##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    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
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transitional period from  to __________________.
 Commission file number: 0-29100
 eResearchTechnology, Inc.
  Delaware
    
    22-3264604(State or other jurisdiction of incorporation 
or organization)
    
    (I.R.S. Employer Identification No.)
 1818 Market Street 
Philadelphia, PA
    
    19103(Address of principal executive offices)
    
    (Zip code)
  (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 Yes o No þ




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##### 



INDEX
 PagePart I. Financial InformationItem 1. Financial StatementsConsolidated Balance Sheets-December 31, 2008 and June 30, 2009 (unaudited)
    
    
    3Consolidated Statements of Operations (unaudited)Three and Six Months Ended June 30, 2008 and 2009
    
    
    4Consolidated Statements of Cash Flows (unaudited)Six Months Ended June 30, 2008 and 2009
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6-17Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18-29Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29Part II. Other InformationItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30Item 6. Exhibits
    
    
    30Signatures
    
    
    31Exhibit Index
    
    
    32Exhibit 10.28Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



Part 1. Financial Information
 
 Item 1.
    
    Financial Statements
  
    December 31, 2008
    
    
    June 30, 2009AssetsCurrent Assets:Cash and cash equivalents
    
    $
    66,376
    
    
    $
    68,729Short-term investments
    
    
    50
    
    
    
    50Investment in marketable securities
    
    
    
    
    
    
    816Accounts receivable, less allowance for doubtful accounts of
$695 and $657, respectively
    
    
    29,177
    
    
    
    17,408Prepaid income taxes
    
    
    1,892
    
    
    
    4,268Prepaid expenses and other
    
    
    2,885
    
    
    
    3,929Deferred income taxes
    
    
    1,831
    
    
    
    1,645Total current assets
    
    
    102,211
    
    
    
    96,845Property and equipment, net
    
    
    29,639
    
    
    
    25,409Goodwill
    
    
    34,603
    
    
    
    34,580Intangible assets
    
    
    2,149
    
    
    
    1,874Other assets
    
    
    520
    
    
    
    422Total assets
    
    $
    169,122
    
    
    $
    159,130Liabilities and Stockholders EquityCurrent Liabilities:Accounts payable
    
    $
    3,971
    
    
    $
    3,518Accrued expenses
    
    
    8,140
    
    
    
    4,570Income taxes payable
    
    
    2,492
    
    
    
    501Current portion of capital lease obligations
    
    
    43
    
    
    
    Deferred revenues
    
    
    12,276
    
    
    
    13,680Total current liabilities
    
    
    26,922
    
    
    
    22,269Deferred rent
    
    
    2,183
    
    
    
    2,409Deferred income taxes
    
    
    1,332
    
    
    
    2,136Other liabilities
    
    
    1,257
    
    
    
    997Total liabilities
    
    
    31,694
    
    
    
    27,811Commitments and contingenciesStockholders Equity:Preferred stock  $10.00 par value, 500,000 shares authorized,
none issued and outstanding
    
    
    
    
    
    
    Common stock  $.01 par value, 175,000,000 shares authorized,
59,950,257 and 59,985,442 shares issued, respectively
    
    
    600
    
    
    
    600Additional paid-in capital
    
    
    93,828
    
    
    
    95,512Accumulated other comprehensive loss
    
    
    (2,716
    )
    
    
    (1,089
    )Retained earnings
    
    
    110,479
    
    
    
    115,097Treasury stock, 8,686,868 and 11,393,587 shares at cost, respectively
    
    
    (64,763
    )
    
    
    (78,801
    )Total stockholders equity
    
    
    137,428
    
    
    
    131,319Total liabilities and stockholders equity
    
    $
    169,122
    
    
    $
    159,130
   3




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##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2009
    
    
    2008
    
    
    2009Net revenues:EDC licenses and services
    
    $
    1,487
    
    
    $
    1,083
    
    
    $
    2,790
    
    
    $
    2,501Services
    
    
    26,763
    
    
    
    16,215
    
    
    
    51,358
    
    
    
    32,323Site support
    
    
    7,222
    
    
    
    6,878
    
    
    
    14,997
    
    
    
    13,138Total net revenues
    
    
    35,472
    
    
    
    24,176
    
    
    
    69,145
    
    
    
    47,962Costs of revenues:Cost of EDC licenses and services
    
    
    468
    
    
    
    397
    
    
    
    919
    
    
    
    863Cost of services
    
    
    10,185
    
    
    
