description
|        |    |      |            
|        | 10 | .04* |             | Executive Employment Agreement, dated June 14, 2004, among
    John D. Ratliff and Quintiles Transnational Corp. (incorporated
    herein by reference to Exhibit 10.1 to our Quarterly Report
    on Form 10-Q for the period ended June 30, 2004, as
    filed with the Securities and Exchange Commission on
    August 13, 2004)                               
|        | 10 | .05* |             | Executive Employment Agreement, dated December 3, 1998, by
    and between John S. Russell and Quintiles Transnational Corp.
    (incorporated herein by reference to Exhibit 10.10 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 1999, as filed with the Securities and
    Exchange Commission on March 30, 2000)             
|        | 10 | .06* |             | Amendment to Executive Employment Agreement, dated
    October 26, 1999, by and between John S. Russell and
    Quintiles Transnational Corp. (incorporated herein by reference
    to Exhibit 10.11 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 1999, as filed with the
    Securities and Exchange Commission on March 30, 2000)
|        | 10 | .07* |             | Amendment to Executive Employment Agreement, dated
    November 14, 2003, by and between John S. Russell and
    Quintiles Transnational Corp. (incorporated herein by reference
    to Exhibit 10.14 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)
|        | 10 | .08* |             | Letter dated November 3, 2003 to John S. Russell from
    Pharma Services Holding, Inc. re. Opportunity to Purchase
    Shares (incorporated herein by reference to Exhibit 10.15
    to our Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)                
|        | 10 | .09* |             | Letter dated November 3, 2003 to John S. Russell from
    Pharma Services Holding, Inc. re. Stock Option (incorporated
    herein by reference to Exhibit 10.16 to our Annual Report
    on Form 10-K for the fiscal year ended December 31,
    2003, as filed with the Securities and Exchange Commission on
    March 1, 2004)                                  
|        | 10 | .10* |             | Executive Employment Agreement, dated July 25, 2000, by and
    between Ron Wooten and Quintiles Transnational Corp.
    (incorporated herein by reference to Exhibit 10.17 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)                      
|        | 10 | .11* |             | Amendment to Executive Employment Agreement, dated
    November 5, 2003, by and between Ron Wooten and Quintiles
    Transnational Corp. (incorporated herein by reference to
    Exhibit 10.18 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)      
|        | 10 | .12* |             | Letter dated November 13, 2003 to Ron Wooten from Quintiles
    Transnational Corp. re. Amendment to Executive Employment
    Agreement (incorporated herein by reference to
    Exhibit 10.19 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)       
|        | 10 | .13* |             | Letter dated October 30, 2003 to Ron Wooten from Pharma
    Services Holding, Inc. re. Opportunity to Purchase Shares
    (incorporated herein by reference to Exhibit 10.20 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)                     
|        | 10 | .14* |             | Letter dated October 30, 2003 to Ron Wooten from Pharma
    Services Holding, Inc. re. Stock Option (incorporated herein by
    reference to Exhibit 10.21 to our Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003,
    as filed with the Securities and Exchange Commission on
    March 1, 2004)                                       
|        | 10 | .15* |             | Executive Employment Agreement, dated February 8, 2002, by
    and between Oppel Greeff and Quintiles Transnational Corp.
    (incorporated herein by reference to Exhibit 10.07 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)                 



