UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-Q





[X]   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities


Exchange Act of 1934





For the quarterly period ended June 30, 2009





or





[_]   Transition Report Pursuant to Section 13 or 15(d) of the Securities


Exchange Act of 1934





For the Transition Period From ___________ to ___________





Commission file number 0-30318





INVENTIV HEALTH, INC.


(Exact name of registrant as specified in its charter)





Delaware                                             52-2181734


(State or other jurisdiction                             (IRS Employer


of incorporation or organization)                          Identification No.)





500 Atrium Drive (formerly 200 Cottontail Lane)


Somerset, New Jersey 08873


(Address of principal executive office and zip code)





(800) 416-0555


(Registrant's telephone number, including area code)





Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]  No [_]





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):





Large accelerated filer [X]                                                                Accelerated
filer [ ]                                           Non-accelerated filer [_]





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes [_] No [X]





Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.





As of July 31, 2009, there were 33,582,870 outstanding shares of the registrant's common stock.











INVENTIV HEALTH, INC.


INDEX TO QUARTERLY REPORT ON


FORM 10-Q





PART I. FINANCIAL INFORMATIONITEM 1. Financial StatementsCondensed Consolidated Balance Sheets as of June 30, 2009 (unaudited)and December 31, 2008Condensed Consolidated Income Statements for the three and six-monthsended June 30, 2009 and 2008 (unaudited)Condensed Consolidated Statements of Cash Flows for the six-monthsended June 30, 2009 and 2008 (unaudited)Notes to unaudited Condensed Consolidated Financial StatementsITEM 2. Management's Discussion and Analysis of Financial Condition andResults of OperationsITEM 3. Quantitative and Qualitative Disclosures About Market RiskITEM 4. Controls and ProceduresPART II. OTHER INFORMATIONITEM 1. Legal ProceedingsITEM 1A. Risk FactorsITEM 4. Submission of Matters to a Vote of Security HoldersITEM 5. Other InformationITEM 6. ExhibitsSIGNATURESEXHIBITS








FORWARD-LOOKING STATEMENTS





This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements are only predictions and provide our current expectations or forecasts of future events and financial performance
and may be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “will” or “should” or, in each case, their negative, or other variations or comparable terminology, though the absence of these words does not necessarily mean that a statement is not forward-looking.





We intend that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking
statements. Forward-looking statements include all matters that are not historical facts and include, without limitation statements concerning:




- our business strategy, outlook, objectives, plans, intentions and goals
- our estimates regarding our liquidity, capital expenditures and sources of both, and our ability to fund our operations and planned capital expenditures for the foreseeable future;
- our belief that our growth and success will depend on our ability to continue to enhance the quality of our existing services, introduce new services on a timely and cost-effective basis, integrate new services with existing services, increase penetration with existing customers, recruit, motivate and retain qualified personnel and economically train
existing sales representatives and recruit new sales representatives;
- our expectations regarding our pursuit of additional debt or equity sources to finance our internal growth initiatives or acquisitions;
- our estimates regarding our future earnout obligations from completed acquisitions;
- our belief that there are ample opportunities for cross-selling to our existing clients;
- our anticipation that it will be necessary to continue to select, invest in and develop new and enhanced technology and end-user databases on a timely basis in the future in order to maintain our competitiveness;
- our expectations regarding the impact of our acquisitions, joint ventures and partnerships;
- our expectations regarding the impact of the adoption of certain accounting standards;
- our expectations regarding the potential impact of pending litigation; and
- our expectations regarding the liquidation of the Columbia Strategic Cash Portfolio.




These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in
any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:




- the potential impact of a recessionary environment on our customers and business;
- our ability to sufficiently increase our revenues and maintain or decrease expenses and cash capital expenditures to permit us to fund our operations;
- our ability to continue to comply with the covenants and terms of our credit facility and to access sufficient capital under our credit agreement or from other sources of debt or equity financing to fund our operations;
- the impact of any default by any of our credit providers or swap counterparties;
- our ability to accurately forecast costs to be incurred in providing services under fixed price contracts, including with respect to the leasing costs for our fleet vehicles and related fuel costs;
- our ability to accurately forecast insurance claims within our self-insured programs;
- our ability to accurately forecast the performance of business units to which our potential earnout obligations relate and, therefore, to accurately estimate the amount of the earnout obligations we will incur;
- the potential impact of pricing pressures on pharmaceutical manufacturers from future health care reform initiatives or from changes in the reimbursement policies of third party payers;
- potential disruptions and switching costs related to vendors relationships;
- the possibility that customer agreements will be terminated or not renewed;
- our ability to grow our existing client relationships, obtain new clients and cross-sell our services;
- our ability to successfully operate new lines of business;
- our ability to manage our infrastructure and resources to support our growth;
- our ability to successfully identify new businesses to acquire, conclude acquisition negotiations and integrate the acquired businesses into our operations;
- any disruptions, impairments, or malfunctions affecting software as well as excessive costs or delays that may adversely impact our continued investment in and development of software.
- the potential impact of government regulation on us and on our clients base;
- our ability to comply with all applicable laws as well as our ability to successfully implement from a timing and cost perspective any changes in applicable laws;
- our ability to recruit, motivate and retain qualified personnel, including sales representatives and clinical staff;
- our ability to maintain technological advantages in a variety of functional areas, including sales force automation, electronic claims surveillance and patient compliance
- the actual impact of the adoption of certain accounting standards;
- the actual outcome of pending litigation;
- any potential impairment of intangible assets;
- consolidation in the pharmaceutical industry;
- changes in trends in the pharmaceutical industry or in pharmaceutical outsourcing; and
- our ability to determine the actual time at which the liquidation of our Columbia Strategic Cash Portfolio will be completed or the total losses that we will actually realize from that investment vehicle.




Investors should carefully consider these risk factors and the matters discussed under Item 1A, Risk Factors, of our Form 10-K for the year ended December 31, 2008.





Except to the extent required by applicable laws or rules, we do not undertake to update any forward-looking statements or to publicly announce revisions to any of the forward-looking statements, whether as a result of new information, future events or otherwise.














PART I. FINANCIAL INFORMATION


ITEM 1.                      Financial Statements


INVENTIV HEALTH, INC.


CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands, except share and per share amounts)


June 30,
December 31,2009 (unaudited)
2008
(Revised)ASSETSCurrent assets:Cash and equivalents
$94,962
$90,463Restricted cash and marketable securities
6,373
8,069Accounts receivable, net of allowances for doubtful accounts of $4,804 and $4,787 atJune 30, 2009 and December 31, 2008, respectively
126,791
158,689Unbilled services
106,544
86,390Prepaid expenses and other current assets
12,937
16,880Current tax assets
595
595Current deferred tax assets
10,955
9,198Total current assets
359,157
370,284Property and equipment, net
61,847
63,382Equity investments
1,401
1,423Goodwill
215,674
215,526Other intangibles, net
220,066
226,509Non-current deferred tax assets
67,905
75,172Deposits and other assets
21,998
20,820Total assets
$948,048
$973,116LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities:Current portion of capital lease obligations
$11,942
$13,417Current portion of long-term debt
3,975
4,279Accrued payroll, accounts payable and accrued expenses
85,493
129,009Current income tax liabilities
649
2,736Client advances and unearned revenue
59,522
57,223Total current liabilities
161,581
206,664Capital lease obligations, net of current portion
19,580
25,010Long-term debt
320,111
321,828Non-current income tax liabilities
5,692
5,636Other non-current liabilities
42,879
46,334Total liabilities
549,843
605,472Equity:inVentiv Health Inc. stockholders’ equity:Preferred stock, $.001 par value, 10,000,000 shares authorized, none issued and outstanding atJune 30, 2009 and December 31, 2008, respectively
--
--Common stock, $.001 par value, 50,000,000 shares authorized; 33,572,052 and 33,272,543shares issued and outstanding at June 30, 2009 and December 31, 2008, respectively
34
33Additional paid-in-capital
401,260
394,560Accumulated other comprehensive losses
(15,817)
(20,869)Accumulated earnings (deficit)
12,991
(6,210)Total inVentiv Health Inc. stockholders’ equity
398,468
367,514Noncontrolling interest
(263)
130Total equity
398,205
367,644Total liabilities and equity
$948,048
$973,116





The accompanying notes are an integral part of these unaudited condensed consolidated financial statements





INVENTIV HEALTH, INC.


CONDENSED CONSOLIDATED INCOME STATEMENTS


(in thousands, except per share amounts)


(unaudited)


For the Three-Months Ended

For the Six-months EndedJune 30,

June 30,2009
2008
(Revised)

2009
2008
(Revised)Net revenues
$235,499
$236,003

$456,483
$460,581Reimbursable out-of-pockets
33,542
49,039

70,210
86,782Total revenues
269,041
285,042

$526,693
547,363Operating expenses:Cost of services
148,397
144,786

292,883
287,575Reimbursed out-of-pocket expenses
33,879
52,950

70,569
90,434Selling, general and administrative expenses
61,917
59,278

119,071
121,484Total operating expenses
244,193
257,014

482,523
499,493Operating income
24,848
28,028

44,170
47,870Interest expense
(5,773)
(6,309)

(11,547)
(12,691)Interest income
50
417

115
1,247Income from continuing operations before income tax provision and (loss) income from equity investments
19,125
22,136

32,738
36,426Income tax provision
(7,768)
(8,751)

(13,540)
(14,393)Income from continuing operations before (loss) income from equity investments
11,357
13,385

19,198
22,033(Loss) income from equity investments
(11)
6

8
(35)Income from continuing operations
11,346
13,391

19,206
21,998Income from discontinued operations:Gains on disposals of discontinued operations, net of taxes
--
94

--
107Income from discontinued operations
--
94

--
107Net income
11,346
13,485

19,206
22,105Less:  Net income attributable to the noncontrolling interest
(54)
(316)

(5)
(892)Net income attributable to inVentiv Health Inc.
$11,292
$13,169

$19,201
$21,213Earnings per share (see Note 7):Continuing operations attributable to inVentiv Health Inc.:Basic
$0.34
$0.40

$0.57
$0.64Diluted
$0.34
$0.39

$0.57
$0.63Discontinued operations attributable to inVentiv Health Inc.:Basic
$0.00
$0.00

$0.00
$0.01Diluted
$0.00
$0.00

$0.00
$0.01Net income attributable to inVentiv Health Inc.:Basic
$0.34
$0.40

$0.57
$0.65Diluted
$0.34
$0.39

$0.57
$0.64Weighted average common shares outstanding:Basic
33,471
33,066

33,411
32,844Diluted
33,657
33,519

33,567
33,349





The accompanying notes are an integral part of these unaudited condensed consolidated financial statements





INVENTIV HEALTH, INC.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(in thousands)


(unaudited)


For the Six-Months EndedJune 30,2009
2008
(Revised)Cash flows from operating activities:Net income
$19,206
$22,105Income from discontinued operations
--
(107)Income from continuing operations
19,206
21,998Adjustments to reconcile net income  to net cash  provided by operating activities:Depreciation
10,327
9,476Amortization
6,267
7,433Tradename writeoff
117
--(Income) loss from equity investments
(8)
35Adjustment on derivative financial instrument
--
660Deferred taxes
5,510
4,816Adjustment on marketable securities
(1,682)
455Stock compensation expense
5,070
5,741Tax benefit from stock option exercises and vesting of restricted shares
907
3,015Changes in assets and liabilities, net of effects from discontinued operations:Accounts receivable, net
31,898
23,918Unbilled services
(20,154)
(23,621)Prepaid expenses and other current assets
3,943
5,322Accrued payroll, accounts payable and accrued expenses
(2,242)
(4,971)Net tax liabilities
(3,969)
(5,528)Client advances and unearned revenue
2,299
(7,156)Excess tax benefits from stock based compensation
1,033
(669)Other
(734)
2,481Net cash provided by continuing operations
57,788
43,405Net cash used in discontinued operations
(613)
(49)Net cash provided by operating activities
57,175
43,356Cash flows from investing activities:Restricted cash balances and marketable securities
5,826
21,605Investment in cash value of life insurance policies
(2,722)
(1,681)Cash paid for acquisitions, net of cash acquired
(532)
(3,181)Acquisition earn-out payments
(38,264)
(16,813)Equity investments
30
(68)Purchases of property and equipment
(9,770)
(8,973)Proceeds from manufacturers rebates on leased vehicles
453
856Net cash used in continuing operations
(44,979)
(8,255)Net cash provided by discontinued operations
613
156Net cash used in investing activities
(44,366)
(8,099)Cash flows from financing activities:Repayments on long-term debt
(1,073)
(1,650)Borrowings under line of credit
(948)
--Repayments on capital lease obligations
(6,371)
(6,935)Withholding shares for taxes
(523)
(1,047)Proceeds from exercise of stock options
850
2,130Excess tax benefits from stock-based compensation
(1,033)
669Distributions to noncontrolling interests in affiliated partnership
(398)
(547)Net cash used in financing activities
(9,496)
(7,380)Effect of exchange rate changes
1,186
74Net change in cash and equivalents
4,499
27,951Cash and equivalents, beginning of period
90,463
50,973Cash and equivalents, end of period
$94,962
$78,924Supplemental disclosures of cash flow information:Cash paid for interest
$11,271
$11,823Cash paid for income taxes
$12,043
$12,627Supplemental disclosures of non-cash activities:Vehicles acquired through capital lease agreements
$4,988
$12,071Stock issuance related to acquisitions
$2,335
$17,044





The accompanying notes are an integral part of these unaudited condensed consolidated financial statements


INVENTIV HEALTH, INC.
 
 NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





1.          Organization and Business:





inVentiv Health Inc. (together with its subsidiaries, “inVentiv”, or the “Company”) is a leading provider of value-added services to the pharmaceutical and life sciences industries.  The Company supports a broad range of clinical development, communications and commercialization activities that are critical
to its customers' ability to complete the development of new drug products and medical devices and successfully bring them to market.  The Company’s goal is to assist its customers in meeting their objectives in each of its operational areas by providing our services on a flexible and cost-effective basis that permits the Company to provide discrete service offerings in focused areas as well as integrated multidisciplinary solutions.  The Company provides services to over 350 client
organizations, including all top 20 global pharmaceutical companies and numerous emerging and specialty biotechnology companies.





The Company’s service offerings reflect the changing needs of its clients as their products move through the late-stage development and regulatory approval processes and into product launch.  The Company has established expertise and leadership in providing the services its clients require at each of these stages of product
development and commercialization and seek to address their outsourced service needs on a comprehensive basis throughout the product life cycle through both standalone and integrated solutions.





