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39
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
(X)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1998
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 0-27058
PAREXEL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its Charter)
Massachusetts 04-2776269
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
195 West Street
Waltham, Massachusetts 02154
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(781) 487-9900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
(Title of class)
(Continued)
Indicate by check mark whether the 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 if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant:
The aggregate market value of Common Stock held by nonaffiliates
was $893,059,139.25 as of September 24, 1998.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date:
As of September 24, 1998, there were 24,757,195 shares of the
registrant's Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Specified portions of the Registrant's 1998 Annual Report to
Stockholders for the fiscal year ended June 30, 1998 are
incorporated by reference into Parts II and IV of this report.
Specified portions of the Registrant's Proxy Statement dated
October 5, 1998 for the Annual Meeting of Stockholders to be held
on November 12, 1998 are incorporated by reference into Part III
of this report.
(End of cover page)
PAREXEL INTERNATIONAL CORPORATION
FORM 10-K ANNUAL REPORT
INDEX
Page
PART I.
Item 1. Business 4
Item 2. Properties 25
Item 3. Legal Proceedings 25
Item 4. Submission of Matters to a Vote of 26
Security Holders
PART II
Item 5. Market for Registrant's Common Equity 26
and Related
Stockholder Matters
Item 6. Selected Financial Data 26
Item 7. Management's Discussion and Analysis 26
of Financial
Condition and Results of Operations
Item 7A Quantitative and Qualitative 26
Disclosures About Market Risk
Item 8. Financial Statements and Supplementary 26
Data
Item 9. Changes in and Disagreements with 26
Accountants on
Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of 27
the Registrant
Item 11. Executive Compensation 27
Item 12. Security Ownership of Certain 27
Beneficial Owners
and Management
Item 13. Certain Relationships and Related 27
Transactions
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and
Reports on Form 8-K 27
SIGNATURES 31
PART I
ITEM 1.BUSINESS
General
PAREXEL International Corporation ("PAREXEL" or the "Company")
is a leading contract research and medical marketing services
organization providing a broad spectrum of services from first-in-
human clinical studies through product launch to the
pharmaceutical, biotechnology, and medical device industries
around the world. The Company's primary objective is to help
clients quickly obtain the necessary regulatory approvals of
their products and, ultimately, optimize the market penetration
of those products. Over the past fifteen years, PAREXEL has
developed significant expertise in disciplines supporting this
strategy. The Company's service offerings include: clinical
trials management, data management, biostatistical analysis,
medical marketing, clinical pharmacology, regulatory and medical
consulting, performance improvement, industry training and
publishing, and other drug development consulting services. The
Company believes that its integrated services, therapeutic area
depth, and sophisticated information technology, along with its
experience in global drug development and product launch
services, represent key competitive strengths.
The Company complements the research and development ("R&D")
and marketing functions of pharmaceutical and biotechnology
companies. Through its high quality clinical research and
product launch services, PAREXEL helps clients maximize the
return on their significant investments in research and
development by reducing the time and cost of clinically testing
their products and launching those products into the commercial
marketplace. Clients are provided with a variable cost
alternative to the fixed costs associated with internal drug
development and product marketing by outsourcing these types of
services. Clients no longer need to staff to peak periods and
can benefit from PAREXEL's technical resource pool, broad
therapeutic area expertise, global infrastructures designed to
expedite parallel, multi-country clinical trials, and other
advisory services focused on accelerating time-to-market. The
Company believes it is unique in its vision to tightly integrate
and build critical mass in the complementary businesses of
clinical research and medical marketing. The Company believes
there are significant synergies and efficiencies that can be
realized in the transition from research to marketing creating
opportunities to add value for clients in their efforts to get
more products than they can internally manage into a worldwide
market as expediently and cost effectively as possible.
The Company believes it is the third largest contract research
organization in the world (based upon annual net revenue).