    7,671
    
    
    
    20,448
    
    
    
    15,364Cost of site support
    
    
    4,599
    
    
    
    3,470
    
    
    
    9,867
    
    
    
    7,105Total costs of revenues
    
    
    15,252
    
    
    
    11,538
    
    
    
    31,234
    
    
    
    23,332Gross margin
    
    
    20,220
    
    
    
    12,638
    
    
    
    37,911
    
    
    
    24,630Operating expenses:Selling and marketing
    
    
    3,810
    
    
    
    3,274
    
    
    
    7,133
    
    
    
    6,700General and administrative
    
    
    4,601
    
    
    
    3,527
    
    
    
    9,474
    
    
    
    7,604Research and development
    
    
    1,051
    
    
    
    993
    
    
    
    2,050
    
    
    
    2,142Total operating expenses
    
    
    9,462
    
    
    
    7,794
    
    
    
    18,657
    
    
    
    16,446Operating income
    
    
    10,758
    
    
    
    4,844
    
    
    
    19,254
    
    
    
    8,184Other income (expense), net
    
    
    244
    
    
    
    (409
    )
    
    
    671
    
    
    
    (293
    )Income before income taxes
    
    
    11,002
    
    
    
    4,435
    
    
    
    19,925
    
    
    
    7,891Income tax provision
    
    
    4,342
    
    
    
    1,887
    
    
    
    7,519
    
    
    
    3,273Net income
    
    $
    6,660
    
    
    $
    2,548
    
    
    $
    12,406
    
    
    $
    4,618Basic net income per share
    
    $
    0.13
    
    
    $
    0.05
    
    
    $
    0.24
    
    
    $
    0.09Diluted net income per share
    
    $
    0.13
    
    
    $
    0.05
    
    
    $
    0.24
    
    
    $
    0.09Shares used to calculate basic net income per share
    
    
    50,734
    
    
    
    48,866
    
    
    
    50,686
    
    
    
    49,872Shares used to calculate diluted net income per share
    
    
    52,182
    
    
    
    49,175
    
    
    
    52,038
    
    
    
    50,169
   4




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##### Table of Contents



Six Months Ended June 30,2008
    
    
    2009Operating activities:Net income
    
    $
    12,406
    
    
    $
    4,618Adjustments to reconcile net income to net cash
provided by operating activities:Gain on sale of EDC operations
    
    
    
    
    
    
    (530
    )Depreciation and amortization
    
    
    8,574
    
    
    
    6,620Cost of sales of equipment
    
    
    492
    
    
    
    26Provision for uncollectible accounts
    
    
    60
    
    
    
    210Share-based compensation
    
    
    1,366
    
    
    
    1,515Deferred income taxes
    
    
    (360
    )
    
    
    1,421Changes in operating assets and liabilities:Accounts receivable
    
    
    (2,622
    )
    
    
    11,987Prepaid expenses and other
    
    
    (1,616
    )
    
    
    (1,277
    )Accounts payable
    
    
    (240
    )
    
    
    683Accrued expenses
    
    
    (815
    )
    
    
    (3,447
    )Income taxes
    
    
    348
    
    
    
    (4,602
    )Deferred revenues
    
    
    583
    
    
    
    1,829Deferred rent
    
    
    (198
    )
    
    
    (3
    )Net cash provided by operating activities
    
    
    17,978
    
    
    
    19,050Investing activities:Purchases of property and equipment
    
    
    (5,239
    )
    
    
    (2,520
    )Proceeds from sales of investments
    
    
    2,392
    
    
    
    Payment related to sale of EDC operations
    
    
    
    
    
    
    (1,150
    )Payments for acquisition
    
    
    (4,798
    )
    
    
    (655
    )Net cash used in investing activities
    
    
    (7,645
    )
    
    
    (4,325
    )Financing activities:Repayment of capital lease obligations
    
    
    (855
    )
    
    
    (43
    )Proceeds from exercise of stock options
    
    
    1,174
    
    
    
    72Stock option income tax benefit
    
    
    704
    
    
    
    62Repurchase of common stock for treasury
    
    
    
    
    
    
    (14,038
    )Net cash provided by (used in) financing
activities
    
    
    1,023
    
    
    
    (13,947
    )Effect of exchange rate changes on cash
    
    
    8
    
    
    
    1,575Net increase in cash and cash equivalents
    
    
    11,364
    
    
    