Business Segments





The Company currently serves its clients primarily through four business segments, which correspond to its reporting segments for 2009:




- inVentiv Clinical, which provides professional resourcing services to the pharmaceutical, biotech and device companies.  Professional resourcing services include providing clinical research professionals in support of clients’ research efforts, including permanent placement,
clinical staffing, and strategic resource teams.  In addition, inVentiv Clinical provides its clinical research clients with outsourced functional services in various areas, including clinical operations, medical affairs and biometrics/data management. inVentiv Clinical consists of the Smith Hanley group of companies (which includes Smith Hanley Associates (“SHA”), Smith Hanley Consulting Group (“SHCG”) and MedFocus), HHI Clinical & Statistical Research Services (“HHI”),
and Synergos;
- inVentiv Communications, which provides services related to pharmaceutical advertising, branding, public relations, interactive communications and physician education.  This segment includes inVentiv Communications, Inc., Jeffrey Simbrow Associates (“JSAI”), Ignite Health
and Incendia Health Studios (collectively, “Ignite”), Chamberlain Communications Group, Inc. (“Chamberlain”), Addison Whitney, Angela Liedler GmbH (“Liedler”) and Chandler Chicco Agency (“CCA”);
- inVentiv Commercial, which consists of our outsourced sales and marketing teams, planning and analytics services, sample accountability services, marketing support services, professional development and training, and recruitment of sales representatives in the commercial services area.  This
segment includes Advance Insights, formerly known as inVentiv Strategy & Analytics, and inVentiv Selling Solutions.  inVentiv Selling Solutions includes Promotech Logistics Solutions LLC ("PLS"), acquired in December 2008; and
- inVentiv Patient Outcomes, which provides services related to patient pharmaceutical compliance programs, patient support programs, clinical educator teams, medical cost containment and consulting solutions and patient relationship marketing.  This segment includes Adheris, Inc.
(“Adheris”), The Franklin Group (“Franklin”), The Therapeutics Institute (“TTI”), AWAC and Patient Marketing Group, LLC. (“PMG”) (acquired in August 2008).




The Company’s services are designed to develop, execute and monitor strategic and tactical sales and marketing plans and programs for the promotion of pharmaceutical, biotechnology and other life sciences products.  For third party administrators and other payors, the Company provides a variety of services that enhance
savings and improve patient outcomes, including opportunities to address billing errors, additional discounts and treatment protocols for patients.





2.           Basis of Presentation





The accompanying unaudited condensed consolidated financial statements present the condensed consolidated balance sheets, condensed consolidated results of operations and condensed consolidated cash flows of the Company and its subsidiaries (the "condensed consolidated financial statements"). These condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) related to interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted.  The Company believes that the disclosures made herein are adequate such
that the information presented is not misleading. These condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary to fairly present the Company's condensed consolidated balance sheets as of June 30, 2009 and December 31, 2008, the condensed consolidated income statements of the Company for the three and six months ended June 30, 2009 and 2008 and the condensed consolidated cash flows for the six-months
ended June 30, 2009 and 2008.  Operating results for the three and six months ended June 30, 2009 are not indicative of the results that may be expected for the year ending December 31, 2009. Certain amounts presented for prior periods have been reclassified to conform to the current year presentation.  See Note 3 for the retrospective application of SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS
160”).





These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 as filed with the Securities and Exchange Commission on February 27, 2009.





The consolidated financial statements include the accounts of inVentiv Health, Inc., its wholly owned subsidiaries and its 60% owned subsidiary, Taylor Search Partners (“TSP”), which was acquired in conjunction with the acquisition of inVentiv Communications, Inc.  Our continuing operations consist primarily of four
business segments: inVentiv Clinical, inVentiv Communications, inVentiv Commercial and inVentiv Patient Outcomes.  All significant intercompany transactions have been eliminated in consolidation.  In December 2007, the Company increased its investment interest from 44% to 85% in Angela Liedler GmbH (“Liedler”), a service provider of communication and marketing tools for technical, medical and pharmaceutical products, located in Germany.  The Company accounted for Liedler
as an equity investment until the date of the acquisition of the additional interest, and then consolidated its results thereafter.





As a result of the acquisition of inVentiv Communications, Inc., the Company has a 15% ownership interest in Heart Reklambyra AB (“Heart”), an advertising agency located in Sweden, which is accounted for by using the equity method of accounting.





3.           Recently Issued Accounting Standards:







In June 2009, the FASB issued SFAS 168, “The FASB Accounting Standards Codification and the Hierachy of Generally Accepted Accounting Principles”.SFAS 168 establishes the FASB Accounting Standards Codification (“the codification”) as the single official
source of authoritative accounting principles (other than guidance issued by the SEC) and supersedes and effectively replaces the framework of the GAAP hierarchy in SFAS 162.  All other literature that is not part of the codification, such as FASB Concepts Statements, will be considered non-authoritative.  SFAS 168 is effective for interim and annual periods ending on or after September 15, 2009.  The Company will apply SFAS 168, as required, beginning with the period of its effective
date.  The adoption of the codification will not have a material impact on the Company’s condensed consolidated financial position, results of operations or cash flows.




In June 2009, the FASB issued SFAS 167, “Amendments to FASB Interpretation No. 46(R)”,which amends the consolidation guidance applicable to variable interest entities.  SFAS 167 requires ongoing assessments of whether an enterprise is the primary beneficiary of
a variable interest entity and enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in variable interest entities.  SFAS 167 is effective for annual reporting periods after November 15, 2009.  The Company does not expect SFAS 167 to have a material effect on its condensed consolidated financial statements.




In June 2009, the FASB issued SFAS 166, “Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140”,which amends the derecognition guidance in FASB Statement No. 140 and eliminates the exemption from consolidation for qualifying special-purpose
entities.  SFAS 166 is effective as of the beginning of the first annual reporting period that begins after November 15, 2009.  The Company does not expect SFAS 166 to have a material effect on its condensed consolidated financial statements.




In June 2009, the FASB issued SFAS 165, “Subsequent Events”,which established principles and requirements for subsequent events.  SFAS 165 details the period after the balance sheet date which the Company should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, the circumstances under which the Company should recognize events or transactions occurring after the balance sheet date in its financial statements and the required disclosures for such events.  SFAS 165 is effective for interim and annual periods ending after June 15, 2009.  The implementation of SFAS 165 did not have a material effect on the Company’s condensed consolidated financial statements.  The Company
adopted SFAS 165, effective June 30, 2009, as required, and has evaluated all subsequent events through August 7, 2009 (the date the Company’s financial statements are issued).




In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”,which provides additional guidance for estimating
fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have decreased significantly. FSP FAS 157-4 also provides guidance on identifying circumstances that indicate a transaction is not orderly. The provisions of FSP FAS 157-4 are effective for the Company’s interim period ending on June 30, 2009. The implementation of FSP FAS 157-4 did not have a material effect on the Company’s condensed consolidated financial statements.




In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”,which requires disclosures about fair value of financial instruments in interim reporting periods of publicly traded companies that were previously
only required to be disclosed in annual financial statements. The provisions of FSP FAS 107-1 and APB 28-1 are effective for the Company’s interim period ending on June 30, 2009. The implementation of FSP 107-1 and APB 28-1 did not have a material effect on the Company’s condensed consolidated financial statements.




In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments”,which provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on
securities. The provisions of FSP FAS 115-2 and FAS 124-2 are effective for the Company’s interim period ending on June 30, 2009.  The implementation of FSP FAS 115-2 and FAS 124-2 did not have a material effect on the Company’s condensed consolidated financial statements.


In October 2008, the FASB issued Staff Position No. FSP FAS 157-3 “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (FSP FAS 157-3) which amends FAS 157 to include guidance on how to determine the fair value of a financial asset in an inactive market and which is effective
immediately on issuance, including prior periods for which financial statements have not been issued.  The implementation of FSP FAS 157-3 did not have a material impact on the Company’s financial position and results of operations.







In March 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133”, which requires additional disclosures regarding a company’s derivative instruments and hedging activities
by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also requires disclosure of derivative features that are credit risk–related as well as cross-referencing within the notes to the financial statements to enable financial statement users to locate important information about derivative instruments, financial performance, and cash flows. SFAS 161 is effective for fiscal years beginning after November 15, 2008. The Company adopted SFAS 161,
effective January 1, 2009, as required.







In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS 141(R)”), which addresses the recognition and accounting for identifiable assets acquired, liabilities assumed, and noncontrolling interests in business combinations. SFAS 141(R) also establishes expanded disclosure requirements
for business combinations. SFAS 141(R) is  effective January 1, 2009, being applied prospectively for acquisitions after this date.  Since the Company has not had any acquisitions that are subject to the provisions of SFAS 141R, we continue to evaluate the impact of this standard on our condensed consolidated financial statements; however, this will be mainly dependent on the timing, nature and extent of our acquisitions consummated after January 1, 2009.  The Company adopted SFAS
141(R), effective January 1, 2009, as required.





In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS 160”), which addresses the accounting and reporting framework for minority interests by a parent company.  SFAS 160 also addresses disclosure requirements
to distinguish between interests of the parent and interests of the noncontrolling owners of a subsidiary.  The Company adopted the provisions of SFAS 160, effective January 1, 2009, as required.  As a result of the adoption, the Company has reported noncontrolling interest (previously minority interest) as a component of equity in the Condensed Consolidated Balance Sheets and the net income or loss attributable to noncontrolling interests has been separately identified in the Condensed Consolidated
Income Statements.  The prior periods presented have also been reclassified to conform to the current classification required by SFAS 160.





4.           Acquisitions:





Acquisitions are accounted for using purchase accounting, including SFAS No. 141, Business Combinations, (“SFAS No. 141”) and the financial results of the acquired businesses are included in the Company’s financial statements from their acquisitions dates.  If
a business is acquired subsequent to a reporting period, but prior to the issuance of the Company’s financial statements, it is disclosed in the notes to the consolidated financial statements.  Earnout payments from acquisitions are generally accrued at the end of an earnout period in conjunction with the preparation of the Company’s quarterly financial statements when the acquired company’s results are reviewed, as more fully described below.  The terms of the acquisition
agreements generally include multiple earnout periods or a multi-year earnout period.  Pro forma financial information was not required to be disclosed under the Securities and Exchange Commission’s Regulation S-X for the 2007 and 2008 acquisitions noted below because none of the specific thresholds were met as they were not material to the consolidated operations of the Company at the time of acquisition.





The following acquisitions were consummated during 2008:





PLS – In December 2008, the Company completed the acquisition of the net assets of PLS for approximately $7.2 million in cash, including certain post-closing adjustments and direct acquisition costs.  There are no earnout provisions related to this acquisition.  PLS
is headquartered in New Jersey and provides non-personal promotion services, similar to our existing Promotech group.  PLS’ financial results have been reflected in the inVentiv Commercial segment since the date of its acquisition.





PMG - In August 2008, the Company completed the acquisition of the net assets of PMG for approximately $15.2 million in cash, including certain post-closing adjustments and direct acquisition costs.  The Company will be obligated to make certain earnout payments, which may
be material, contingent on PMG’s performance measurements during 2008 through 2009.  PMG is headquartered in New Jersey and is a leading provider of patient relationship marketing services.  PMG’s financial results have been reflected in the inVentiv Patient Outcomes segment since the date of its acquisition.





The following acquisitions consummated prior to 2008 still have earnouts outstanding for future periods:





Acquisition
Acquisition Date
Segment
Unexpired Earnout PeriodCCA
July 2007
Communications
July 2007- June 2010(1)AWAC
July 2007
Patient Outcomes
July 2007- June 2010Addison Whitney
June 2007
Communications
July 2007- June 2010Ignite
March 2007
Communications
April 2007- March 2010(2)Chamberlain
March 2007
Communications
January 2007-December 2009





(1)  Under certain circumstances a portion of the earnout amount will be deferred and become payable based on the financial results of the CCA for the period July 2010- June 2011.


(2)  If the earnout payment for such period exceeds a specified amount, the excess will be deferred and become payable based on the financial results of Ignite for the period April 2010- March 2011.








5.           Restricted Cash and Marketable Securities:





As of June 30, 2009 and December 31, 2008, there were approximately $1.4 million and $1.3 million of restricted cash, respectively, of which $0.4 million relates to outstanding letters of credit, to support the security deposits relating to the New York, Washington D.C, California and London
offices, which are reflected in the inVentiv Communications segment.  The beneficiaries have not drawn on the $0.4 million letters of credit.  As this cash has been pledged as collateral, it is restricted from use for general purposes and has been classified in restricted cash and marketable securities at June 30, 2009 and December 31, 2008.





The Company receives cash advances from its clients as funding for specific projects and engagements. These funds are deposited into segregated bank accounts and used solely for purposes relating to the designated projects. Although these funds are not held subject to formal escrow agreements,
the Company considers these funds to be restricted and has classified these balances accordingly. Cash held in such segregated bank accounts totaled approximately $0.1 million held in escrow on behalf of clients and was included in restricted cash and marketable securities at June 30, 2009 and December 31, 2008.





As of June 30, 2009 and December 31, 2008, the Company had $6.5 million and $10.0 million, respectively, invested in the Columbia Strategic Cash Portfolio (“CSCP”).  Based on an update provided by CSCP for June 30, 2009, the Company has recorded $1.7 million of the $6.5
million balance as long-term.  The $1.7 million is classified as deposits and other assets on the June 30, 2009 Condensed Consolidated Balance Sheet, which is expected to be distributed after June 30, 2010.  As the majority of the Company’s recorded balances in the CSCP continue to be short-term in nature, $4.8 million and $6.3 million, respectively, are classified as restricted cash and marketable securities on the June 30, 2009 and December 31, 2008 condensed consolidated balance sheets.  During
the periods ended June 30, 2009 and December 31, 2008, the Company recorded no impairment and $2.6 million, respectively, relating to impairments of the Company's investment in the CSCP, which held certain asset-backed securities.  Subsequent to June 30, 2009, the value of the CSCP may materially change depending on market conditions.  Consistent with the Company's investment policy guidelines, the majority of CSCP investments had AAA/Aaa credit ratings at the time of purchase.





The CSCP maintained a net asset value of $1 per unit until December 2007, after which the net asset value per unit fluctuated, and will continue to fluctuate, based on changes in market values of the securities held by the portfolio.  The process of liquidating CSCP’s portfolio
was initiated in December 2007 and is anticipated to continue through 2010.  Future impairment charges may result depending on market conditions until the fund is fully liquidated. The $3.4 million cumulative impairment charge through June 30, 2009 does not have a material impact on the company's liquidity or financial flexibility.




On February 27, 2008, we entered into an unsecured credit facility (the “Blue Ridge facility”) with Blue Ridge Investments, L.L.C., an affiliate of Bank of America, N.A., to allow the Company to separately borrow up to the current balance remaining in the CSCP.   We have not borrowed any funds under this credit
facility.  The Blue Ridge facility provides for multiple drawdowns from time to time until maturity, which shall be the earlier of the day following the redemption of all of our shares of the CSCP and July 1, 2010.  The outstanding balance under the facility may not (subject to limited exceptions) exceed our account value in the CSCP, and distributions from the CSCP must be applied to reduce the outstanding principal balance under the facility.  Amounts borrowed bear interest at
the one-month LIBOR rate plus 0.35% per annum, fluctuating daily.