---



##### 



|        |    |      |             |                                                                                                                                                                                                                                                                                                                                                                      
|------- | -- | ---- | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      | Description
|        |    |      |            
|        | 10 | .16* |             | Amendment to Executive Employment Agreement, dated
    November 17, 2003, by and between Oppel Greeff and
    Quintiles Transnational Corp. (incorporated herein by reference
    to Exhibit 10.08 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)     
|        | 10 | .17* |             | Letter dated December 5, 2003 to Oppel Greeff from
    Quintiles Transnational Corp. re. Amendment to Executive
    Employment Agreement (incorporated herein by reference to
    Exhibit 10.09 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)        
|        | 10 | .18* |             | Letter dated October 30, 2003 to Oppel Greeff from Pharma
    Services Holding, Inc. re. Opportunity to Purchase Shares
    (incorporated herein by reference to Exhibit 10.10 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)                     
|        | 10 | .19* |             | Letter dated October 30, 2003 to Oppel Greeff from Pharma
    Services Holding, Inc. re. Stock Option (incorporated herein by
    reference to Exhibit 10.11 to our Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003,
    as filed with the Securities and Exchange Commission on
    March 1, 2004)                                       
|        | 10 | .20* |             | Executive Employment Agreement, dated June 1, 2003, by and
    between Michael Mortimer and Quintiles Transnational Corp.                                                                                                                                                                                                                                            
|        | 10 | .21* |             | Amendment to Executive Employment Agreement, dated
    January 9, 2004, by and between Michael Mortimer and
    Quintiles Transnational Corp.                                                                                                                                                                                                                        
|        | 10 | .22* |             | Executive Employment Agreement, dated June 16, 1998, by and
    between James L. Bierman and Quintiles Transnational Corp.
    (incorporated herein by reference to Exhibit 10.09 to our
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 1999, as filed with the Securities and
    Exchange Commission on March 30, 2000)                 
|        | 10 | .23* |             | Amendment to Executive Employment Agreement, dated
    March 31, 2003, by and between James L. Bierman and
    Quintiles Transnational Corp. (incorporated herein by reference
    to Exhibit 10.18 to our Annual Report on Form 10-K/ A
    for the fiscal year ended December 31, 2002, as filed with
    the Securities and Exchange Commission on April 29, 2003)
|        | 10 | .24* |             | Letter Agreement, dated January 21, 2004, to James L.
    Bierman from Quintiles Transnational Corp. re. Remaining
    Employment (incorporated herein by reference to
    Exhibit 10.06 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 2003, as filed with the
    Securities and Exchange Commission on March 1, 2004)               
|        | 10 | .25* |             | Letter dated December 6, 2004 to John D. Ratliff from
    Quintiles Transnational Corp. re. Purchase of Pharma Shares                                                                                                                                                                                                                                                
|        | 10 | .26* |             | Letter dated February 22, 2005 to Robert A. Ingram from
    Quintiles Transnational Corp. re. Purchase of Pharma Shares                                                                                                                                                                                                                                              
|        | 10 | .27* |             | Letter dated February 22, 2005 to John D. Ratliff from
    Quintiles Transnational Corp. re. Purchase of Pharma Shares                                                                                                                                                                                                                                               
|        | 10 | .28* |             | Letter dated February 22, 2005 to Michael Mortimer from
    Quintiles Transnational Corp. re. Purchase of Pharma Shares                                                                                                                                                                                                                                              
|        | 10 | .29* |             | Quintiles Transnational Corp. Elective Deferred Compensation
    Plan, as amended and restated (incorporated herein by reference
    to Exhibit 10.14 to our Annual Report on Form 10-K for
    the fiscal year ended December 31, 1999, as filed with the
    Securities and Exchange Commission on March 30, 2000)                                                 
|        | 10 | .30* |             | Quintiles Transnational Corp. Elective Deferred Compensation
    Plan (Amended and Restated for Deferrals On and After
    January 1, 2005)                                                                                                                                                                                                                          
|        | 10 | .31* |             | Pharma Services Holding, Inc. Stock Incentive Plan (incorporated
    herein by reference to Exhibit 10.23 to our Annual Report
    on Form 10-K for the fiscal year ended December 31,
    2003, as filed with the Securities and Exchange Commission on
    March 1, 2004)                                                                                          