Headquartered near Boston, Massachusetts, the Company has more
than 45 offices and 3,700 employees throughout 25 countries. The
Company has established footholds in the major health care
markets around the world, including the United States, Japan,
Germany, the United Kingdom ("U.K."), France, Italy, Spain,
Sweden, Australia, Israel, Norway, Holland, and Eastern Europe,
including Russia, Poland, Czech Republic, Lithuania and Hungary.
The Company believes it is the second largest clinical CRO in
both Europe and Japan. During fiscal 1998, PAREXEL derived 41%
of its revenue from its international operations, distinguishing
the Company from many of its competitors.
The Company, a Massachusetts corporation, was co-founded in
1983 as a regulatory consulting firm by Josef H. von Rickenbach,
Chairman of the Board, President, and Chief Executive Officer of
PAREXEL. Since that time, the Company has executed a focused
growth strategy embracing aggressive internal expansion, as well
as strategic acquisitions to expand or enhance the Company's
portfolio of services, geographic presence, therapeutic area
knowledge, information technology, and client relationships.
Acquisitions have been and will continue to be an important
component of PAREXEL's growth strategy.
During fiscal 1998, the Company significantly enhanced its
global competitive position through a number of acquisitions. In
March 1998, PAREXEL acquired several European-based companies,
significantly expanding its critical mass, presence, and
capabilities across Europe. These companies include: PPS Europe
Limited ("PPS") and Genesis Pharma Strategies Limited
("Genesis"), leading marketing and clinical communications firms
based in the U.K. and servicing the international pharmaceutical
industry; MIRAI, B.V. ("MIRAI"), a full-service, pan-European
contract research organization based in the Netherlands; and
LOGOS GmbH ("LOGOS"), a regulatory affairs consulting firm in
Freiberg, Germany, that specializes in dossier preparation and
marketing approval submissions. With these acquisitions, PAREXEL
has substantially reinforced its core clinical research and
consulting capabilities across Eastern, Central, and Northern
Europe, thereby solidifying its position of strength as one of
the few truly global contract research and medical marketing
organizations. In December 1997, the Company acquired Kemper-
Materson, Inc., ("KMI"), a leading regulatory consulting firm
based in Massachusetts, which enhances PAREXEL's ability to
provide expertise and technical advisory services within the
laboratory and manufacturing environments. All of these
acquisitions involved exchanges of PAREXEL common stock and were
accounted for as poolings of interests for financial reporting
purposes.
Industry Overview
The CRO industry provides independent product development and
related services on an outsourced basis to the pharmaceutical,
biotechnology, and medical device industries. Although
outsourcing by client companies is occurring throughout the
product life cycles of pharmaceutical and biological products,
CROs today still derive a significant portion of their revenue
from the research and development expenditures of pharmaceutical
and biotechnology companies. The CRO industry has evolved from
providing limited clinical services in the 1970s to an industry
which currently offers a full range of services that encompass
the research, development and commercialization processes,
including discovery, pre-clinical evaluations, study design,
clinical trial management, data collection and management,
biostatistical analysis, clinical formulation, packaging,
manufacturing, laboratory testing, product registrations, medical
marketing, contract sales, and other services. CROs are required
to conduct services in accordance with strict regulations which
govern clinical trials and the drug approval process.
The CRO industry is fragmented, with participants ranging from
several hundred small, limited-service providers to several large
full-service CROs with global operations. The Company believes
there are significant barriers to becoming a full-service CRO
with global capabilities. Some of these barriers include the
development of broad therapeutic area knowledge and expertise in
other technical areas, the infrastructure and experience
necessary to serve the global demands of clients, the ability to
simultaneously manage complex clinical trials in numerous
countries, the expertise to prepare regulatory submissions in
multiple countries, the development and maintenance of complex
information technology systems required to integrate these
capabilities, the establishment of solid working relationships
with repeat clients, a strong history of financial performance,
and capital funding to finance growth. In recent years, the CRO
industry has experienced consolidation reflected in the
acquisitions of smaller firms by larger, public CROs.