6.           Employee Stock Compensation:




The Company follows SFAS No. 123 (“SFAS 123R”), Share-Based Payment, which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period.





Stock-based compensation expense was $2.5 million, of which $0.5 million was recorded in cost of services and $2.0 million recorded as Selling, General and Administrative expenses (“SG&A”) for the three months ended June 30, 2009 and $3.2 million, of which $0.8 million was recorded in cost of services and $2.4 million recorded
as SG&A for the three months ended June 30, 2008. For the six-months ended June 30, 2009, stock-based compensation expense was $5.1 million, of which $0.7 million was recorded in cost of services and $4.4 million recorded as SG&A; for the six-months ended June 30, 2008, stock-based compensation expense was $5.7 million, of which $1.3 million was recorded in cost of services and $4.4 million was recorded as SG&A.





Stock-based compensation expense caused income before income tax provision and income from equity investments to decrease by $2.5 million and $3.2 million for the three months ended June 30, 2009 and 2008, respectively, caused net income to decrease by $1.5 million and $1.9 million for the three months ended June 30, 2009 and 2008, respectively,
and caused basic and diluted earnings per share to decrease by $0.04 per share and $0.06 per share for the three months ended June 30, 2009 and 2008, respectively.  During the six months ended June 30, 2009 and June 30, 2008 the stock-based compensation expense caused income before income tax provision and income from equity investments to decrease by $5.1 million and $5.7 million, respectively, caused net income to decrease by $3.0 million and $3.4 million for the six months ended June 30, 2009 and
2008, respectively, and caused basic and diluted earnings per share to decrease by $0.09 per share and $0.10 per share for the six months ended June 30, 2009 and 2008, respectively.





Cash used in financing activities increased by $1.0 million and decreased by $0.7 million for the six-months ended June 30, 2009 and 2008, respectively, related to excess tax benefits from the exercise of stock-based awards.





Assumptions





The fair value of each option grant is estimated on the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions:





Three Months Ended
June 30,
Six Months Ended
June 30,2009
2008
2009
2008Expected life of option
5.5-6 yrs
5.5-6 yrs
5.5-6 yrs
5.5-6 yrsRisk-free interest rate
--(1)
3.49%
1.36%
3.06%Expected volatility
50%
37%
47%
37%Expected dividend yield
0.00%
0.00%
0.00%
0.00%


(1)In the second quarter of 2009, no options were granted by the Company, hence, the interest rate was not applicable.





The Company analyzed historical trends in expected volatility and expected life of stock options on a quarterly basis; during 2009 and 2008 the volatility ranged between of 37%-50%.  As of January 1, 2008, the Company adopted SAB 110 revision to SAB topic 14 for determining the
expected term and the range of the expected term remained unchanged at 5.5 to 6 years as previously reported under SAB 107.  The Company continues to base the estimate of risk-free rate on the U.S. Treasury yield curve in effect at the time of grant. The Company has never paid cash dividends, does not currently intend to pay cash dividends, and has certain restrictions under its credit facility to pay dividends and thus has assumed a 0% dividend yield.  These conclusions were based on several
factors, including past company history, current and future trends, comparable benchmarked data and other key metrics.





As part of the requirements of SFAS 123R, the Company is required to estimate potential forfeitures of stock grants and adjust compensation cost recorded accordingly.  The forfeiture rate was estimated based on historical forfeitures.  The estimate of forfeitures will be
adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of stock compensation expense to be recognized in future periods.  The forfeiture rates utilized for the six months ended June 30, 2009 and 2008 were 5.30% and 5.46%, respectively.





Stock Incentive Plan and Award Activity





The Company’s 2006 Stock Incentive Plan (Amended on April 27, 2009) (“Stock Plan” or “LTIP”) authorizes incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units and stock appreciation rights ("SARs”).  Prior to the adoption of the LTIP, the Company was
authorized to grant equity incentive awards under its 1999 Stock Incentive Plan (together with the LTIP, the "Equity Incentive Plans"), which was terminated at the time the LTIP was adopted.  The aggregate number of unissued shares of the Company’s common stock that may be issued under the Stock Plan is 4.2 million shares, which includes 4.1 million additional shares that were approved by our shareholders on June 17, 2009.





The exercise price of options granted under the Stock Plan may not be less than 100% of the fair market value per share of the Company’s common stock on the date of the option grant. The vesting and other provisions of the options are determined by the Compensation Committee of the Company’s Board of Directors.








The following table summarizes activity under the Company’s Equity Incentive Plans for the six months ended June 30, 2009 (in thousands, except per share amounts):





Shares
Weighted Average Exercise Price
Weighted Average Remaining Contractual Term (in years)
Aggregate Intrinsic ValueOutstanding at January 1, 2009
1,499
$22.18Granted and assumed
495
$10.82Exercised
(109)
$7.81Forfeited/expired/cancelled
(10)
$22.64Outstanding at June 30, 2009
1,875
$20.01
7.21
$2,186Vested and expected to vest at June 30, 2009
1,803
$20.15
7.13
$2,046Options exercisable at June 30, 2009
992
$20.23
5.75
$846




There were no stock options granted during the three-months ended June 30, 2009.   The weighted-average grant-date fair value of stock options granted during the three-months ended June 30, 2008 was $11.97.  The weighted-average grant-date fair value of stock options granted during the six-months ended June 30, 2009
and 2008 was $4.96 and $12.83 per share, respectively.   The total intrinsic value of options exercised during the three-months ended June 30, 2009 and 2008 was $0.8 million for both periods, and was $0.8 million and $2.1 million during the six-months ended June 30, 2009 and 2008, respectively.  As of June 30, 2009 and December 31, 2008, there was approximately $5.5 million and $4.6 million, respectively, of total unrecognized compensation cost related to nonvested share-based compensation
arrangements granted under the Stock Plan; that cost is expected to be recognized over a weighted average of 2.9 years and 2.5 years, respectively.






The actual tax benefit realized for the tax deductions from option exercise of the share-based payment arrangements totaled $0.2 million and $0.4 million for the three months ended June 30, 2009 and 2008, respectively, and totaled $0.2 million and $1.0 million for the six-months ended June 30, 2009 and 2008, respectively.






Options outstanding and exercisable have exercise price ranges and weighted average remaining contractual lives of:







Outstanding Options

Exercisable OptionsExercise Price Range
Numbers of Options
Weighted Average Exercise Price
Weighted Average
Remaining Life
(years)
Number of Options
Weighted Average
Exercise Price$1.66
To
$10.30
113,425
$6.22
4.07
113,425
$6.22$10.82
To
$10.82
494,746
$10.82
9.55
--
$--$10.86
To
$15.48
25,744
$14.06
5.00
25,744
$14.06$15.96
To
$15.96
250,000
$15.96
4.97
250,000
$15.96$16.89
To
$19.70
194,090
$17.39
5.19
194,090
$17.39$20.10
To
$26.77
362,874
$26.07
6.58
271,437
$26.06$28.66
To
$31.45
124,882
$29.73
8.50
35,444
$29.84$32.55
To
$32.55
156,891
$32.55
8.55
39,225
$32.55$35.01
To
$35.01
94,114
$35.01
7.34
48,419
$35.01$37.21
To
$37.21
57,914
$37.21
8.01
14,479
$37.211,874,680


992,263


A summary of the status and changes of the Company’s nonvested shares related to its Equity Incentive Plans as of and during the six months ended June 30, 2009 is presented below:





(in thousands, except per share amounts)
Shares
Weighted Average Grant-Date Fair ValueNonvested at January 1, 2009
667
$30.30Granted
613
$10.90Released
(166)
$29.61Forfeited
(24)
$24.23Nonvested at June 30, 2009
1,090
$19.62




As of June 30, 2009 and December 31, 2008, there was approximately $14.7 million and $12.6 million, respectively, of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Stock Plan; that cost is expected to be recognized over a weighted average of 2.9 years and 2.5 years, respectively.
The total fair value of shares vested during the three and six months ended June 30, 2009 was $0.3 million and $1.8 million, respectively.  During the three and six-months ended June 30, 2008 the amounts were $2.3 million and $5.4 million, respectively.




7.           Earnings Per Share (“EPS”):





Basic earnings per share excludes dilution for potentially dilutive securities and is computed by dividing net income or loss attributable to common shareholders by the weighted average number of common shares outstanding during the period.  Diluted net income per share reflects the potential dilution that could occur if securities or
other instruments to issue common stock were exercised or converted into common stock.  Potentially dilutive securities are excluded from the computation of diluted net income per share when their inclusion would be antidilutive.





A summary of the computation of basic and diluted earnings per share from continuing operations is as follows:








Three-Months Ended June 30,
Six-months Ended June 30,2009
2008
2009
2008(in thousands, except per share data)Basic EPS from Continuing Operations ComputationIncome from continuing operations attributable to inVentiv Health Inc.
$11,292
$13,075
$19,201
$21,106Weighted average number of common shares outstanding
33,471
33,066
33,411
32,844Basic EPS from continuing operations attributable to inVentiv Health Inc.
$0.34
$0.40
$0.57
$0.64Diluted EPS from Continuing Operations ComputationIncome from continuing operations attributable to inVentiv Health Inc.
$11,292
$13,075
$19,201
$21,106Weighted average number of common shares outstanding
33,471
33,066
33,411
32,844Stock options (1)
56
311
51
322Restricted stock awards (2)
130
142
105
183Total diluted common shares outstanding
33,657
33,519
33,567
33,349Diluted EPS from continuing operations attributable to inVentiv Health Inc.
$0.34
$0.39
$0.57
$0.63





(1)   For the three-months and six-months ended June 30, 2009, 1,760,515 and 1,730,749 shares, respectively, were excluded from the calculation of diluted EPS due to the fact that the shares are considered anti-dilutive because the number of potential
buyback shares is greater than the number of weighted shares outstanding.  Similarly, for the three and six months ended June 30, 2008, 391,306 shares and 362,267 shares, respectively, were excluded from the calculation of diluted EPS due to the fact that the shares are considered anti-dilutive because the number of potential buyback shares is greater than the number of weighted shares outstanding.


(2) For the three-months and six-months ended June 30, 2009, 435,768 and 407,625 shares, respectively, were excluded from the calculation of diluted EPS due to the fact that the shares are considered anti-dilutive because the number of potential buyback shares
is greater than the number of weighted shares outstanding.  Similarly, for the three and six months ended June 30, 2008, 20,463 and 807 shares, respectively, were excluded from the calculation of diluted EPS due to the fact that the shares are considered anti-dilutive because the number of potential buyback shares is greater than the number of weighted shares outstanding.





8.           Significant Clients:





During the six-months ended June 30, 2009 and 2008 the Company had no clients that accounted for more than 10%, individually, of the Company's total revenues across our inVentiv Clinical, inVentiv Communications, inVentiv Commercial and inVentiv Patient
Outcomes segments.








9.           Goodwill and Other Intangible Assets:





Goodwill consists of the following:





(in thousands)
inVentiv
Clinical
inVentiv Communications
inVentiv Commercial
inVentiv Patient Outcomes
Other
TotalBalance as of January 1, 2008
$56,944
$190,958
$45,773
$90,039
--
$383,714Goodwill acquired during the year
--
--
1,561
5,202
--
6,763Goodwill through contingent consideration(1)
32
31,127
--
12,153
--
43,312Goodwill allocation (2)
--
(6,674)
--
--
--
(6,674)Other adjustments
186
863(4)
--
--
--
1,049Impairment losses(3)
(41,344)
(112,667)
--
(58,627)
--
(212,638)Balance as of December 31, 2008
$15,818
$103,607
$47,334
$48,767
--
$215,526Goodwill through contingent consideration(1)
--
88
--
--
--
88Goodwill allocation(5)
--
--
60
--
--
60Balance as of June 30, 2009
$15,818
$103,695
$47,394
$48,767
--
$215,674




The contingent consideration represents adjustments relating to the finalization of the earnouts for the twelve months ended December 31 each year and March 31 for 2008.


The amount relates to the allocation of the goodwill at year-end to identifiable intangible assets arising from the final valuation, completed during 2008, for the Liedler acquisition, which was acquired
on December 28, 2007.  Under SFAS 141, if a business combination is consummated toward the end of an acquiring enterprise's fiscal year or the acquired enterprise is very large or unusually complex, the acquiring enterprise may not be able to obtain some of the data required to complete the allocation of the cost of the purchased enterprise for inclusion in its next annual financial report.  As discussed in Part 2, Item 8 of our Annual Report on Form 10-K, since Liedler was acquired on December
28, 2007, the valuation was not completed by the time the 2007 10-K was filed.


These amounts relate to the respective reporting unit noncash impairment charges of goodwill as a result of the interim impairment tests the Company performed at December 31, 2008.  The
fair value of each reporting unit was estimated using the expected present value of future cash flows.


This amount relates to a tax adjustment on the Chamberlain acquisition accounted for under EITF 93-7 Uncertainties Related to Income Taxes in a Purchase Business Combination.


The amount relates to the allocation of the goodwill at year-end to identifiable intangible assets arising from the PLS acquisition.  Identifiable intangible assets were allocated
at December 31, 2008, but were revised accordingly based on finalization of the valuation, as allowed under SFAS 141.





Other intangible assets consist of the following:





June 30, 2009

December 31, 2008(in thousands)

Accumulated



AccumulatedGross
Amortization
Net

Gross
Amortization
NetCustomer relationships
$113,834
$(32,600)
$81,234

$113,896
$(27,177)
$86,719Technology
14,168
(4,887)
9,281

14,168
(4,497)
9,671Noncompete agreement
1,506
(1,019)
487

1,506
(911)
595Tradenames subject to amortization
2,159
(989)
1,170

2,275
(790)
1,485Other
1,234
(830)
404

1,232
(683)
549Total definite-life intangibles
132,901
(40,325)
92,576

133,077
(34,058)
99,019Tradenames not subject to amortization (1)
127,490
--
127,490

127,490
--
127,490Total other intangibles (2)
$260,391
$(40,325)
$220,066

$260,567
$(34,058)
$226,509




These indefinite-life tradenames arose primarily from acquisitions where the brand names of the entities acquired are very strong and longstanding.  These tradenames are also supported annually in the Company’s
impairment test for goodwill and tradenames conducted in June of every year and the interim impairment test performed at December 31, 2008.


The decrease in total gross other intangibles is related to the allocation of goodwill and identifiable intangible assets for the PLS acquisition, as described above and the writeoff of the Strategyx name, as described below.