    2,353Cash and cash equivalents, beginning of period
    
    
    38,082
    
    
    
    66,376Cash and cash equivalents, end of period
    
    $
    49,446
    
    
    $
    68,729
   5




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##### Table of Contents



eResearchTechnology, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 (unaudited)
 Note 1. Basis of Presentation
  Note 2. Summary of Significant Accounting Policies
 Principles of Consolidation
  Reclassifications
  Use of Estimates
  Revenue Recognition
      6




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Concentration of Credit Risk and Significant Clients
   Cash and Cash Equivalents
  Short-term Investments and Investments in Marketable Securities
  Property and Equipment
   7




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##### Table of Contents



Goodwill
    Long-lived Assets
  Software Development Costs
   8




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##### Table of Contents



Stock-Based Compensation
 Accounting for Stock-Based Compensation
  Valuation Assumptions for Options Granted
  2008
    
    
    2009Risk-free interest rate
    
    
    2.14
    %
    
    
    1.34
    %Expected life
    
    3.5 years
    
    
    3.5 yearsExpected volatility
    
    
    51.73
    %
    
    
    63.98
    %
  Equity Incentive Plans
     9




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##### Table of Contents



RemainingWeighted
    
    
    Contractual
    
    
    IntrinsicAverage
    
    
    Term
    
    
    ValueShares
    
    
    Exercise Price
    
    
    (in years)
    
    
    (in thousands)Outstanding as of January 1, 2009
    
    
    3,635,860
    
    
    $
    11.03Granted
    
    
    1,230,650
    
    
    
    4.61Exercised
    
    
    (35,185
    )
    
    
    2.05Cancelled/forfeited
    
    
    (159,739
    )
    
    
    11.08Outstanding as of June 30, 2009
    
    
    4,671,586
    
    
    $
    9.41
    
    
    
    5.0
    
    
    $
    3,612Options exercisable or expected to vest at
June 30, 2009
    
    
    4,391,266
    
    
    $
    9.52
    
    
    
    4.9
    
    
    $
    3,364Options exercisable at June 30, 2009
    
    
    2,802,786
    
    
    $
    10.64
    
    
    
    4.1
    
    
    $
    1,955
    Tax Effect Related to Stock-based Compensation Expense
  Note 3. Fair Value of Financial Instruments
    10




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Level 1
    
    Unadjusted quoted prices in active markets for identical assets or liabilitiesLevel 2
    
    Unadjusted quoted prices in active markets for similar assets or liabilities, or 
Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or 
Inputs other than quoted prices that are observable for the asset or liabilityLevel 3
    
    Unobservable inputs for the asset or liability
  Fair Value Measurements at December 31, 2008Quoted Prices
    
    
    
    
    
    
    Significantin Active Markets
    
    
    Significant Other
    
    
    Unobservablefor Identical Assets
    
    
    Observable Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Money market funds
    
    $
    66,376
    
    
    $
    66,376
    
    
    $
    
    
    
    $
    Auction rate
securities
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    50Total
    
    $
    66,426
    
    
    $
    66,376
    
    
    $
    
    
    
    $
    50
 Fair Value Measurements at June 30, 2009Quoted Prices
    
    
    
    
    
    
    Significantin Active Markets
    
    
    Significant Other
    
    
    Unobservablefor Identical Assets
    
    
    Observable Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Money market funds
    
    $
    68,729
    
    
    $
    68,729
    
    
    $
    
    
    
    $
    Auction rate
securities
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    50Marketable
securities
    
    
    816
    
    
    
    
    
    
    
    816
    
    
    
    Total
    
    $
    69,595
    
    
    $
    68,729
    
    
    $
    816
    
    
    $
    50
 Note 4. Business Combination
   11




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LeaseSeverance
    
    
    LiabilityBalance at acquisition at November 28, 2007
    
    $
    1,165
    
    
    $
    900Adjustments to previous estimates
    
    
    16
    
    
    
    Cash payments
    
    
    (55
    )
    
    
    Balance at December 31, 2007
    
    
    1,126
    
    
    
    900Additional reserve recorded
    
    
    21
    
    
    
    Adjustments to previous estimates
    
    
    (255
    )
    
    
    1,183Cash payments
    
    
    (801
    )
    
    
    (327
    )Balance at December 31, 2008
    
    
    91
    
    
    
    1,756Cash payments
    
    
    (91
    )
    
    
    (260
    )Balance at June 30, 2009
    
    $
    
    
    