The CRO industry derives substantially all of its revenue from
the pharmaceutical and biotechnology industries. The global
pharmaceutical and biotechnology industries spent approximately
$40 billion in 1997 on research and development, with an equal or
greater amount spent on marketing and selling activities.
Approximately $4 billion or more is estimated to have been
outsourced to CROs, and the pharmaceutical outsourcing industry
is projected to be growing 20 - 25% annually.
The Company believes that there are a number of positive macro
trends driving the CRO industry's growth, including the
following:
Drug Development Pressures. The Company believes that
research and development expenditures have increased as a
result of the constant pressure to develop product pipelines,
and to respond to the demand for products for an aging
population and for the treatment of chronic disorders and life-
threatening conditions in such categories as infectious
disease, central nervous system, cardiology and oncology. The
development of therapies for chronic disorders, requires
complex clinical trials to demonstrate the therapy's safety and
effectiveness, and to determine if the drug causes any long-
term side effects.
Globalization of Clinical Development and Regulatory Strategy.
Pharmaceutical and biotechnology companies increasingly are
attempting to maximize profits from a given drug by pursuing
regulatory approvals in multiple countries simultaneously
rather than sequentially, as was the practice historically.
The Company believes that the globalization of clinical
research and development activities has increased the demand
for CRO services. A pharmaceutical or biotechnology company
seeking approvals in a country in which it lacks experience or
internal resources will frequently turn to a CRO for assistance
in interacting with regulators or in organizing and conducting
clinical trials. In addition, a company may turn to a CRO in
the belief that regulatory authorities who are not familiar
with the company may have more confidence in the results from
tests independently conducted by a CRO known to those
authorities.
Increasingly Complex and Stringent Regulation; Need for
Technological Capabilities. Increasingly complex and stringent
regulatory requirements throughout the world have increased the
volume of data required for regulatory filings and escalated
the demands on data collection and analysis during the drug
development process. In recent years, the FDA and
corresponding regulatory agencies of Canada, Japan and Western
Europe have made progress in attempting to harmonize standards
for preclinical and clinical studies and the format and content
of applications for new drug approvals. Further, the FDA
encourages the use of computer-assisted filings in an effort to
expedite the approval process. As regulatory requirements have
become more complex, the pharmaceutical and biotechnology
industries are increasingly outsourcing to CROs to take
advantage of their data management expertise, technological
capabilities and global presence.
Competitive Pressures. Drug companies have been focusing on
gaining market share and more efficient ways of conducting
business because of pressures stemming from patent expirations,
market acceptance of generic drugs, and efforts of regulatory
bodies and managed care to control drug prices. The Company
believes that the pharmaceutical industry is responding by
centralizing the research and development process and
outsourcing to variable cost CROs, thereby reducing the fixed
costs associated with internal drug development. The CRO
industry, by specializing in clinical trials management, is
often able to perform the needed services with a higher level
of expertise or specialization, more quickly and at a lower
cost than the client could perform the services internally.
The Company believes that some large pharmaceutical companies,
rather than utilizing many CRO service providers, are selecting
a limited number of full-service, global CROs to serve as their
primary CROs.
Consolidation in the Pharmaceutical Industry. The
pharmaceutical industry is consolidating as pharmaceutical
companies seek to obtain cost reduction synergies through
business combinations. Once consolidated, many pharmaceutical
companies aggressively manage costs by reducing headcount and
outsourcing to variable-cost CROs in an effort to reduce the
fixed costs associated with internal drug development. The
Company believes that full-service global CROs will benefit
from this trend.
Growth of Biotechnology and Genomics Industries. The U.S.
biotechnology industry has grown rapidly over the last ten
years, and in recent years the genomics industry has emerged
with strong growth potential. These companies are introducing
significant numbers of new drug candidates which will require
regulatory approval and, oftentimes, do not have the necessary
experience or resources to conduct clinical trials,
registrations, and product launches. Accordingly, many of
these companies have chosen to outsource to CROs rather than
expend significant time and resources to develop the necessary
internal capabilities. Moreover, the biotechnology industry is
rapidly expanding into and within Europe, providing significant
growth opportunities for CROs with a global presence.