The Company has the following identifiable intangible assets:





Intangible asset

Amount
(in thousands)
Weighted average amortization periodTradename

$129,649
(1)Customer relationships

113,834
10.8 yearsTechnology

14,168
14.3 yearsNoncompete agreement

1,506
4.5 yearsOther

1,234
4.5 yearsTotal

$260,391




$2.2 million of the tradenames are definite-life intangibles, which have a weighted average amortization period of 4.8 years.




Amortization expense, based on intangibles subject to amortization held at June 30, 2009, is expected to be $6.1 million for the remainder of 2009, $11.9 million in 2010, $11.6 million in 2011, $11.5 million in 2012, $10.2 million in 2013, $9.8 million in 2014 and $31.4 million thereafter.





The balances recorded on the Company’s Condensed Balance Sheet for goodwill and other indefinite-life intangibles, such as tradenames, are assessed annually for potential impairment as of June 30, pursuant to the guidelines of SFAS 142, Goodwill and Other Intangible Assetsand
SFAS 144,Accounting for the Impairment of or Disposal of Long-Lived Assets.  In accordance with SFAS 142, the Company uses the two-step process for periods in which impairment testing is performed.  The first step compares the fair value of the reporting unit to its carrying value. If the carrying amount exceeds the fair value, the second step of the test is performed to measure the amount of impairment loss, if any. The second step
compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. To calculate the implied fair value of goodwill in this second step, the Company allocates the fair value of the reporting unit to all of the assets and liabilities of that reporting unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value was the price paid to acquire the reporting unit. The excess of the fair value of the reporting
unit over the amount assigned to the assets and liabilities of the reporting unit represents the implied fair value of goodwill. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized for that difference.





The Company performed annual impairment tests as of June 30, 2008 and concluded that the existing goodwill and indefinite lived intangible tradename balances were not impaired.  The Company's declining stock price during the fourth quarter of 2008 resulted in a market capitalization that was well below the book value of the Company.  This
was due to a combination of declining market conditions and lower than expected operating results for certain businesses.  As such, the Company conducted an interim impairment test during the fourth quarter of 2008, resulting in the following impairment charges:





(in thousands)
2008
ImpairmentGoodwill
$212,638Intangible assets:Customer relationships
5,605Tradenames
25,833Technology
23,772Total Impairment
$267,848





Goodwill and other indefinite-life intangibles were assessed for potential impairment on June 30, 2009, as noted above, for the Company’s annual impairment testing.   The Company conducted its assessment and concluded that the foregoing balances on the Company’s Condensed Consolidated Balance Sheet were not impaired
as of June 30, 2009.





During the first quarter of 2009, the Company strategically changed its Strategy & Analytics’ name to Advance Insights, thereby discontinuing the usage of Health Products Research, Strategyx, Ventiv Access Services and Creative Healthcare Solutions names.  The Company accordingly recorded a $0.1 million tradename writeoff
as a result of discontinuing the Strategyx name, which is included as part of selling, general and administrative expenses on the condensed consolidated income statement.





10.           Fair Value Measurement




As discussed in Note 3, the Company adopted SFAS 157 on January 1, 2008, which among other things, requires enhanced disclosures about assets and liabilities measured at fair value. Our adoption of SFAS 157 was limited to financial assets and liabilities, which primarily relate to our marketable securities, deferred compensation plan
and derivative contracts.




We utilize the market approach to measure fair value for our financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.




SFAS 157 includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions
market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:


Level 1

-

Inputs are quoted prices in active markets for identical assets or liabilities.Level 2

-

Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.Level 3

-

Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.







The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2009 and the basis for that measurement:





(in thousands)
Total Fair Value Measurement June 30, 2009
Quoted Prices in Active Markets for Identical Assets (Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)ASSETSMarketable Securities
$6,548(1)
--
--
$6,548(1)Deferred Compensation
Plan Assets
8,530
--
8,530
--TOTAL ASSETS
$15,078
--
$8,530
$6,548LIABILITIESDeferred Compensation
Plan Liabilities
$8,521
--
$8,521
--Derivative Liabilities
24,726
--
--
24,726TOTAL LIABILITIES
$33,247
--
$8,521
$24,726





(1) – As described in Note 5, the marketable securities balance of $6.5 million includes $4.8 million classified as restricted cash and marketable securities and $1.7 million as deposits and other assets, respectively, on the Company’s June 30, 2009 Condensed Consolidated Balance Sheet.





As a result of market conditions related to the interest rate environment, the Company updated its valuation of its five-year interest rate derivative as of June 30, 2009, resulting in a credit value adjustment of $2.6 million to the derivative liability, with a corresponding offset to Other Comprehensive Income as a result of cash
flow hedge accounting (see Note 13).  This valuation, which involved current and future probability-adjusted risk factors, included inputs derived from valuation techniques in which one or more significant inputs were unobservable, classifying this as a Level 3 input under the definition described above.  The significant inputs in this valuation included credit market spread, estimated exposure and company and counterparty default risk.





As a result of the decrease in available investment prices from September 30, 2008 to December 31, 2008 due to market conditions, the Company changed its classification of marketable securities from a Level 2 input to a Level 3 input.    The Company incurred a $2.6 million impairment charge during 2008, of which $2.0 million
was in the fourth quarter of 2008 and primarily related to the lack of liquidity and resulting distressed values of investments in the marketplace.  These factors resulted in a significant percentage of the securities within CSCP that required unobservable inputs, which was not materially present through September 30, 2008.  These significant inputs included interest rate curves, credit curves and creditworthiness of the counterparty.  The classification and significant unobservable
inputs remained consistent for the period ended June 30, 2009.   There were no changes to the presentation of the CSCP in the condensed consolidated financial statements as a result of the Level 2 input to Level 3 input change.





The following is a rollforward of the Level 3 assets and liabilities through June 30, 2009:





Fair Value Measurements(in thousands)
Using Significant Unobservable Inputs (Level 3)ASSETS
CSCPBalance at January 1, 2009
$9,999Included in earnings (or changes in net assets)
36Included in other comprehensive income
345Purchases, issuances and settlements
(3,832)Transfers in and/or out of Level 3
--Balance at June 30, 2009
$6,548LIABILITIES
DerivativeBalance at January 1, 2009
$30,783Included in earnings (or changes in net assets)
--Included in other comprehensive income
(3,594)Deferred tax impact of other comprehensive income
(2,463)Transfers in and/or out of Level 3
--Balance at June 30, 2009
$24,726





11.           Debt:




On July 6, 2007, the Company entered into an Amended and Restated Credit Agreement (“the Credit Agreement”) with UBS AG, Stamford Branch and others. The Credit Agreement provides for a secured term loan of $330 million which was made available to inVentiv in a single drawing, up to $20 million in additional term loans ("delayed
draw term loans") that was to be advanced no later than January 6, 2008, which we elected not to draw, a $50 million revolving credit facility, of which $10 million is available for the issuance of letters of credit, and a swingline facilty.  The Credit Agreement was used to:




- amend the existing October 2005 credit facility, with a remaining balance of $164 million, and
- enter into a new $166 million loan to help fund the acquisitions of Chandler Chicco Agency and AWAC, and pay the fees associated with the new credit facility, with the balance retained by inVentiv as working capital.

The term loan will mature on the seventh anniversary of the Credit Agreement, with scheduled quarterly amortization of 1% per year during years one through six and 94% during year seven. The delayed draw term loans will mature on the seventh anniversary of the Credit Agreement, with scheduled quarterly amortization of 0.25% per quarter and
the balance becoming due on such seventh anniversary. The revolving loans will mature on the sixth anniversary of the Credit Agreement. Amounts advanced under the Credit Agreement must be prepaid with a percentage, determined based on a leverage test set forth in the Credit Agreement, of Excess Cash Flow (as defined in the Credit Agreement) and the proceeds of certain non-ordinary course asset sales, certain issuances of debt obligations and 50% of certain issuances of equity securities of inVentiv and its subsidiaries,
subject to certain exceptions. inVentiv may elect to prepay the loans, in whole or in part at any time, in certain minimum principal amounts, without penalty or premium (other than normal LIBOR break funding costs). Amounts borrowed under the Credit Agreement in respect of term loans (including delayed draw term loans) that are repaid or prepaid may not be reborrowed. Amounts borrowed under the Credit Agreement in respect of revolving loans may be paid or prepaid and reborrowed.




Interest on the loans will accrue, at inVentiv's election, at either (1) the Alternate Base Rate (which is the greater of UBS's prime rate and federal funds effective rate plus 1/2 of 1%) or (2) the Adjusted LIBOR Rate, with interest periods determined at inVentiv's option of 1, 2, 3 or 6 months (or, if the affected lenders agree, 9 months),
in each case plus a spread based equal to 0.75% for Alternate Base Rate loans and 1.75% for Adjusted LIBOR Rate loans.




The Credit Agreement contains, among other things, conditions precedent, representations and warranties, covenants and events of default customary for facilities of this type. Such covenants include certain limitations on indebtedness, liens, sale-leaseback transactions, guarantees, fundamental changes, dividends and transactions with affiliates.
The Credit Agreement also includes a financial covenant under which inVentiv is required to maintain a total leverage ratio that does not exceed, as of the last day of any four consecutive fiscal quarters, 4.0 to 1.0 through December 31, 2009 and 3.5 to 1.0 thereafter.  The Company’s leverage ratio was 2.4 to 1.0 as of June 30, 2009, which is in compliance with the financial covenant.




Under certain conditions, the lending commitments under the Credit Agreement may be terminated by the lenders and amounts outstanding under the Credit Agreement may be accelerated. Such events of default include failure to pay any principal, interest or other amounts when due, failure to comply with covenants, breach of representations or
warranties in any material respect, non-payment or acceleration of other material debt of inVentiv and its subsidiaries, bankruptcy, insolvency, material judgments rendered against inVentiv or certain of its subsidiaries or a 40% change of control of inVentiv, subject to various exceptions and notice, cure and grace periods.




The Company has the intent and ability to choose the three-month LIBOR base rate for the duration of the term of the Credit Agreement.  The three-month LIBOR base rate as of June 30, 2009 and December 31, 2008 was 0.60% and 1.43%, respectively.  As disclosed in Note 13, the Company has a derivative financial instrument,
currently with a notional amount of $323 million, to hedge against the current term loan facility.




The Company accounts for amendments to its revolving credit facility under the provisions of EITF Issue No. 98-14, Debtor’s Accounting for the Changes in Line-of-Credit or Revolving-Debt Arrangements(EITF 98-14), and its term loan under the provisions of EITF Issue
No. 96-19, Debtor’s Accounting for a Modification or Exchange of Debt Instruments(EITF 96-19). In amending its revolving credit facility, deferred financing costs are being amortized over the term of the new arrangement since the borrowing capacity increased in the new loan, per the guidance in EITF 98-14.  In connection with an amendment of our existing $164 million term loan, under the terms of EITF 96-19, bank and
any third-party fees were deferred and amortized over the term of the Credit Agreement since the old and new debt instruments were not substantially different.  The unamortized portion of the deferred financing costs were approximately $3.6 million and $3.9 million and are included in Deposits and Other Assets on the condensed consolidated balance sheets as of June 30, 2009 and December 31, 2008, respectively.





12.        Capital Lease Obligations:





During 2000, the Company entered into a master lease agreement to provide a fleet of automobiles for sales representatives of its inVentiv Commercial Services operating segment. Subsequent to 2000, the Company entered into other lease agreements with multiple vendors. Based on the terms of the agreements, management concluded that the leases
were capital leases based on the criteria established by SFAS No. 13, Accounting for Leases. The Company capitalized leased vehicles and recorded the related lease obligations totaling approximately $5.4 million (including rebates of $0.4 million) and $12.9 million (including rebates of $0.9 million) during the six-months ended June 30, 2009 and 2008, respectively.  The Company also incurred net disposals of $6.4 million and $9.4 million during
the six-months ended June 30, 2009 and 2008, respectively.





13.           Derivative Financial Instrument:







SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”), as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities.  It requires the recording of all
derivatives as either assets or liabilities on the balance sheet measured at estimated fair value and the recognition of the unrealized gains and losses.  We record the fair market value of our derivatives as other assets and other liabilities within our consolidated balance sheet.  Derivatives that are not part of hedge relationships are recorded at fair market value on our Consolidated Balance Sheet with the offsetting adjustment to interest expense on our Consolidated Income Statement.  For
hedge relationships designated as cash flow hedges under SFAS 133, changes in fair value of the effective portion of a designated cash flow hedge are recorded to other comprehensive income or loss; the ineffective portion is recorded to interest expense in our consolidated income statement.




We enter into interest rate swaps to manage interest rate risk associated with variable rate debt.





On September 6, 2007, the Company entered into a new amortizing five-year interest rate swap arrangement with a notional amount of $165 million at hedge inception, with an accretive notional amount that increased to $325 million effective December 31, 2008 (concurrently with the expiration of the Company’s original 2005 three-year interest
rate swap arrangement) to hedge the total outstanding debt notional amount.  This hedge relationship was designated as a cash flow hedge.  At hedge inception, the Company employed the dollar offset method by performing a sensitivity analysis to assess effectiveness and utilized the hypothetical derivative method under DIG Issue G7 to measure ineffectiveness.  The hypothetical derivative contains the same terms and conditions as the debt agreement.  The fair value of the
derivative, net of credit value adjustment, was approximately $24.7 million and $30.8 million as of June 30, 2009 and December 31, 2008, respectively, and was recorded in other non-current liabilities.  As a result of the hypothetical derivative method, there was no ineffectiveness for the period ended June 30, 2009, and accordingly, $6.1 million ($3.6 million, net of taxes) was recorded as an increase to Other Comprehensive Income and a decrease to other non-current liabilities on the Company’s
Condensed Consolidated Balance Sheet.  This change in Other Comprehensive Income includes the $2.6 million credit value adjustment as discussed in Note 10.  The amount of loss reclassified from accumulated other comprehensive income into interest expense for the three months and six months ended June 30, 2009 was approximately $3.0 million and $5.8 million, respectively.





Based on current assumptions regarding the interest rate environment and other market conditions at June 30, 2009, the estimated amount of accumulated other comprehensive income that is expected to be reclassified into interest expense under our hedge relationships within the next 12 months is $13.1 million.





14.           Commitments and Contingencies:





The Company is subject to lawsuits, investigations and claims arising out of the conduct of its business, including those related to commercial transactions, contracts, government regulation and employment matters. Certain claims, suits and complaints have been filed or are pending against the Company.   Certain such claims
that were asserted against Adheris and PRS, as described in Part I, Item 3 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, have been settled and such settlements became final during the second quarter of 2008. All pending matters are of a kind routinely experienced in our business and are consistent with our historical experience.  In the opinion of management, taking into account the advice of legal counsel, no matters outstanding as of June 30, 2009 are likely
to have a material adverse effect on inVentiv.