    $
    1,496
  Note 5. Intangible Assets
  December 31, 2008EstimatedAccumulated
    
    
    Net Book
    
    
    Useful Life (inDescription
    
    Gross Value
    
    
    Amortization
    
    
    Value
    
    
    years)Backlog
    
    $
    1,900
    
    
    $
    1,269
    
    
    $
    631
    *
    
    
    3Customer Relationships
    
    
    1,700
    
    
    
    182
    
    
    
    1,518
    
    
    
    10Technology
    
    
    400
    
    
    
    400
    
    
    
    
    
    
    
    1Total
    
    $
    4,000
    
    
    $
    1,851
    
    
    $
    2,149
 June 30, 2009EstimatedAccumulated
    
    
    Net Book
    
    
    Useful Life (inDescription
    
    Gross Value
    
    
    Amortization
    
    
    Value
    
    
    years)Backlog
    
    $
    1,900
    
    
    $
    1,460
    
    
    $
    440
    *
    
    
    3Customer Relationships
    
    
    1,700
    
    
    
    266
    
    
    $
    1,434
    
    
    
    10Technology
    
    
    400
    
    
    
    400
    
    
    $
    
    
    
    
    1Total
    
    $
    4,000
    
    
    $
    2,126
    
    
    $
    1,874
 
 *
    
    The backlog is being amortized over three years on an accelerated basis.   12




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##### Table of Contents



Amortization ofIntangibleYears ending December 31,
    
    Assets2009
    
    $
    2672010
    
    
    4312011
    
    
    1702012
    
    
    1702013
    
    
    170Thereafter
    
    
    666Total
    
    $
    1,874
 Note 6. Sale of Assets
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2009
    
    
    2008
    
    
    2009Net revenue
    
    $
    1,487
    
    
    $
    1,083
    
    
    $
    2,790
    
    
    $
    2,501Cost of revenue
    
    
    468
    
    
    
    397
    
    
    
    919
    
    
    
    863Gross margin
    
    
    1,019
    
    
    
    686
    
    
    
    1,871
    
    
    
    1,638Operating expenses
    
    
    268
    
    
    
    (309
    )
    
    
    521
    
    
    
    (84
    )Operating income
    
    
    751
    
    
    
    995
    
    
    
    1,350
    
    
    
    1,722Income tax provision
    
    
    319
    
    
    
    418
    
    
    
    574
    
    
    
    725Net income from EDC operations
    
    $
    432
    
    
    $
    577
    
    
    $
    776
    
    
    $
    997
  Note 7. Net Income per Common Share
   13




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Net
    
    
    
    
    
    
    Per ShareThree Months Ended June 30,
    
    Income
    
    
    Shares
    
    
    Amount2008Basic net income
    
    $
    6,660
    
    
    
    50,734
    
    
    $
    0.13Effect of dilutive
shares
    
    
    
    
    
    
    1,448
    
    
    
    Diluted net income
    
    $
    6,660
    
    
    
    52,182
    
    
    $
    0.132009Basic net income
    
    $
    2,548
    
    
    
    48,866
    
    
    $
    0.05Effect of dilutive
shares
    
    
    
    
    
    
    309
    
    
    
    Diluted net income
    
    $
    2,548
    
    
    
    49,175
    
    
    $
    0.05
 Net
    
    
    
    
    
    
    Per ShareSix Months Ended June 30,
    
    Income
    
    
    Shares
    
    
    Amount2008Basic net income
    
    $
    12,406
    
    
    
    50,686
    
    
    $
    0.24Effect of dilutive
shares
    
    
    
    
    
    
    1,352
    
    
    
    Diluted net income
    
    $
    12,406
    
    
    
    52,038
    
    
    $
    0.242009Basic net income
    
    $
    4,618
    
    
    
    49,872
    
    
    $
    0.09Effect of dilutive
shares
    
    
    
    
    
    
    297
    
    
    
    Diluted net income
    
    $
    4,618
    
    
    
    50,169
    
    
    $
    0.09
  Note 8. Comprehensive Income
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2009
    
    
    2008
    
    
    2009Net income
    
    $
    6,660
    
    
    $
    2,548
    
    
    $
    12,406
    
    
    $
    4,618Other comprehensive income:Change in unrealized losses on
marketable securities
    
    
    
    
    
    
    (219
    )
    
    
    
    
    
    
    (219
    )Currency translation adjustment
    
    
    19
    
    
    
    2,078
    
    
    