PAREXEL's Strategy
PAREXEL's intention is to maintain and enhance its position as
a leading CRO by providing a full spectrum of integrated clinical
research and medical marketing services on a global basis across
key therapeutic areas. With an ongoing commitment to providing
excellent client service and advancing safe and effective drug
therapies, the Company draws on its specialized knowledge and
expertise to aid clients in the expedition of drug development
time, regulatory approval, and the market introduction of new
products. In so doing, PAREXEL helps clients achieve an
important objective, which is maximizing product revenues and
profits over limited patent lives.
Central to PAREXEL's success has been the Company's focused
strategy on building its platform of knowledge in the pursuit of
outstanding client service. This includes a focus on its core
clinical research business which has enjoyed significant growth;
a focus on continuous process improvement, efficiency gains and
leveraging internal expertise, resources and infrastructure; a
focus on managing the Company's strong internal growth while
augmenting the Company's knowledge base through strategic
acquisitions; a focus on deeply and broadly penetrating key
client accounts by offering a full spectrum of clinical
development and medical marketing services; and always, a focus
on outstanding quality and superior client service. During
fiscal 1998, we made substantial progress in executing our
consistently communicated strategy of adding breadth and depth of
service within our three strategic business units, pursuing
global expansion, and building on our therapeutic area,
regulatory, and information technology expertise.
The Company's service philosophy involves a flexible approach
which allows its clients to use the Company's services on an
individual or bundled basis. The Company believes its expertise
in conducting scientifically demanding trials and its ability to
coordinate complicated global trials are significant competitive
strengths. The Company continues to devote significant resources
to developing innovative methodologies and sophisticated
information systems designed to allow the Company to more
effectively manage its business operations and deliver services
to its clients. The Company has executed a focused growth
strategy embracing aggressive internal expansion and strategic
acquisitions to expand or enhance the Company's portfolio of
services, geographic presence, therapeutic area knowledge,
information technology, and client relationships.
PAREXEL has extended its strategic vision beyond product
regulatory approval, to the rapid market penetration of clients'
products. It is management's belief that there are significant
efficiencies to be gained by tightening the integration between
the R&D functions and the marketing and sales functions within
client organizations, which will positively impact time-to-
market. Given PAREXEL's core competencies in clinical research,
the Company is well positioned to capitalize on peri-approval
outsourcing opportunities within the pharmaceutical and
biotechnology industries.
Serve the Global Model of New Drug Development
The Company believes that its ability to conduct clinical
trials and other services worldwide enhances its ability to serve
the increasingly global model of drug development. The Company
provides clinical research and development services to major
North American, European and Japanese pharmaceutical companies.
The Company has expanded geographically primarily through
internal growth, supplemented by strategic acquisitions, with a
goal of serving all major client markets worldwide and
positioning the Company to serve developing markets. Since
January 1, 1994, the Company has established a presence in Kobe
and Tokyo, Japan; Milan, Italy; Raleigh-Durham, NC; Sydney,
Australia; Madrid, Spain; Tel Aviv, Israel; Washington, D.C.;
Chicago, IL; Sheffield, U.K.; Stockholm, Sweden; The Netherlands,
Norway, Poland, Lithuania, Hungary, Czechia, and Russia. During
fiscal 1998, the Company acquired MIRAI, a leader in managing
large, international, multi-center Phase II-IV clinical trials
for pharma, biotech, and medical device clients in key
therapeutic areas. MIRAI brings a well established presence and
reputation in attractive, new locations for the Company,
including Eastern Europe, Russia, and the Benelux, Nordic, and
Baltic countries and maintains a Phase I alliance with TOHO, one
of the largest Japanese pharmaceutical wholesalers and owner of
the Tokyo Research Center of Clinical Pharmacology, which
services to augment PAREXEL's Asia Pacific operations where we
currently have offices in Kobe/Osaka and Tokyo.