15.           Deferred Compensation:





The Ventiv Health, Inc. Deferred Compensation Plan (the "NQDC Plan") provides eligible management and other highly compensated employees with the opportunity to defer, on a pre-tax basis, their salary, bonus, and other specified cash compensation and to receive the deferred amounts, together with a deemed investment return (positive or negative),
either at a pre-determined time in the future or upon termination of employment with the Company or an affiliated employer participating in the NQDC Plan.  The compensation deferrals were initiated in 2005.  The deferred compensation liability of approximately $8.5 million and $6.8 million were included in other non-current liabilities in the Company’s Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008.  The NQDC Plan does not provide for the payment
of above-market interest to participants.





To assist in the funding of the NQDC Plan obligation, the Company participates in a corporate-owned life insurance program in a rabbi trust whereby it purchases life insurance policies covering the lives of certain employees, with the Company named as beneficiary.  Rabbi trusts are grantor trusts generally set up to fund compensation
for a select group of management or highly paid executives.  The cash value of the life insurance policy at June 30, 2009 and December 31, 2008 was approximately $7.8 million and $5.1 million, respectively, and is currently classified in Deposits and Other Assets on the Company’s Condensed Consolidated Balance Sheets. In addition, approximately $0.7 million and $1.6 million as of June 30, 2009 and December 31, 2008, respectively, were invested in mutual funds and classified in Prepaid expenses
and other current assets on our Condensed Consolidated Balance Sheets.





16.           Income Taxes





The effective tax rate for the six-month period ended June 30, 2009 was 41.3%.  The rate included a benefit due to the utilization of state net operating losses of $0.5 million.  The effective tax rate for the six-month period ended June 30, 2008 was 40.5%.  The rate for the six-month period ended June 30, 2008
included a tax benefit relating to state taxes settled of approximately $0.3 million.  The Company’s current effective tax rate is based on current projections for earnings in the tax jurisdictions in which inVentiv does business and is subject to taxation.  The Company’s effective tax rate could fluctuate due to changes in earnings between operating entities and related tax jurisdictions.





The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), on January 1, 2007.  The gross amount of unrecognized tax benefit was $5.3 million as of December 31, 2008 and $4.2 million as of June 30, 2009.  Included in this balance were positions totaling $0.9 million
at December 31, 2008 and at June 30, 2009 that, if recognized, would affect the effective tax rate.





The Company recognizes potential interest and penalties related to unrecognized tax benefits in income tax expense.  The total amount of accrued interest and penalties recorded as of December 31, 2008 and June 30, 2009 was $2.6 million and $2.1 million respectively.





The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions.  The Company is no longer subject to U.S. federal income tax examinations for years before 2005 and generally, is no longer subject to state and local income tax examinations by tax authorities
for years before 2004.





Management has concluded that it is reasonably possible that the unrecognized tax benefits will decrease by approximately $2.5 million within the next 12 months.  The decrease is primarily related to federal and state taxes that may be settled or have expiring statutes of limitations.





17.           Stockholders’ Equity





The following table describes the 2009 activity in the Company’s Stockholders’ Equity accounts for the six-months ended June 30, 2009:


inVentiv Health Inc Shareholders


(in thousands, except share amounts)
Common Stock
Additional Paid-In
Capital
Accumulated (deficit) earnings
Comprehensive
Income
Accumulated Other Comprehensive Losses (1)
Noncontrolling Interest
TotalBalance at December 31, 2008
33
$394,560
($6,210)
--
$(20,869)
$130
$367,644Net income


19,201
19,201

5
19,206Net change in effective portion of
derivative, net of taxes



3,594
3,594

3,594Unrealized gain on marketable securities



342
342

342Foreign currency translation
adjustment



1,116
1,116

1,11624,253Restricted stock expense
1
3,466




3,467Withholding shares for taxes

(523)




(523)Tax expense from exercise of
employee stock options and vesting
of restricted stock

(1,031)




(1,031)Proceeds from exercise of stock
Options

850




850Stock option expense

1,603




1,603Issuance of shares in connection with
Acquisitions

2,335




2,335Distributions





(398)
(398)Balance at June 30, 2009
34
$401,260
$12,991

$(15,817)
$(263)
$398,205





(1) As of June 30, 2009 Accumulated Other Comprehensive Losses consists of a $1.5 million loss on currency translation fluctuations in our foreign bank accounts remaining from the divestitures of our European business units, from continuing operations of our UK, France, German and Canadian subsidiaries, and equity investments and noncontrolling
interests in our foreign business units as well as other comprehensive losses of approximately $14.7 million, net of taxes, that relates to the effective portion of the Company’s derivative instruments, as described in Note 13.





18.           Related Parties:





Several inVentiv business units provided services to Cardinal Health, Inc. (“Cardinal”) during 2009.  Revenues generated for services provided to Cardinal totaled approximately $0.7 million and $0.5 million for the periods ended June 30, 2009 and December 31, 2008, respectively.  Robert Walter, who is the father
of R. Blane Walter, our CEO, served as Executive Chairman, and subsequently as an Executive Director, of Cardinal during 2007 and 2008.  R. Blane Walter and his immediate family members (including Robert Walter) and related trusts own approximately 2.4% of the outstanding capital stock of Cardinal.  All transactions between the Company and Cardinal were on arms'-length terms and were negotiated without the involvement of any members of the Walter family.





The Company, through its Promotech business unit, purchased warehouse consulting and procurement services from South Atlantic Systems Group ("SAS") commencing in 2007.  These contractual arrangements with SAS have been completed for 2008 and provided for total payments of approximately $0.8 million. Mark Teixeira, who is the brother-in-law
of David Bassin, our Chief Financial Officer, is the General Manager for South Atlantic Systems and was granted an 11.6% equity interest in SAS as of December 31, 2007.





The Company is party to an acquisition agreement dated September 6, 2005 pursuant to which the Company acquired inVentiv Communications, Inc. (then known as inChord Communications, Inc. ("inChord")) from Mr. Walter and other former inChord shareholders.  Mr. Walter and certain of his
family members had approximately a 92% interest in the earnout consideration payable under the acquisition agreement.  As a result, during 2008, Mr. Walter and such family members received a total of $17.1 million in cash and common stock constituting their share of the final earnout payment under the agreement, net of a portion of such payment (the "Deferred Earnout Payment") that the parties agreed would be deferred pending further evaluation of a customer receivable.  In April of 2009,
Mr. Walter and such family members received a total of $2.2 million in common stock constituting their share of the Deferred Earnout Payment.  The inChord acquisition agreement was approved prior to its execution by the Board of Directors of the Company.





inVentiv Communications’ leases its current headquarters facility in Westerville, Ohio from Lexington MLP Westerville L.P.  Prior to May 15, 2007, this facility was partially owned by Mr. Walter, his brothers and other current employees of inVentiv Communications.  The term of the lease is fifteen years, and expires
on September 30, 2015.  During the three and six-months ended June 30, 2009, the Company paid $0.4 million and $0.9 million, respectively, in rent to Lexington MLP Westerville L.P.





19.           Segment Information:





The Company currently manages four operating segments: inVentiv Clinical, inVentiv Communications, inVentiv Commercial and inVentiv Patient Outcomes, and its non-operating reportable segment, “Other”, which is based on the way management makes operating decisions and assesses performance.  The following represents
the Company’s reportable segments as of June 30, 2009:




- inVentiv Clinical, which provides services related to permanent placement, clinical staffing, data collection and management and functional service provision primarily in support of pharmaceutical clinical development.
- inVentiv Communications, which provides services related to pharmaceutical advertising, branding, public relations, interactive communications and physician education.
- inVentiv Commercial, which consists of the Company’s outsourced sales and marketing teams, planning and analytics services, sample accountability services, marketing support services, professional development and training, and recruitment of sales representatives in the commercial services
area.
- inVentiv Patient Outcomes, which provides services related to patient pharmaceutical compliance programs, patient support programs, clinical educator teams, medical cost containment and consulting solutions and patient relationship marketing.
- Other, which encompasses the activities of the corporate management group.



Three-months ended June 30, 2009 (in thousands):





inVentiv
Clinical
inVentiv Communications
inVentiv Commercial
inVentiv Patient Outcomes
Other
TotalRevenues
$53,359
$75,635
$108,615
$34,848
--
$272,457Less: Intersegment revenues
(55)
(419)
(2,882)
(60)
--
(3,416)Reported Revenues
$53,304
$75,216
$105,733
$34,788
--
$269,041Depreciation and amortization
808
2,584
3,558
1,118
12
$8,080Interest expense
--
23
84
2
5,664
5,773Interest income
--
13
9
2
26
50Segment income (loss) (1)
$3,391
$10,242
$11,172
$7,842
($13,522)
$19,125








Three-months ended June 30, 2008 (in thousands):





inVentiv
Clinical
inVentiv Communications
inVentiv Commercial
inVentiv Patient Outcomes
Other
TotalRevenues
$54,452
$96,061
$113,424
$29,745
$--
$293,682Less: Intersegment revenues
(68)
(361)
(8,211)
--
--
(8,640)Reported Revenues
$54,384
$95,700
$105,213
$29,745
$--
$285,042Depreciation and amortization
552
2,551
3,889
1,295
12
8,299Interest expense
--
33
296
1
5,979
6,309Interest income
18
112
--
8
279
417Segment income (loss) (1)
$4,951
$10,850
$12,035
4,953
$(10,653)
$22,136








Six-months ended June 30, 2009 (in thousands):





inVentiv
Clinical
inVentiv Communications
inVentiv Commercial
inVentiv Patient Outcomes
Other
TotalRevenues
$104,577
$146,988
$215,936
$67,243
--
$534,744Less: Intersegment revenues
(104)
(840)
(6,979)
(128)
--
(8,051)Reported Revenues
$104,473
$146,148
$208,957
$67,115
--
$526,693Depreciation and amortization
1,369
5,070
7,895
2,238
22
16,594Interest expense
--
42
195
3
11,307
11,547Interest income
1
31
9
2
72
115Segment income (loss) (1)
$4,902
$20,136
$18,112
$13,758
$(24,170)
$32,738








Six-months ended June 30, 2008 (in thousands):





inVentiv
Clinical
inVentiv Communications
inVentiv Commercial
inVentiv Patient Outcomes
Other
TotalRevenues
$106,638
$184,555
$207,148
$59,643
$--
$557,984Less: Intersegment revenues
(169)
(581)
(9,871)
--
--
(10,621)Reported Revenues
$106,469
$183,974
$197,277
$59,643
$--
$547,363Depreciation and amortization
1,099
5,070
8,121
2,596
23
16,909Interest expense
--
50
725
2
11,914
12,691Interest income
68
346
--
25
808
1,247Segment income (loss) (1)
$7,905
$23,488
$16,522
$9,717
$(21,206)
$36,426








(1) Income from continuing operations before income tax provision and (loss) income from equity investments






(in thousands)
June 30, 2009
December 31, 2008Total Assets:inVentiv Clinical
$105,247
$97,162inVentiv Communications
370,367
377,123inVentiv Commercial
175,504
205,910inVentiv Patient Outcomes
136,467
134,355Other
160,463
158,566Total assets
$948,048
$973,116









ITEM 2.              Management's Discussion and Analysis of Financial Condition and Results of Operations





This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements, accompanying notes and other financial information included in the Annual Report on Form 10-K for the year ended December 31, 2008.





Overview





inVentiv Health Inc. (together with its subsidiaries, “inVentiv, ” “we,” "us," or "our") is a leading provider of value-added services to the pharmaceutical, life sciences and healthcare industries.  We support a broad range of clinical development, communications and commercialization activities that are
critical to our customers' ability to complete the development of new drug products and medical devices and successfully commercialize them.  In addition, we provide medical cost containment services to payors in our patient outcomes business.  Our goal is to assist our customers in meeting their objectives by providing our services in each of our operational areas on a flexible and cost-effective basis.  We provide services to over 350 client organizations, including all top 20
global pharmaceutical companies, numerous emerging and specialty biotechnology companies and third party administrators.





Our service offerings reflect the changing needs of our clients as their products move through the late-stage development and regulatory approval processes and into product launch and then throughout the product lifecycle.  We have established expertise and leadership in providing the services our clients require at each of these
stages of product development and commercialization and seek to address their outsourced service needs on a comprehensive basis throughout the product lifecycle.  For payors, we provide a variety of services that enhance savings and improve patient outcomes including opportunities to address billing errors, additional discounts and treatment protocols for patients.








Business Segments





We serve our clients primarily through four business segments, which correspond to our reporting segments for 2009:




- inVentiv Clinical, which provides professional resourcing and services to the pharmaceutical, biotech and device companies.  Professional resourcing services include providing clinical research professionals in support of clients’ research efforts, including permanent placement,
clinical staffing, and strategic resource teams.  In addition, inVentiv Clinical provides its clinical research clients with outsourced functional services in various areas, including clinical operations, medical affairs and biometrics/data management.   inVentiv Clinical consists of the Smith Hanley group of companies (which includes Smith Hanley Associates (“SHA”), Smith Hanley Consulting Group (“SHCG”) and MedFocus), HHI Clinical & Statistical Research Services
(“HHI”), and Synergos;
- inVentiv Communications, which provides services related to pharmaceutical advertising, branding, public relations, interactive communications and physician education.  This segment includes inVentiv Communications, Inc., Jeffrey Simbrow Associates (“JSAI”), Ignite Health
and Incendia Health Studios (collectively, “Ignite”), Chamberlain Communications Group, Inc. (“Chamberlain”), Addison Whitney, Angela Liedler GmbH (“Liedler”) and Chandler Chicco Agency (“CCA”);
- inVentiv Commercial, which consists of our outsourced sales and marketing teams, planning and analytics services, sample accountability services, marketing support services, professional development and training, and recruitment of sales representatives in the commercial services area.  This
segment includes Advance Insights, formerly known as inVentiv Strategy & Analytics and inVentiv Selling Solutions.  inVentiv Selling Solutions includes Promotech Logistics Solutions LLC ("PLS"), acquired in December 2008; and
- inVentiv Patient Outcomes,  which provides services related to patient pharmaceutical compliance programs, patient support programs, clinical educator teams, medical cost containment and consulting solutions and patient relationship marketing.  This segment includes Adheris, Inc. (“Adheris”), The Franklin Group (“Franklin”),
The Therapeutics Institute, AWAC (acquired in July 2007) and Patient Marketing Group, LLC. (“PMG”) (acquired in August 2008)

Outsourcing Trends and the Current Economic Environment





Our business as a whole, and of our inVentiv Clinical, inVentiv Commercial and inVentiv Patient Outcomes segments in particular, is related significantly to the degree to which pharmaceutical companies outsource services that have traditionally been performed internally by fully integrated manufacturers.  Although the pharmaceutical
industry is generally regarded as non-cyclical, the current recessionary environment has impacted virtually all economic activity in the United States and abroad, including in the pharmaceutical and life sciences industry, and has resulted in increased budget scrutiny and efforts to significantly reduce expenditures in all areas of our clients' businesses.