    16
    
    
    
    1,846Comprehensive income, net of tax
    
    $
    6,679
    
    
    $
    4,407
    
    
    $
    12,422
    
    
    $
    6,245
  14




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Note 9. Recent Accounting Pronouncements
      Note 10. Income Taxes
    Note 11. Related Party Transactions
   15




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Note 12. Commitments and Contingencies
    Note 13. Operating Segments / Geographic Information
   16




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##### Table of Contents



Three Months Ended June 30, 2008NorthAmerica
    
    
    Europe
    
    
    TotalEDC licenses and services revenues
    
    $
    1,487
    
    
    $
    
    
    
    $
    1,487Service revenues
    
    
    21,583
    
    
    
    5,180
    
    
    
    26,763Site support revenues
    
    
    4,775
    
    
    
    2,447
    
    
    
    7,222Net revenues from external customers
    
    $
    27,845
    
    
    $
    7,627
    
    
    $
    35,472Operating income
    
    $
    8,497
    
    
    $
    2,261
    
    
    $
    10,758Long-lived assets
    
    $
    23,578
    
    
    $
    6,274
    
    
    $
    29,852Total assets
    
    $
    139,347
    
    
    $
    19,059
    
    
    $
    158,406
 Three Months Ended June 30, 2009NorthAmerica
    
    
    Europe
    
    
    TotalEDC licenses and services revenues
    
    $
    1,083
    
    
    $
    
    
    
    $
    1,083Service revenues
    
    
    13,717
    
    
    
    2,498
    
    
    
    16,215Site support revenues
    
    
    4,930
    
    
    
    1,948
    
    
    
    6,878Net revenues from external customers
    
    $
    19,730
    
    
    $
    4,446
    
    
    $
    24,176Operating income
    
    $
    4,197
    
    
    $
    647
    
    
    $
    4,844Long-lived assets
    
    $
    22,240
    
    
    $
    3,169
    
    
    $
    25,409Total assets
    
    $
    139,648
    
    
    $
    19,482
    
    
    $
    159,130
 Six Months Ended June 30, 2008NorthAmerica
    
    
    Europe
    
    
    TotalEDC licenses and services revenues
    
    $
    2,790
    
    
    $
    
    
    
    $
    2,790Service revenues
    
    
    42,114
    
    
    
    9,244
    
    
    
    51,358Site support revenues
    
    
    9,906
    
    
    
    5,091
    
    
    
    14,997Net revenues from external customers
    
    $
    54,810
    
    
    $
    14,335
    
    
    $
    69,145Operating income
    
    $
    15,347
    
    
    $
    3,907
    
    
    $
    19,254Long-lived assets
    
    $
    23,578
    
    
    $
    6,274
    
    
    $
    29,852Total assets
    
    $
    139,347
    
    
    $
    19,059
    
    
    $
    158,406
 Six Months Ended June 30, 2009NorthAmerica
    
    
    Europe
    
    
    TotalEDC licenses and services revenues
    
    $
    2,501
    
    
    $
    
    
    
    $
    2,501Service revenues
    
    
    27,604
    
    
    
    4,719
    
    
    
    32,323Site support revenues
    
    
    9,373
    
    
    
    3,765
    
    
    
    13,138Net revenues from external customers
    
    $
    39,478
    
    
    $
    8,484
    
    
    $
    47,962Operating income
    
    $
    7,182
    
    
    $
    1,002
    
    
    $
    8,184Long-lived assets
    
    $
    22,240
    
    
    $
    3,169
    
    
    $
    25,409Total assets
    
    $
    139,648
    
    
    $
    19,482
    
    
    $
    159,130
 Note 14. Stock Repurchase
   17




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Cautionary Statement for Forward-Looking Information
    Overview
     Cardiac Safety ® ®
  18




---



##### Table of Contents



Cardiac Safety Consulting.
 ePRO
 Project Assurance
        19




---



##### Table of Contents



Reclassifications
   20




---



##### Table of Contents



Results of Operations
 Executive Overview
        21




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##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2009
    
    
    2008
    
    
    2009Net revenues:EDC licenses and services
    
    
    4.2
    %
    
    
    4.5
    %
    
    
    4.0
    %
    
    
    5.2
    %Services
    
    
    75.4
    %
    
    
    67.1
    %
    
    
    74.3
    %
    
    
    67.4
    %Site support
    
    
    20.4
    %
    
    
    28.4
    %
    
    
    21.7
    %
    
    
    27.4
    %Total net revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of revenues:Cost of EDC licenses and services
    