PAREXEL is conducting a number of multinational clinical
studies designed to pursue concurrent regulatory approvals in
multiple countries. The Company believes that the expertise
developed by conducting multi-jurisdictional clinical trials is a
competitive advantage as pharmaceutical companies increasingly
pursue regulatory approvals simultaneously in multiple
jurisdictions.
The Company believes that the efficient delivery of high-
quality clinical services requires adherence to standardized
procedures on a worldwide basis. The Company has devoted
considerable resources to developing internal standard operating
procedures, including many internal checks and balances. These
procedures, together with the Company's information technology,
enable the Company to reduce the time involved in preparing
regulatory submissions by concurrently compiling and analyzing
large volumes of data from multinational trials and preparing
regulatory submissions for filings on a global basis.
Address All Aspects of Clinical Research and Product Launch
The Company offers a full range of services that encompass the
clinical research process, and will continue to build its medical
marketing services supporting the commercial launch phase. The
Company believes that its knowledge and experience in all stages
of clinical research, as well as peri- and post-approval services
surrounding product launch, enhance its marketability and
credibility with clients. The Company's full range of services
and global experience complement the R&D and marketing and sales
functions of pharmaceutical and biotechnology companies. In
order to meet the needs of specific clients, PAREXEL offers its
services on either an individual or a bundled basis. This
approach allows the Company to establish a relationship with a
new client with the need for a particular service, which may in
turn lead to larger, more comprehensive projects. This
flexibility allows PAREXEL to deliver its services by operating
autonomously or by working in close collaboration with its
clients. In some cases, the Company has taken advantage of the
flexibility of its information technology systems to gain direct
access to client data on client systems. In addition, the
Company provides regulatory periodicals, training materials and
seminars and other complementary information products and
services designed to meet its clients' demands for increased
productivity in clinical development.
Conduct Scientifically Demanding Trials
The Company provides its services in connection with
scientifically and clinically demanding trials in a wide range of
therapeutic areas, such as trials involving the testing of drugs
developed by biotechnology companies and drugs addressing complex
diseases such as HIV/AIDS, cancer and Alzheimer's. The Company's
leadership in HIV/AIDS-related therapeutic areas is evidenced by
the selection of PAREXEL as the CRO for the Intercompany
Collaborative for AIDS Drug Development, a consortium including
18 global leaders in AIDS research. Other therapeutic categories
in which the Company has expertise include central nervous system
("CNS"), neurology, oncology, gastroenterology, endocrinology,
cardiology, hematology, immunology, rheumatology and the study of
pulmonary, reproductive and infectious diseases. The Company
believes that as trials involve increasingly complex therapeutic
areas, CROs with a broad range of experience have a competitive
advantage over other companies with more limited capabilities.
Continue Investment in Information Technology
The Company believes that superior information technology is
essential to enable a CRO to provide project services
concurrently in multiple countries, expand its geographic
operations to meet the global needs of the pharmaceutical and
biotechnology industries and provide innovative services designed
to expedite the clinical trials process. The Company has an
extensive and effective global information technology network and
believes that its information technology provides it with a
significant competitive advantage. The Company's information
technology supports its global organizational structure by
enabling all offices to exchange information with each other so
that several offices worldwide can work simultaneously on a
project. The global information technology network also allows
the Company to track the progress of ongoing client projects and
predict more accurately and quickly its future personnel needs to
meet client contract commitments. In addition, the Company's
open and flexible information technology system can be adapted to
the multiple needs of different clients and regulatory systems.
For example, the system enables the Company to reduce the time
involved in preparing regulatory submissions by concurrently
compiling and analyzing large volumes of data from multinational
trials and preparing regulatory submissions for filings on a
global basis. This system also enables the Company to respond
quickly to client inquires on the progress of projects and, in
some cases, to gain direct access to client data on client
systems.)