Our business has been affected by the tentativeness of clients to make outsourcing expenditure decisions.  We believe that our clients are intently focused on their short-term spending and cost-cutting efforts, and are continuing to look for ways to streamline their operations.  With respect to our inVentiv Communications
division, in particular, some clients are reducing marketing expenditures through reducing the scopes of agency projects and delaying decisions on new marketing initiatives.  The consequence has been to shift the revenue opportunities for our inVentiv Communications division away from supporting in-market products, where margins have traditionally been the most attractive.  Although we have seen evidence in recent months that our clients’ expenditures with certain of our business units
are stabilizing, current economic conditions present continuing challenges and make it difficult for us to predict when a return to our clients' historical spending levels may occur.





In 2009, our medical insurance claims experience has been higher than expected, mainly due to higher occurrences of individually large medical and prescription drug claims.  Since we are self-insured to a significant degree, continuance of these trends could result in a material adverse impact on our financial condition and results
of operations.  During the six months ended June 30, 2009, the Company incurred approximately $14 million in medical costs.





Management is addressing the challenges of the current environment by taking steps to reduce fixed costs and create more flexibility in our cost structure, maximize and conserve strong cash flow and be in a position to pay down debt over time.  Cost management strategies employed by management include:




- reducing fixed cost headcount;
- our "in balance" staffing initiative, through which we are converting  FTE's to hourly positions that can be billed in direct response to the requirements of our client engagements;
- completion during the first quarter of 2009 of our "super studio" in Columbus, Ohio, which will increase utilization and efficiency by allowing the management of project-based graphic design and production needs for agencies across the Communications division;
- negotiation of favorable rates with our vendors;
- ongoing implementation of our Peoplesoft software to manage enterprise-wide resources; and
- consolidation of certain facilities and operations.



We believe that these steps will allow inVentiv to provide competitive pricing to its clients and to improve margins.





An offsetting and longer-term positive trend for us is that our clients appear to be adopting clear strategies to outsource more of their pharmaceutical marketing expenditures in lower cost and more flexible solutions consistent with what inVentiv offers.  Our sale of integrated, multi-service offerings has grown sequentially for  three
quarters and we believe that integrated offerings, which represented approximately 15% of revenues during the quarter, are a significant area of opportunity in the future.





Regulatory Uncertainty





Because most of our revenues are generated by businesses involved in the commercialization of pharmaceutical products, uncertainties surrounding the approval of our clients' pharmaceutical products affect us.  The pace at which a pharmaceutical product moves through the FDA approval
process, and the application by the FDA of standards and procedures related to clinical testing, manufacturing, labeling claims and other matters are difficult to predict and may change over time.  FDA non-approvals and delays in approval can significantly impact revenue because of the relationship between the approval process and the amount and timing of client marketing expenditures to support the affected pharmaceutical products.





Although delays in FDA approval rates have negatively impacted the pharmaceutical industry, and indirectly inVentiv, the new product pipeline in the industry remains strong, with many late-stage products awaiting FDA approval.  Even if the FDA approval rate does not improve, we believe that the number of products awaiting approval,
and the requirement for pharmaceutical manufacturers to support these products as they reach commercialization, represents an opportunity over the medium to longer-term for inVentiv to capture increasing levels of outsourced services engagements. As a result of our deep and long-standing relationships with our clients, we believe that we are well positioned to capture these opportunities.








Business Strategy





Although certain areas of our business have slowed during recent quarters as a result of the current trends discussed above, our businesses have generated strong overall revenue growth for the past several years.  Our internal revenue growth reflects our strong track record in winning new business, which in turn is enhanced by our
pursuit of cross-servicing opportunities within and across our business segments.  Our revenues are generally received under contracts with limited terms and that can be terminated at the client’s option on short notice.  We have been successful historically in obtaining increasing amounts of repeat business from many of our clients and in expanding the scope of the services we provide to them and thereby sustaining multi-year relationships with many of our clients.  When relationships
do not renew, we have been successful in redeploying personnel quickly and efficiently.





Strategic acquisitions have been a core element of our business strategy since 2004.  Acquisitions contributed significantly to our annual revenue growth over the last few years.  We expect to be more selective and execute fewer acquisitions going forward.  We will continue to evaluate our strategic position
and intend to make opportunistic acquisitions that enable us to expand the scope of our service offerings and drive shareholder value.





Our acquisition activity adds complexity to the analysis of period-to-period financial results and makes direct comparison of those financial results difficult.  Our acquisitions are accounted for using purchase accounting and the financial results of the acquired businesses are included in our consolidated financial statements
from their acquisitions dates.  A prior year period that ended before an acquisition was completed, however, will not include the corresponding financial results of the acquired business.





No new acquisitions were consummated during the first two quarters of 2008 or 2009 and, accordingly, no revenues were generated from acquisitions during those periods.  However, our acquisitions of PLS and PMG during the second half of 2008 contributed to certain quarterly variances, as compared with prior year periods, within
the Commercial and Patient Outcomes’ segments.  See -- Results of Operations below.





Earnout Obligations Related to Completed Acquisitions





The terms of most of our completed acquisitions include the opportunity for the sellers to receive contingent earnout consideration based on the performance of the acquired businesses.  The terms of the acquisition agreements generally include multiple earnout periods or a multi-year earnout period.  Earnout obligations
under certain of our acquisitions have not yet been completed.  All of our acquisitions were consummated prior to January 1, 2009 and fall under the guidance of SFAS 141.  As such, we accrue the earnout obligations at the end of an earnout period when the contingency is resolved and additional consideration is distributable for these acquisitions.  These earnout obligations have been, and may be, material in amount and represent a significant use of
cash for the periods in which they are earned or paid.  Based on the performance of the applicable business units to date and our projections of the financial performance of such business units for the remainder of the applicable earnout periods, we project that our use of cash and equity in satisfaction of earnout obligations during 2009 and payable in 2010 may be between $20 million and $40 million.  Such payout amounts are subject to variability and could vary significantly
based on the actual performance of the acquired businesses.





International Operations





The following is a summary of our non-U.S. operations:





Division
Location
Percent Ownership
Put/Call OptionsinVentiv Communications
United Kingdom
100%France
100%Canada
100%Germany (Liedler)
85%
inVentiv has the option to acquire the remaining 15% equity interestItaly
37.5%Germany (Haas and Health)
19.9%
inVentiv may acquire an additional 60.1% within 90 days following calendar year 2010, and the remaining 20% for a period of 90 days following the third anniversary of the acquisition of the 60.1% equity interestSweden
15%inVentiv Clinical
Mexico
100%Brazil
100%India
100%
Sciformix Corp. has option to acquire 20% of joint venture entity through January 2010inVentiv Commercial
Japan
100%Canada
100%Puerto Rico
100%








Foreign operations are accounted for using the functional currency of the country where the business is located, translated to US dollars in the inVentiv Health, Inc. consolidated financial statements.  These investments are accounted for using various methods depending on ownership % and control. For investments below the 20% threshold
where inVentiv does not have significant influence, these are maintained on the cost method.  For investment ownership that is between 20% and 50%, or in cases where a lower ownership percentage is owned but where we exercise significant influence, we use the equity method of accounting. For investments where we own greater than 50% and exercise significant influence over the entities, financial results are consolidated in our year-end financial statements. Although the financial results of our
international operations are immaterial to the financial statements as a whole, their existence is an important component of our continued global approach and marketing strategy with our clients.





Critical Accounting Policies





The Company’s critical accounting policies are described in its Annual Report on Form 10-K for the year ended December 31, 2008.  There has been no material change, update or revision to the Company’s critical accounting policies.

















Three-Months Ended June 30, 2009 Compared to Three-Months Ended June 30, 2008





Results of Operations





The following sets forth, for the periods indicated, certain components of our operating earnings, including such data stated as percentage of revenues:





(in thousands, except for per share data)
For the Three-Months Ended June 30,2009
2008Revenues:

Percentage (1)

Percentage(1)inVentiv Clinical
$53,304
19.8%
$54,384
19.1%inVentiv Communications
75,216
28.0%
95,700
33.6%inVentiv Commercial
105,733
39.3%
105,213
36.9%inVentiv Patient Outcomes
34,788
12.9%
29,745
10.4%Total revenues
269,041
100.0%
285,042
100.0%Cost of services (1) (2):inVentiv Clinical
38,473
72.2%
37,395
68.8%inVentiv Communications
41,399
55.0%
59,766
62.5%inVentiv Commercial
82,986
78.5%
81,937
77.9%inVentiv Patient Outcomes
19,418
55.8%
18,638
62.7%Total cost of services
182,276
67.8%
197,736
69.4%Selling, general and administrative expenses(1):inVentiv Clinical
11,440
21.5%
12,057
22.2%inVentiv Communications
23,565
31.3%
25,162
26.3%inVentiv Commercial
11,500
10.9%
10,945
10.4%inVentiv Patient Outcomes
7,528
21.6%
6,161
20.7%Other
7,884
--
4,953
--Total selling, general and administrative expenses
61,917
23.0%
59,278
20.8%Total operating income
24,848
9.2%
28,028
9.8%Interest expense
(5,773)
(2.1)%
(6,309)
(2.2)%Interest income
50
--
417
0.1%Income from continuing operations before income tax provision
and (loss) income from equity investments
19,125
7.1%
22,136
7.8%Income tax provision
(7,768)
(2.9)%
(8,751)
(3.1)%Income from continuing operations before income (loss) from equity investments
11,357
4.2%
13,385
4.7%(Loss) income from equity investments
(11)
--
6
--Income from continuing operations
11,346
4.2%
13,391
4.7%Income from discontinued operations:Gains on disposals of discontinued operations, net of taxes
--
--
94
--Income from discontinued operations
--

94
--Net income
11,346
4.2%
13,485
4.7%Less:  Net income attributable to the noncontrolling interest
(54)
--
(316)
(0.1%)Net income attributable to inVentiv Health Inc.
11,292
4.2%
$13,169
4.6%Earnings per share:Continuing operations attributable to inVentiv Health Inc.:Basic
$0.34

$0.40Diluted
$0.34

$0.39Discontinued operations attributable to inVentiv Health Inc.:Basic
$0.00

$0.00Diluted
$0.00

$0.00Net earnings attributable to inVentiv Health Inc.:Basic
$0.34

$0.40Diluted
$0.34

$0.39





Cost of services includes reimbursed out of pocket expenses.








Revenues: Revenues decreased by approximately $16 million, or 6%, to $269 million during the second quarter of 2009, from $285 million during the second quarter of 2008. Net revenues decreased by approximately $1 million to $235 million during the second quarter
of 2009, from $236 million in the second quarter of 2008.




inVentiv Clinical’s revenues were $53 million during the second quarter of 2009,  a decrease of $1 million compared to  $54 million during  the second quarter of 2008.  inVentiv Clinical revenues accounted for 20% of total inVentiv revenues during the second quarter of 2009.  Revenues
in inVentiv Clinical were lower in 2009 predominantly due to a softening in the demand for our resourcing services due to the current economic environment.




inVentiv Communications’ revenues were $75 million during the second quarter of 2009, a decrease of $21 million or 22% from the second quarter of 2008.  inVentiv Communications’ revenues accounted for 28% of total inVentiv revenues during the second quarter of 2009.  The majority of this decrease is due
to lower pass-through revenues as a result of our clients focus on advertising services that are efficient in delivering the message to their customers.  The remaining decrease relates to a softening in the demand for our marketing services due to the current economic environment.





inVentiv Commercial’s revenues were $106 million during the second quarter of 2009, an increase of 1% from the second quarter of 2008.  inVentiv Commercial revenues accounted for 39% of total inVentiv revenues for the second quarter of 2009.  Approximately $4 million of revenues related to the inclusion of PLS’s
results in the second quarter of 2009 offset by decreased pass-through revenues and lower revenues in our marketing support services and outsourced sales and marketing teams in the second quarter of 2009 when compared to the same period in 2008.





inVentiv Patient Outcomes’ revenues were $35 million during the second quarter of 2009, up $5 million from the second quarter of 2008.  The acquisition of PMG contributed approximately $4 million of revenues during the second quarter of 2009.  The remaining growth was organic, primarily from increased revenues
in patient services programs and medical cost containment services.




Cost of Services: Cost of services decreased by approximately $16 million or 8%, to $182 million during the second quarter of 2009 from $198 million in the second quarter of 2008.  Cost of services as a percentage of revenues was 68% and 69% during the
second quarter of 2009 and 2008, respectively.





inVentiv Clinical’s cost of services increased by approximately 3%, to $38 million during the second quarter of 2009 from $37 million during the second quarter of 2008.  Cost of services as a percentage of revenues was 72% and 69% during the second quarter of 2009 and 2008, respectively.  The increased percentage
was primarily due to an increase in headcounts and pass-through expenses in our CRO services division.




inVentiv Communications’ cost of services decreased by 32% to $41 million during the second quarter of 2009 when compared to the second quarter of 2008.  Cost of services as a percentage of the segment’s revenues decreased from 62% during the second quarter of 2008 to 55% during the second quarter of 2009.  The
decrease in cost of services and the related percentage was primarily due to the decrease in pass-through revenues, as described above.





Cost of services at inVentiv Commercial increased to $83 million during the second quarter of 2009 from $82 million during the second quarter of 2008. Cost of services was 78% of inVentiv Commercial’s revenues for both the second quarter of 2009 and second quarter of 2008.





inVentiv Patient Outcomes stayed consistent at $19 million during the second quarter of 2009 and 2008.  The contribution of $2 million to cost of services from PMG, which was acquired in the third quarter of 2008, was offset by a mix shift in business within the segment.





Selling, General and Administrative Expenses (“SG&A”): SG&A expenses increased by approximately $3 million, or 5%, to $62 million during the second quarter of 2009 from $59 million during the second quarter of 2008.  Approximately
$1.7 million of this difference relates to additional medical costs affected by unfavorable medical claims experience from our self-insured medical plan.  The remaining difference mainly relates to the inclusion of PLS’ and PMG’s results, as described below.




SG&A expenses at inVentiv Clinical decreased by approximately $1 million to approximately $11 million during the second quarter of 2009, compared to $12 million during the second quarter of 2008 due to lower commissions in our resourcing and permanent placement groups as a result of the lower revenue.




SG&A expenses at inVentiv Communications decreased $1 million to $24 million during the second quarter of 2009 due to lower compensation and professional fees.




SG&A expenses at inVentiv Commercial increased by approximately $1 million to $12 million during the second quarter of 2009 from $11 million during the second quarter of 2008.  The majority of this increase was due to the inclusion
of PLS’ results and to costs related to moving facilities in July 2009.




SG&A expenses at inVentiv Patient Outcomes increased by $2 million to $8 million during the second quarter of 2009, which was primarily from the inclusion of PMG’s results.