---



##### 



|        |    |      |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | -- | ---- | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      | Description
|        |    |      |            
|        | 10 | .32* |             | Form of Stock Option Agreement under the Pharma Services
    Holding, Inc. Stock Incentive Plan (incorporated herein by
    reference to Exhibit 10.2 to our Quarterly Report on
    Form 10-Q for the period ended September 30, 2004, as
    filed with the Securities and Exchange Commission on
    November 12, 2004)                                                                                                                                
|        | 10 | .33* |             | Form of Restricted Stock Purchase Agreement under the Pharma
    Services Holding, Inc. Stock Incentive Plan (incorporated herein
    by reference to Exhibit 10.3 to our Quarterly Report on
    Form 10-Q for the period ended September 30, 2004, as
    filed with the Securities and Exchange Commission on
    November 12, 2004)                                                                                                                   
|        | 10 | .34* |             | Summary of Material Terms of PharmaBio Development Bonus Plan
    (incorporated herein by reference to Exhibit 10.4 to our
    Quarterly Report on Form 10-Q for the period ended
    September 30, 2004, as filed with the Securities and
    Exchange Commission on November 12, 2004)                                                                                                                                                                  
|        | 10 | .35* |             | Quintiles Transnational Corp. Performance Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .36  |             | Agreement and Plan of Merger, dated as of January 22, 2000,
    among Quintiles Transnational Corp., Healtheon/ WebMD
    Corporation, Pine Merger Corp., Envoy Corporation and QFinance,
    Inc. (incorporated herein by reference to Exhibit 2.01 to
    our Current Report on Form 8-K, dated January 25,
    2000, as filed with the Securities and Exchange Commission on
    January 25, 2000)                                                     
|        | 10 | .37  |             | Settlement Agreement, dated October 12, 2001, by and among
    Quintiles Transnational Corp., WebMD Corporation and Envoy
    Corporation (incorporated herein by reference to
    Exhibit 10.01 to our Quarterly Report on Form 10-Q for
    the period ended September 30, 2001, as filed with the
    Securities and Exchange Commission on November 1, 2001)                                                                                          
|        | 10 | .38  |             | Agreement of Lease, dated April 24, 2003, entered into
    between Shibbolet (Proprietary) Limited and Quintiles
    Clindepharm (Proprietary) Limited (incorporated herein by
    reference to Exhibit 10.28 to our Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003,
    as filed with the Securities and Exchange Commission on
    March 1, 2004)                                                                           
|        | 10 | .39  |             | Agreement of Lease, dated December 13, 1999, entered into
    between Shibbolet (Proprietary) Limited and Quintiles
    Clindepharm (Proprietary) Limited (incorporated herein by
    reference to Exhibit 10.29 to our Annual Report on
    Form 10-K for the fiscal year ended December 31, 2003,
    as filed with the Securities and Exchange Commission on
    March 1, 2004)                                                                        
|        | 10 | .40  |             | Memorandum of Agreement of Lease, dated March 13, 2000,
    between Rosenpark Eiendomme CC and Quintiles Clindepharm (PTY)
    Limited (incorporated herein by reference to Exhibit 10.30
    to our Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003, as filed with the Securities and
    Exchange Commission on March 1, 2004)                                                                                               
|        | 10 | .41  |             | Asset Purchase Agreement, dated June 8, 2004, by and among
    Quintiles Transnational Corp., Quintiles Bermuda Ltd., Quintiles
    Ireland Limited, Bioglan Pharmaceuticals Company and Bradley
    Pharmaceuticals, Inc., as amended August 10, 2004
    (incorporated herein by reference to Exhibit 2.01 to our
    Current Report on Form 8-K dated August 10, 2004, as
    filed with the Securities and Exchange Commission on
    August 20, 2004)
|        | 21 | .01  |             | Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 24 | .01  |             | Power of Attorney (included on the signature pages hereto)                                                                                                                                                                                                                                                                                                                                                                                                
|        | 31 | .01  |             | Certification Pursuant to Rule 13a-14/15d-14, As Adopted
    Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                    
|        | 31 | .02  |             | Certification Pursuant to Rule 13a-14/15d-14, As Adopted
    Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                    
|        | 32 | .01  |             | Certification Pursuant to 18 U.S.C. Section 1350, As
    Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act
    of 2002                                                                                                                                                                                                                                                                                                                            
|        | 32 | .02  |             | Certification Pursuant to 18 U.S.C. Section 1350, As
    Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act
    of 2002                                                                                                                                                                                                                                                                                                                            






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|* | Executive compensation plans and arrangements