    
    1.3
    %
    
    
    1.6
    %
    
    
    1.3
    %
    
    
    1.8
    %Cost of services
    
    
    28.7
    %
    
    
    31.7
    %
    
    
    29.6
    %
    
    
    32.0
    %Cost of site support
    
    
    13.0
    %
    
    
    14.4
    %
    
    
    14.3
    %
    
    
    14.8
    %Total costs of revenues
    
    
    43.0
    %
    
    
    47.7
    %
    
    
    45.2
    %
    
    
    48.6
    %Gross margin
    
    
    57.0
    %
    
    
    52.3
    %
    
    
    54.8
    %
    
    
    51.4
    %Operating expenses:Selling and marketing
    
    
    10.7
    %
    
    
    13.6
    %
    
    
    10.3
    %
    
    
    14.0
    %General and administrative
    
    
    13.0
    %
    
    
    14.6
    %
    
    
    13.7
    %
    
    
    15.8
    %Research and development
    
    
    3.0
    %
    
    
    4.1
    %
    
    
    3.0
    %
    
    
    4.5
    %Total operating
expenses
    
    
    26.7
    %
    
    
    32.3
    %
    
    
    27.0
    %
    
    
    34.3
    %Operating income
    
    
    30.3
    %
    
    
    20.0
    %
    
    
    27.8
    %
    
    
    17.1
    %Other income (expense), net
    
    
    0.7
    %
    
    
    -1.7
    %
    
    
    1.0
    %
    
    
    -0.7
    %Income before income taxes
    
    
    31.0
    %
    
    
    18.3
    %
    
    
    28.8
    %
    
    
    16.4
    %Income tax provision
    
    
    12.2
    %
    
    
    7.8
    %
    
    
    10.9
    %
    
    
    6.8
    %Net income
    
    
    18.8
    %
    
    
    10.5
    %
    
    
    17.9
    %
    
    
    9.6
    %
  22




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Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2009.
  Three Months Ended June 30,2008
    
    
    2009
    
    
    Increase (Decrease)EDC licenses and services:Net revenues
    
    $
    1,487
    
    
    $
    1,083
    
    
    $
    (404
    )
    
    
    (27.2
    %)Costs of revenues
    
    
    468
    
    
    
    397
    
    
    
    (71
    )
    
    
    (15.2
    %)Gross margin
    
    $
    1,019
    
    
    $
    686
    
    
    $
    (333
    )
    
    
    (32.7
    %)Services:Net revenues
    
    $
    26,763
    
    
    $
    16,215
    
    
    $
    (10,548
    )
    
    
    (39.4
    %)Costs of revenues
    
    
    10,185
    
    
    
    7,671
    
    
    
    (2,514
    )
    
    
    (24.7
    %)Gross margin
    
    $
    16,578
    
    
    $
    8,544
    
    
    $
    (8,034
    )
    
    
    (48.5
    %)Site support:Net revenues
    
    $
    7,222
    
    
    $
    6,878
    
    
    $
    (344
    )
    
    
    (4.8
    %)Costs of revenues
    
    
    4,599
    
    
    
    3,470
    
    
    
    (1,129
    )
    
    
    (24.5
    %)Gross margin
    
    $
    2,623
    
    
    $
    3,408
    
    
    $
    785
    
    
    
    29.9
    %TotalNet revenues
    
    $
    35,472
    
    
    $
    24,176
    
    
    $
    (11,296
    )
    
    
    (31.8
    %)Costs of revenues
    
    
    15,252
    
    
    
    11,538
    
    
    
    (3,714
    )
    
    
    (24.4
    %)Gross margin
    
    
    20,220
    
    
    
    12,638
    
    
    
    (7,582
    )
    
    
    (37.5
    %)Operating expenses:Selling and marketing
    
    
    3,810
    
    
    
    3,274
    
    
    
    (536
    )
    
    
    (14.1
    %)General and administrative
    
    
    4,601
    
    
    
    3,527
    
    
    
    (1,074
    )
    
    
    (23.3
    %)Research and development
    
    
    1,051
    
    
    
    993
    
    
    
    (58
    )
    
    
    (5.5
    %)Total operating expenses
    
    
    9,462
    
    
    
    7,794
    
    
    
    (1,668
    )
    
    
    (17.6
    %)Operating income
    
    
    10,758
    
    
    