Other SG&A was approximately $8 million for the second quarter of 2009, an increase of approximately $3 million from the second quarter of 2008.  The increase was mainly related to unfavorable claims experience from our self-insured medical plan as well as an integration of certain divisional departments into a corporate function
in 2009.




Interest Expense:Interest expense was approximately $6 million during the second
quarter of 2008 and the second quarter of 2009, mainly due to the consistent period interest on our Credit Agreement, as more fully explained in Liquidity and Capital Resources.




Provision for Income Taxes: The effective tax rate for the second quarter of 2009 was 40.8%, versus 40.1% during the second quarter of 2008.  The rate for the second quarter of 2009 included a tax benefit due to state net operating losses of $0.5 million.  The
rate for the second quarter of 2008 included a tax benefit relating to state taxes settled of approximately $0.3 million.  The Company’s current effective tax rate is based on current projections for earnings in the tax jurisdictions in which inVentiv does business and is subject to taxation.  The Company’s effective tax rate could fluctuate due to changes in earnings between operating entities and differences in tax rates in the related tax jurisdictions.





Net Income and Earnings Per Share (“EPS”): inVentiv’s net income decreased by approximately $2 million to $11 million during the second quarter of 2009 when compared to the second quarter
of 2008.  Diluted earnings per share decreased to $0.34 per share during the second quarter of 2009 from $0.39 per share during the second quarter of 2008.  Overall EPS and net income decreased between quarters because of lower revenues and related operating income, and increased medical claims, as described above.





Six-months Ended June 30, 2009 Compared to Six-months Ended June 30, 2008





Results of Operations





The following sets forth, for the periods indicated, certain components of our operating earnings, including such data stated as percentage of revenues:


(in thousands, except for per share data)
For the Six-months Ended June 30,2009
2008Revenues:

Percentage(1)

Percentage(1)inVentiv Clinical
$104,473
19.8%
$106,469
19.5%inVentiv Communications
146,148
27.8%
183,974
33.6%inVentiv Commercial
208,957
39.7%
197,277
36.0%inVentiv Patient Outcomes
67,115
12.7%
59,643
10.9%Total revenues
526,693
100.0%
547,363
100.0%Cost of services (1)(2):inVentiv Clinical
77,002
73.7%
73,924
69.4%inVentiv Communications
80,274
54.9%
109,361
59.4%inVentiv Commercial
167,793
80.3%
157,594
79.9%inVentiv Patient Outcomes
38,383
57.2%
37,130
62.3%Total cost of services
363,452
69.0%
378,009
69.1%Selling, general and administrative expenses(1):inVentiv Clinical
22,571
21.6%
24,707
23.2%inVentiv Communications
45,725
31.3%
51,421
28.0%inVentiv Commercial
22,866
10.9%
22,436
11.4%inVentiv Patient Outcomes
14,973
22.3%
12,819
21.5%Other
12,936
--
10,101
--Total Selling, general and administrative expenses
119,071
22.6%
121,484
22.2%Total operating income
44,170
8.4%
47,870
8.7%Interest expense
(11,547)
(2.2)%
(12,691)
(2.3)%Interest income
115
--
1,247
0.2%Income from continuing operations before income tax provision,
minority interest in income of subsidiary and income (loss) from equity investments
32,738
6.2%
36,426
6.6%Income tax provision
(13,540)
(2.6)%
(14,393)
(2.6)%Income from continuing operations before income (loss) from equity investments
19,198
3.6%
22,033
4.0%Income (loss) from equity investments
8
--
(35)
--Income from continuing operations
19,206
3.6%
21,998
4.0%Income from discontinued operations:Gains on disposals of discontinued operations, net of taxes
--
--
107
--Income from discontinued operations
--
--
107
--Net income
19,206
3.6%
22,105
4.0%Less:  Net income attributable to the noncontrolling interest
(5)
--
(892)
(0.1)%Net income attributable to inVentiv Health Inc.
19,201
3.6%
$21,213
3.9%Earnings per share:Continuing operations attributable to inVentiv Health Inc.:Basic
$0.57

$0.64Diluted
$0.57

$0.63Discontinued operations attributable to inVentiv Health Inc.:Basic
$0.00

$0.01Diluted
$0.00

$0.01Net earnings attributable to inVentiv Health Inc.:Basic
$0.57

$0.65Diluted
$0.57

$0.64






Cost of services and selling, general and administrative expense are expressed as a percentage of segment revenue.  All other line items are displayed as a percentage of total revenues.


Cost of services includes reimbursed out of pocket expenses.










Revenues: Revenues decreased by approximately $20 million, or 4%, to $527 million during the six-months ended June 30, 2009, from $547 million during the six-months ended June 30, 2008.  Net revenues decreased by approximately $5 million, or 1%, to $456
million during the six-months ended June 30, 2009, from $461 million during the six-months ended June 30, 2008.




inVentiv Clinical’s revenues were $104 million during the six months ended June 30, 2009, a decrease of $2 million compared to $106 million during  the six months ended June 30, 2008.inVentiv Clinical revenues accounted for 20% of total inVentiv revenues during six
months ended June 30, 2009.  Revenues in inVentiv Clinical were lower in 2009 predominantly due to a softening in the demand for our resourcing services due to the current economic environment.




inVentiv Communications’ revenues were $146 million during the six months ended June 30, 2009, an decrease of $38 million, or 21%, from the six months ended June 30, 2008.  inVentiv Communications’ revenues accounted for 28% of total inVentiv revenues during the six months ended June 30, 2009.  The majority
of this decrease is due to lower pass-through revenues as a result of our clients focus on advertising services that are efficient in delivering the message to their customers.  The remaining decrease relates to a softening in the demand for our marketing services due to the current economic environment.





Revenues in our inVentiv Commercial segment were $209 million during the six months ended June 30, 2009, an   increase of approximately $12 million, or 6%, from the $197 million during the for six months ended June 30, 2008.   Approximately $7 million of the increase related to the inclusion of PLS’s
results for 2009.  The remaining increase was due to several sales teams launches during the first half of 2009 offset by anticipated client wind-downs in the ordinary course of business.





inVentiv Patient Outcomes’ revenues were $67 million during the six months ended June 30, 2009, up $7 million from the six months ended June 30, 2008.  This increase was primarily due to the acquisition of PMG, which contributed approximately $7 million of revenues during 2009.





Cost of Services: Cost of services decreased by approximately $15 million or 4%, to $363 million for the six months ended June 30, 2009 from $378 million in the six months ended June 30, 2008. Cost of services as a percentage of revenues stayed consistent at 69%
during the six months ended June 30, 2008 and 2009.





inVentiv Clinical’s cost of services increased by approximately $3 million, or 4%, to $77 million during the six months ended June 30, 2009 from $74 million during the six months ended June 30, 2008.  Cost of services as a percentage of revenues was 74% and 69% during the six months ended June 30, 2009 and 2008, respectively.  The
increased percentage was primarily due to an increase in headcounts and pass-through expenses in our CRO services division.





inVentiv Communications’ cost of services decreased by approximately $29 million, or 27%, to $80 million during the six months ended June 30, 2009 from $109 million during the six months ended June 30, 2008.  Cost of services as a percentage of the segment’s revenues decreased from 59% during the six months ended
June 30, 2008 to 55% during the six months ended June 30, 2009.  The decrease in cost of services and the related percentage was primarily due to the decrease in pass-through revenues, as described above.





Cost of services at inVentiv Commercial increased by approximately 6% from the six months ended June 30, 2008, in line with the increase in revenues as explained above.  Cost of services as a percentage of revenues remained fairly constant at 80% for both periods.





inVentiv Patient Outcomes’ cost of services increased by approximately $1 million, or 3%, to $38 million during the six months ended June 30, 2009 from $37 million during the six months ended June 30, 2008.  $3 million of the increase was from the acquisition of PMG, with the offsetting decrease from a mix shift in business.





SG&A: SG&A expenses decreased by approximately $2 million, or 2%, to $119 million from $121 million in the six months ended June 30, 2009 and 2008, respectively.  This decrease primarily relates to various cost savings initiatives for the Company
offset by $2.6 million relating to additional medical costs affected by unfavorable medical claims from our self-insured medical plan.




SG&A expenses at inVentiv Clinical decreased by approximately 8% from the six months ended June 30, 2008 to the six months ended June 30, 2009 due to lower commissions in our resourcing and permanent placement groups as a result of the  lower revenue.




SG&A expenses at inVentiv Communications decreased $5 million to $46 million during the six months ended June 30, 2009, primarily due to lower compensation and professional fees.




SG&A expenses at inVentiv Commercial increased by approximately $1 million to $23 million during the six months ended June 30, 2009 from the six months ended June 30, 2008.  The majority of this increase was due to the inclusion of PLS’ results and to costs related to moving facilities in July 2009.




SG&A expenses at inVentiv Patient Outcomes increased by $2 million to $15 million during the six months ended June 30, 2009, which was primarily from the inclusion of PMG’s results.




Other SG&A increased by approximately 30% to $13 million from the six months ended June 30, 2008 to the same period in 2009.  The increase was mainly related to unfavorable claims experience from our self-insured medical plan as well as an integration of certain divisional departments into a corporate function in 2009.




Interest Expense:Interest expense was approximately $12 million and $13 million for the six months ended June 30, 2009 and June 30, 2008,respectively.  This
decrease wasmainly due to the interest savings from a lower principal balance on our Credit Agreement, as more fully explained in Liquidity and Capital Resources,and lower capitalized interest on the fleet vehicles from our inVentiv Commercial segment.




Provision for Income Taxes: The effective tax rate for the six-month period ended June 30, 2009 was 41.3%, versus an effective tax rate of 40.5% for the six months ended June 30, 2008.  For the six months ended June 31, 2009, the rate included a tax benefit
due to state net operating losses of $0.5 million.   For the six months ended June 30, 2008, the rate included approximately $0.3 million of a tax benefit relating to states taxes settled.  The Company’s current effective tax rate is based on current projections for earnings in the tax jurisdictions in which inVentiv does business and is subject to taxation.  The Company’s effective tax rate could fluctuate due to changes in earnings between operating entities and
differences in tax rates in the related tax jurisdictions.





Net Income and EPS: inVentiv’s net income decreased by approximately $2 million to $19 million during the six months ended June 30, 2009 when compared to the same period in 2008.  Diluted
earnings per share decreased to $0.57 per share during the six months ended June 30, 2009 from $0.64 per share during the six months ended June 30, 2008.  Overall EPS and net income decreased between the periods because of lower revenues and related operating income, and increased medical claims, as described above.









































Liquidity and Capital Resources





At June 30, 2009, inVentiv had $95 million of unrestricted cash and equivalents, an increase of $5 million from December 31, 2008.





Cash provided by operations was $57 million during the six-months ended June 30, 2009, while cash provided by operations was $43 million in the six-months ended June 30, 2008.  This increase was primarily due to the improved collections and timing of unbilled services across our segments in the six months ended June 30, 2009 as
compared to June 30, 2008.  This is a result of our continued focus on strengthening our collections process as the credit environment has worsened.





Cash used in investing activities was $44 million for the six-months ended June 30, 2009 compared to $8 million used during the same period in 2008.  During the six months ended June 30, 2009 and 2008, the Company paid approximately $39 million and $20 million of cash, respectively, relating to earnout contingency payments and post-closing
adjustments from previous acquisitions.  During the six months ended June 30, 2009 and 2008, the Company also received proceeds of $4 million and $22 million, respectively, from our investment in the Columbia Strategic Cash Portfolio (“CSCP”).





Cash used in financing activities was $9 million for the six-months ended June 30, 2009, compared to $7 million provided by financing activities for the six-months ended June 30, 2008.  The difference primarily relates to the decrease in the Company’s stock price for these comparative periods, which has resulted in significantly
less exercises of stock options as well as tax expense for the six months ended June 30, 2009 as opposed to excess tax benefits for the six months ended June 30, 2008 from stock-based compensation.





Our principal external source of liquidity is our syndicated, secured credit agreement, which we entered into with UBS AG, Stamford Branch, and others in connection with the inVentiv Communications, Inc. acquisition.  On July 6, 2007, we amended this credit facility and in connection therewith entered into an Amended and Restated
Credit Agreement with UBS AG, Stamford Branch and the other lenders party to the credit facility.  The key features of the Amended and Restated Credit Agreement are as follows:




- A $330 million term loan facility was made available to inVentiv in a single drawing, which was used to
- refinance the existing October 2005 credit facility, which had a remaining balance of $164 million, and
- fund the acquisitions of CCA and AWAC and pay the fees associated with the new credit facility, with the balance retained by inVentiv as working capital.
- The credit agreement also included up to $20 million in additional term loans (“delayed draw term loans”) that was to be advanced no later than January 6, 2008.  The Company elected not to draw additional amounts under the agreement.  The agreement also contains a $50 million revolving credit facility, of
which $10 million is available for the issuance of letters of credit, and a swingline facility.  The term loan will mature on the seventh anniversary of the Amended and Restated Credit Agreement, with scheduled amortization of 1% per year during years one through six and 94% during year seven.  The revolving loans will mature on the sixth anniversary of the Amended and Restated Credit Agreement.
- Amounts advanced under the credit agreement must be prepaid with a percentage, determined based on a leverage test set forth in the credit agreement, of Excess Cash Flow (as defined in the credit agreement) and the proceeds of certain non-ordinary course asset sales and certain issuances of debt obligations and 50% of certain issuances of equity securities
of inVentiv and its subsidiaries, subject to certain exceptions. We may elect to prepay the loans, in whole or in part at any time, in certain minimum principal amounts, without penalty or premium (other than normal LIBOR break funding costs). Amounts borrowed under the Amended and Restated Credit Agreement in respect of term loans (including delayed draw term loans) that are repaid or prepaid may not be reborrowed.  Amounts borrowed under the Amended and Restated Credit Agreement in respect of revolving
loans may be paid or prepaid and reborrowed.
- Interest on the loans accrue, at our election, at either (1) the Alternate Base Rate (which is the greater of UBS’s prime rate and federal funds effective rate plus 1/2 of 1%) or (2) the Adjusted LIBOR Rate, with interest periods determined at our option of 1, 2, 3 or 6 months (or, if the affected lenders agree, 9 months), in each case plus a spread
based on the type of loan and method of interest rate determination elected.

The Amended and Restated Credit Agreement contains, among other things, conditions precedent, representations and warranties, covenants and events of default customary for facilities of this type. Such covenants include certain limitations on indebtedness,
liens, sale-leaseback transactions, guarantees, fundamental changes, dividends and transactions with affiliates. The Amended and Restated Credit Agreement also includes a financial covenant under which inVentiv is required to maintain a total leverage ratio that does not exceed, as of the last day of any four consecutive fiscal quarters, 4.0 to 1.0 through December 31, 2009 and 3.5 to 1.0 thereafter. Our leverage ratio was 2.4 to 1.0 as of June 30, 2009, which is in compliance with the financial covenant.