    4,844
    
    
    
    (5,914
    )
    
    
    (55.0
    %)Other income (expense), net
    
    
    244
    
    
    
    (409
    )
    
    
    (653
    )
    
    
    (267.6
    %)Income before income taxes
    
    
    11,002
    
    
    
    4,435
    
    
    
    (6,567
    )
    
    
    (59.7
    %)Income tax provision
    
    
    4,342
    
    
    
    1,887
    
    
    
    (2,455
    )
    
    
    (56.5
    %)Net income
    
    $
    6,660
    
    
    $
    2,548
    
    
    $
    (4,112
    )
    
    
    (61.7
    %)
  Three Months Ended June 30,
    
    
    Increase2008
    
    
    2009
    
    
    (Decrease)Cost of EDC licenses and services
    
    
    31.5
    %
    
    
    36.7
    %
    
    
    5.2
    %Cost of services
    
    
    38.1
    %
    
    
    47.3
    %
    
    
    9.2
    %Cost of site support
    
    
    63.7
    %
    
    
    50.5
    %
    
    
    (13.2
    %)Total costs of revenues
    
    
    43.0
    %
    
    
    47.7
    %
    
    
    4.7
    %Operating expenses:Selling and marketing
    
    
    10.7
    %
    
    
    13.6
    %
    
    
    2.9
    %General and administrative
    
    
    13.0
    %
    
    
    14.6
    %
    
    
    1.6
    %Research and development
    
    
    3.0
    %
    
    
    4.1
    %
    
    
    1.1
    %
  23




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##### Table of Contents



EDC
  Revenues
   Costs of Revenues
   Operating Expenses
    24




---



##### Table of Contents



25




---



##### Table of Contents



Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2009.
  Six Months Ended June 30,2008
    
    
    2009
    
    
    Increase (Decrease)EDC licenses and services:Net revenues
    
    $
    2,790
    
    
    $
    2,501
    
    
    $
    (289
    )
    
    
    (10.4
    %)Costs of revenues
    
    
    919
    
    
    
    863
    
    
    
    (56
    )
    
    
    (6.1
    %)Gross margin
    
    $
    1,871
    
    
    $
    1,638
    
    
    $
    (233
    )
    
    
    (12.5
    %)Services:Net revenues
    
    $
    51,358
    
    
    $
    32,323
    
    
    $
    (19,035
    )
    
    
    (37.1
    %)Costs of revenues
    
    
    20,448
    
    
    
    15,364
    
    
    
    (5,084
    )
    
    
    (24.9
    %)Gross margin
    
    $
    30,910
    
    
    $
    16,959
    
    
    $
    (13,951
    )
    
    
    (45.1
    %)Site support:Net revenues
    
    $
    14,997
    
    
    $
    13,138
    
    
    $
    (1,859
    )
    
    
    (12.4
    %)Costs of revenues
    
    
    9,867
    
    
    
    7,105
    
    
    
    (2,762
    )
    
    
    (28.0
    %)Gross margin
    
    $
    5,130
    
    
    $
    6,033
    
    
    $
    903
    
    
    
    17.6
    %TotalNet revenues
    
    $
    69,145
    
    
    $
    47,962
    
    
    $
    (21,183
    )
    
    
    (30.6
    %)Costs of revenues
    
    
    31,234
    
    
    
    23,332
    
    
    
    (7,902
    )
    
    
    (25.3
    %)Gross margin
    
    
    37,911
    
    
    
    24,630
    
    
    
    (13,281
    )
    
    
    (35.0
    %)Operating expenses:Selling and marketing
    
    
    7,133
    
    
    
    6,700
    
    
    
    (433
    )
    
    
    (6.1
    %)General and administrative
    
    
    9,474
    
    
    
    7,604
    
    
    
    (1,870
    )
    
    
    (19.7
    %)Research and development
    
    
    2,050
    
    
    
    2,142
    
    
    
    92
    
    
    
    4.5
    %Total operating expenses
    
    
    18,657
    
    
    
    16,446
    
    
    
    (2,211
    )
    
    
    (11.9
    %)Operating income
    
    
    19,254
    
    
    
    8,184
    
    
    
    (11,070
    )
    
    
    (57.5
    %)Other income (expense), net
    
    
    671
    
    
    
    (293
    )
    
    
    (964
    )
    
    
    (143.7
    %)Income before income taxes
    
    
    19,925
    
    
    
    7,891
    
    
    