Effective September 6, 2007, we entered into a five-year swap arrangement for $165 million, in which the notional amount increased to $325 million upon the expiration of our 2005 swap arrangement in December 2008, to hedge against our credit exposure under the Amended and Restated Credit Agreement.  The
swap arrangement is explained in more detail in Part I, Item 3 below.




We believe that our cash and equivalents, cash to be provided by operations and available credit under our credit facility will be sufficient to fund our current operating requirements over the next 12 months.  However, we cannot assure you that these sources of liquidity will be sufficient to fund all internal growth initiatives,
investments and acquisition activities that we may wish to pursue. If we pursue significant internal growth initiatives or if we wish to acquire additional businesses in transactions that include cash payments as part of the purchase price, we may pursue additional debt or equity sources to finance such transactions and activities, depending on market conditions.  The acquisition agreements entered into in connection with our 2007 and 2008 acquisitions include earn-out provisions pursuant to which the
sellers will become entitled to additional consideration, which may be material, if the acquired businesses achieve specified performance measurements.  See Note 4 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

















ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk





Long-Term Debt Exposure





At June 30, 2009, the Company had $323 million debt outstanding under its secured term loan as described under “Liquidity and Capital Resources” in Item 2 above.  The Company will incur variable interest expense with respect to our outstanding loan.  This interest rate risk may be partially offset by our derivative
financial instrument, as described below.  Based on our debt obligation outstanding at June 30, 2009, a hypothetical increase or decrease of 10% of our variable interest rate would have an immaterial effect on interest expense due to the fixed rate associated with our derivative financial instruments.





Derivative Financial Instrument





On September 6, 2007, we entered into a new amortizing five-year interest rate swap arrangement with a notional amount of $165 million at hedge inception, with an accretive notional amount that increased to $325 million effective December 31, 2008 (concurrently with the expiration of the Company’s original 2005 three-year interest rate
swap arrangement) to hedge the total outstanding debt notional amount.  This hedge relationship was designated as a cash flow hedge.  At hedge inception, we employed the dollar offset method by performing a sensitivity analysis to assess effectiveness and utilized the hypothetical derivative method under DIG Issue G7 to measure ineffectiveness.  The hypothetical derivative contains the same terms and conditions as the debt agreement.  As a result of the hypothetical derivative
method, there was no ineffectiveness for the period ended June 30, 2009, and accordingly, $6.1 million ($3.6 million, net of taxes) was recorded as an increase to Other Comprehensive Income and a decrease to other non-current liabilities on our Condensed Consolidated Balance Sheet.





Foreign Currency Exchange Rate Exposure





The Company is not currently affected by foreign currency exchange rate exposure, except for any fluctuations in the foreign bank accounts remaining from the divestitures of our European business units,from continuing operations of our UK, France and Canadian subsidiaries and equity investments
and minority interests in our foreign business units, which are not material to its consolidated financial statements.  Our treatment of foreign subsidiaries is consistent with the guidelines set forth in SFAS 52, Foreign Currency Translations.   The financial statements of our subsidiaries expressed in foreign currencies are translated from the respective functional currencies to U.S. Dollars, with results of operations and cash
flows translated at average exchange rates during the period, and assets and liabilities translated at end of the period exchange rates.  At June 30, 2009, the accumulated other comprehensive losses related to foreign currency translations was approximately $1.5 million.  Foreign currency transaction gains and (losses) are included in the results of operations and are not material.





ITEM 4. Controls and Procedures




Based on their evaluation as of June 30, 2009, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) were effective as of June 30, 2009 to provide reasonable
assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified by the SEC, and that material information relating to the Company and its consolidated subsidiaries is made known to management, including the Chief Executive Officer and Chief Financial Officer, particularly during the period when our periodic reports are being prepared.  There were no changes in our internal controls over financial reporting
during the quarter ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.






Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our Disclosure Controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance
that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.




PART II.  OTHER INFORMATION





ITEM 1. Legal Proceedings





Weisz v. Albertsons, Inc.(San Diego Superior Court Case No. GIC 830069):  This action was filed on May 17, 2004 in San Diego Superior
Court, California by Utility Consumer Action Network against Albertsons, Inc. and its affiliated drug store chains and seventeen pharmaceutical companies.  This complaint alleged, among other claims, violation of the California Unfair Competition Law and the California Confidentiality of Medical Information Act (“CMIA”) arising from the operation of manufacturer-sponsored, pharmacy-based compliance programs similar to Adheris’ refill reminder programs.  An amended complaint
was filed on November 4, 2004 adding Adheris as a defendant to the lawsuit.  A subsequent amendment to the complaint substituted Plaintiff Kimberly Weisz (“Plaintiff”) as the class representative to this purported class action.  After several rounds of pleading challenges to Plaintiff’s various renditions of the complaint, all but one pharmaceutical manufacturing company, AstraZeneca, LP, were dismissed from the case, leaving only Albertsons, Inc., Adheris, and AstraZeneca
as the remaining defendants (“Defendants”) in this action.





On February 8, 2009, the remaining parties to the Weisz action entered into a Settlement Agreement and Release (the "Weisz Settlement").  Under the terms of the Weisz Settlement, which received final court approval on June 5, 2009, Adheris agreed to refrain from knowing participation
in any refill reminder programs, targeted mailings or notifications regarding medical conditions of specific California residents except those residents who have expressly opted in to the communication or as otherwise permitted by California law.  Adheris currently does not conduct significant business in California of the type encompassed by Weisz Settlement.  It is expected that Adheris’ financial contribution to the settlement in excess of its retention amount will be funded by insurance.





Indemnification Claim.  In January 2008, PRS received a demand for indemnification from one of its customers relating to a lawsuit filed against the customer pursuant to the Telephone Consumer Protection Act of 1991, as amended by the Junk Fax Prevention
Act of 2005, 47 U.S.C. § 227, a state consumer fraud statute and common law conversion; and seeks statutory and actual damages allegedly caused by the sending of unsolicited fax advertisements related to the customer’s product.  PRS assisted the customer in sending the faxes in question, although the actual faxing was done by an unaffiliated entity.  The customer based its demand for indemnification on an indemnification clause found in its services contract with PRS.  PRS
agreed to indemnify the customer on the condition that PRS and its appointed counsel would have control over the defense of this matter.





In December 2008, the parties to the action entered into a settlement agreement, which received  final court approval June 10, 2009.  The amount to be paid to the settlement class in excess of the deductible amount will be funded by insurance.





Other  We are subject to lawsuits, investigations and claims arising out of the conduct of our business, including those related to commercial transactions, contracts, government regulation and employment
matters.  Certain such claims have been filed or are pending against us.  All such matters are of a kind routinely experienced in our business and are consistent with our historical experience.  We do not believe that any such routine action will have a material adverse effect on us.





ITEM 1A.  Risk Factors





There have been no material changes in the risk factors discussed in Item 1A of our Form 10-K for the year ended December 31, 2008 except as follows:





Pricing pressures on pharmaceutical manufacturers from future health care reform initiatives or from changes in the reimbursement policies of third party payers may negatively impact our business.





Most of our revenues are generated from customers whose businesses are involved in the manufacture and commercialization of pharmaceutical products.  Sales of pharmaceutical products are dependent, in large part, on the availability and extent of reimbursement from government health
administration authorities, private health insurers and other organizations.  Changes in government regulations or private third-party payors’ reimbursement policies may reduce reimbursement for pharmaceutical products and adversely affect demand for our services, resulting in a material adverse impact on our financial condition and results of operations.





In the United States, at both the federal and state levels, the government regularly proposes legislation to reform healthcare and its cost, and such proposals have received increasing political attention. Congress is considering legislation to reform the U.S. healthcare system by reducing the
number of uninsured and underinsured individuals and making other changes. While healthcare reform may increase the number of patients who have insurance coverage for pharmaceutical products, it may also include changes that adversely affect our clients' business, including by limiting reimbursement for pharmaceutical products, increasing rebates required from manufacturers whose drugs are covered by Medicare and Medicaid programs, facilitating the importation of lower-cost prescription drugs that are marketed
outside the United States or by other means.  Our customers encounter similar regulatory and legislative issues in other countries.





Managed care organizations continue to seek price discounts and, in some cases, to impose restrictions on the coverage of particular drugs.  Government efforts to reduce Medicaid expenses may lead to increased use of managed care organizations by Medicaid programs. This may result
in managed care organizations influencing prescription decisions for a larger segment of the population and a corresponding constraint on prices and reimbursement for pharmaceutical products.





We are dependent on vendors providing goods and services that are critical to certain of our business units, and if such vendors were to cease providing goods and services to us for any reason, we might have difficulty replacing them.





We are dependent on third party vendors for components of the services provided to customers by some of our business units.  Certain of these vendors are sole source vendors or have high switching costs associated with them.  If any such vendor were to fail to provide goods
and services to us on a timely basis, the corresponding client services provided by our business units could be interrupted.  A delay in or disruption of client services could lead to the loss of the client, the incurrence of contractual penalties, exposure to damages claims and/or an adverse impact on our reputation and accordingly could materially and adversely impact on our financial condition and results of operations.





We have experienced an increased rate of medical reimbursement claims during 2009, and if the increased rate of claims is sustained or increases, our business could be adversely affected.





We are largely self-insured for employee healthcare benefits other than catastrophic coverage.  During 2009, we have experienced higher than anticipated costs of providing employee healthcare benefits.  Specifically, we have experienced higher occurrences of individually
large medical and prescription drug claims.  Although we and others believe that employees may be accelerating medical claims as a result of current economic conditions, we have not been able to directly determine the reason for the increased claims rate.  If the increased claims rate is sustained or  increases, it could materially and adversely impact on our financial condition and results of operations.








ITEM 4.    Submission of Matters to a Vote of Security Holders





At an annual meeting of the stockholders of the Company, held on June 17, 2009, the following matters were submitted to a vote of our stockholders, with the following votes cast:





(i)  the election of seven directors to the Board of Directors for a term of one year, expiring at the 2010 Annual Meeting:





For
WithheldEran Broshy
28,680,283
2,080,387A. Clayton Perfall
29,302,169
1,458,501Per G.H. Lofberg
28,813,093
1,947,577Mark E. Jennings
28,812,265
1,948,406Craig Saxton, M.D.
27,706,551
3,054,120Terrell G. Herring
28,260,624
2,500,047R. Blane Walter
29,260,342
1,500,328





(ii) the approval of the 2006 Long-Term Incentive Plan Amendment:





For
Withheld
Abstain
Broker Non-VotesApproval of the 2006 Long-Term Incentive Plan Amendment
20,231,706
7,596,529
22,209
2,910,226








(iii) the ratification of  the appointment of Deloitte and Touche LLP as the Company’s independent auditors for 2009:





For
Withheld
Abstain
Broker Non-VotesDeloitte & Touche LLP ratification
30,710,096
39,890
10,684
--








ITEM 5.Other Information





Transition of Eran Broshy from Executive Chairman to Non-Executive Chairman





On August 6, 2009, we entered into arrangements with Eran Broshy for his continued service as Chairman in a non-executive capacity in lieu of serving as Executive Chairman, effective as of August 1, 2009.  Mr. Broshy will receive a retainer of $100,000 per year as non-executive Chairman in addition to regular per meeting fees and
will be eligible to participate in the director equity grant program on the same terms as other directors.  Accordingly, Mr. Broshy will receive an initial equity grant as a non-employee director on or about August 12, 2009.   Concurrently, we entered into a consulting agreement with Mr. Broshy pursuant to which he will provide consulting services related to corporate strategy and corporate development.  Mr. Broshy will be entitled to a consulting fee of $100,000 per year
for up to 3 years, but the agreement is terminable after 2 years; he was previously entitled to a salary of $300,000 per year as Executive Chairman.




As disclosed in our Form 8-K filed on June 9, 2009, our Board of Directors, acting through its compensation committee, determined to use its best efforts to negotiate with our executives having “single trigger” change in control benefits in order to amend or modify these agreements to remove the “single trigger” change
in control benefits absent stockholder ratification.  The arrangements with Mr. Broshy described above eliminate all of Mr. Broshy's cash change of control benefits and all tax gross-up obligations to Mr. Broshy related to a change in control.  The agreement reached did not eliminate Mr. Broshy's right to acceleration of equity vesting upon a change in control.  Mr. Broshy's existing equity grants contemplated that they would continue to vest during any post-employment service as
a director of the Company.




Adoption of SFAS 160


In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS 160”), which addresses the accounting and reporting framework for minority interests by a parent company.  SFAS 160 also addresses disclosure requirements
to distinguish between interests of the parent and interests of the noncontrolling owners of a subsidiary.  The Company adopted the provisions of SFAS 160, effective January 1, 2009, as required.  As a result of the adoption, the Company has reported noncontrolling interest (previously minority interest) as a component of equity in the Condensed Consolidated Balance Sheets and the net income or loss attributable to noncontrolling interests has been separately identified in the Condensed Consolidated
Income Statements.
 
 The adoption of SFAS 160 did not have a material impact on the Company’s financial condition, results of operations or cash flows.  As a result of the retrospective presentation and disclosure requirements of SFAS 160, the Company will reflect the revision of certain previously reported line items effected by the adoption
of SFAS 160 in future filings.
 
 The principal effect of the adoption of SFAS No. 160 on the Consolidated Balance Sheets  as of December  31, 2008 and 2007 included in the Company’s 2008 Annual Report on Form 10-K  is summarized as follows:
 
 
 (in thousands)
December 31, 2008
December 31, 2007Total equity, as previously reported
$367,514
$477,466SFAS No. 160 reclassification of noncontrolling interest
130
160Total equity, as  adjusted
$367,644
$477,626
 
 
 The effect of the adoption of SFAS No. 160 on the Consolidated Income Statements for the years ended December 31, 2008, 2007 and 2006 included in the Company’s 2008 Annual Report on Form 10-K is summarized as follows:
 
 Years Ended December 31(in thousands)
2008
2007
2006Net (loss) income, as previously reported
$(128,021)
$47,484
$51,235SFAS No 160 reclassification of noncontrolling interests
1,146
1,070
1,207Net (loss) income, as adjusted
(126,875)
48,554
52,442Net income attributable to noncontrolling interest
(1,146)
(1,070)
(1,207)Net (loss) income attributable to inVentiv Health Inc.
$(128,021)
$47,484
$51,235








ITEM 6.           Exhibits





10.27

Letter agreement dated August 6, 2009 between the Registrant and Eran Broshy.10.28

Consulting Agreement executed August 6, 2009 and effective as of August 1, 2009 between the Registrant and Eran Broshy.31.1

Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2

Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1

Chief Executive Officer’s Certification of Financial Statements Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2

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














SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





INVENTIV HEALTH, INC.





Date: August 7, 2009                                                                    By:        /s/      David
S. Bassin


David S. Bassin


Chief Financial Officer and Secretary


(Principal financial officer and principal accounting officer)