    (12,034
    )
    
    
    (60.4
    %)Income tax provision
    
    
    7,519
    
    
    
    3,273
    
    
    
    (4,246
    )
    
    
    (56.5
    %)Net income
    
    $
    12,406
    
    
    $
    4,618
    
    
    $
    (7,788
    )
    
    
    (62.8
    %)
  Six Months Ended June 30,
    
    
    Increase2008
    
    
    2009
    
    
    (Decrease)Cost of EDC licenses and services
    
    
    32.9
    %
    
    
    34.5
    %
    
    
    1.6
    %Cost of services
    
    
    39.8
    %
    
    
    47.5
    %
    
    
    7.7
    %Cost of site support
    
    
    65.8
    %
    
    
    54.1
    %
    
    
    (11.7
    %)Total costs of revenues
    
    
    45.2
    %
    
    
    48.6
    %
    
    
    3.4
    %Operating expenses:Selling and marketing
    
    
    10.3
    %
    
    
    14.0
    %
    
    
    3.7
    %General and administrative
    
    
    13.7
    %
    
    
    15.8
    %
    
    
    2.1
    %Research and development
    
    
    3.0
    %
    
    
    4.5
    %
    
    
    1.5
    %
  26




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##### Table of Contents



EDC
  Revenues
   Costs of Revenues
   Operating Expenses
     27




---



##### Table of Contents



Liquidity and Capital Resources
    ®
       28




---



##### Table of Contents



Inflation
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
  Foreign Currency Risk
   
 Item 4.
    
    Controls and Procedures
   29




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##### Table of Contents



Part II. Other Information
 
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  ISSUER PURCHASES OF EQUITY SECURITIES
 (c) Total Number ofShares Purchased as
    
    
    (d) Maximum Number ofPart of Publicly
    
    
    Shares that May Yet Be(a) Total Number of
    
    
    (b) Average Price
    
    
    Announced Plans or
    
    
    Purchased Under thePeriod
    
    Shares Purchased
    
    
    Paid per Share
    
    
    Programs (1)
    
    
    Plans or ProgramsApril 2009
    
    
    168,000
    
    
    $
    5.24
    
    
    
    168,000
    
    
    
    5,742,199May 2009
    
    
    479,700
    
    
    $
    5.48
    
    
    
    479,700
    
    
    
    5,262,499June 2009
    
    
    93,567
    
    
    $
    5.50
    
    
    
    93,567
    
    
    
    5,168,932Total
    
    
    741,267
    
    
    
    
    
    
    
    741,267
 
 (1)
    
    We originally announced a program to repurchase up to 500,000 shares on April 21, 2004,
and subsequently announced increases of $2.0 million and 10.0 million shares on October 20,
2004 and May 3, 2005, respectively. Through June 30, 2009, we have repurchased 7.3 million
shares of the 12.5 million shares approved for repurchase. 
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
 Item 6.
    
    Exhibits
 10.28
    
    

Modification Number One to Promissory Note and Loan Agreement dated May 19, 2009.31.1
    
    
    Certification of Chief Executive Officer.31.2
    
    
    Certification of Chief Financial Officer.32.1
    
    
    Statement of Chief Executive Officer Pursuant to Section 1350 of Title 18 of the United States Code.32.2
    
    
    Statement of Chief Financial Officer Pursuant to Section 1350 of Title 18 of the United States Code.
 
 *
    
    Management contract or compensatory plan or arrangement.  30




---



##### Table of Contents



eResearchTechnology, Inc.(Registrant)Date: August 7, 2009
    
    By:
    
    /s/ Michael J. McKelvey

Michael J. McKelveyPresident and Chief Executive Officer,(Principal executive officer)Date: August 7, 2009
    
    By:
    
    /s/ Keith D. Schneck

Keith D. SchneckExecutive Vice President, Chief FinancialOfficer and Secretary(Principal financial and accounting officer)
  31




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Exhibit10.28
    
    

Modification Number One to Promissory Note and Loan Agreement dated May 19, 2009.31.1
    
    
    Certification of Chief Executive Officer.31.2
    
    
    Certification of Chief Financial Officer.32.1
    
    
    Statement of Chief Executive Officer Pursuant to Section 1350 of Title 18 of the United States Code.32.2
    
    
    Statement of Chief Financial Officer Pursuant to Section 1350 of Title 18 of the United States Code.
 
 *
    
    Management contract or compensatory plan or arrangement.  32