Services
The Company believes that there are outsourcing opportunities
throughout the drug development process, and the Company will
continue to actively seek ways to leverage its drug development
expertise throughout the product lifecycle to assist clients in
achieving their development and commercial goals. Today, the
Company provides a full continuum of outsourced services to the
pharmaceutical and biotechnology industries ranging from first-in-
human clinical studies through a product's launch into the
commercial marketplace.
Over the past fifteen years, PAREXEL has developed significant
expertise in disciplines which support clients' efforts to
accelerate the development and market introduction of their
products. Specifically, PAREXEL offers such services as:
clinical trials management, data management, biostatistical
analysis, medical marketing, clinical pharmacology, regulatory
and medical consulting, performance improvement, industry
training and publishing, and other drug development consulting
services. The Company's integrated services, therapeutic area
depth, and sophisticated information technology, along with its
experience in global drug development and product launch
services, represent key competitive strengths.
PAREXEL has internally organized its operations into three
interactive business units, namely: Contract Research Services,
Medical Marketing Services and the Consulting Group.
Contract Research Services ("CRS")
Clinical Trials Management, Biostatistical and Data
Management and related medical services comprise the Company's
Drug Development business unit, which represents approximately
65% of the Company's fiscal 1998 revenue base.
Clinical Trials Management Services
PAREXEL offers complete services for the design, initiation and
management of clinical trial programs, a critical element in
obtaining regulatory approval for drugs. The Company has
performed services in connection with trials in most therapeutic
areas, including, but not limited to, cardiovascular, central
nervous system, infectious disease, AIDS/HIV, neurology,
oncology, gastroenterology, endocrinology, hematology,
immunology, rheumatology, pulmonary, and reproductive diseases.
PAREXEL's multi-disciplinary clinical trials group examines a
product's existing preclinical and clinical data to design
clinical trials to provide evidence of the product's safety and
efficacy.
PAREXEL can manage every aspect of clinical trials, including
study and protocol design, placement, initiation, monitoring,
report preparation and strategy development. See "Government
Regulation." Most of the Company's clinical trials management
projects involve Phase II or III clinical trials, which are
generally larger, longer and more complex than Phase I trials.
Clinical trials are monitored for and with strict adherence to
good clinical practices ("GCP"). The design of efficient Case
Report Forms ("CRF"), detailed operations manuals and site visits
by PAREXEL's clinical research associates ensure that clinical
investigators and their staff follow the established protocols of
the studies. The Company has adopted standard operating
procedures which are intended to satisfy regulatory requirements
and serve as a tool for controlling and enhancing the quality of
PAREXEL's worldwide clinical services.
Clinical trials represent one of the most expensive and time-
consuming parts of the overall drug development process. The
information generated during these trials is critical for gaining
marketing approval from the FDA or other regulatory agencies.
PAREXEL's clinical trials management group assists clients with
one or more of the following steps:
Study Protocol Design. The protocol defines the medical
issues the study seeks to examine and the statistical tests
that will be conducted. Accordingly, the protocol defines
the frequency and type of laboratory and clinical measures
that are to be tracked and analyzed. The protocol also
defines the number of patients required to produce a
statistically valid result, the period of time over which
they must be tracked and the frequency and dosage of drug
administration. The study's success depends on the
protocol's ability to predict correctly the requirements of
the regulatory authorities.
Case Report Form Design. Once the study protocol has been
finalized, case report forms must be developed. The CRF is
the critical source document for collecting the necessary
clinical data as dictated by the study protocol. The CRF may
change at different stages of a trial. The CRFs for one
patient in a given study may consist of 100 or more pages.
Site and Investigator Recruitment. The drug is administered
to patients by physicians, referred to as investigators, at
hospitals, clinics or other locations, referred to as sites.
Potential investigators may be identified and solicited by
the drug sponsor or the CRO. The trial's success depends on
the successful identification and recruitment of experienced
investigators with an adequate base of patients who satisfy
the requirements of the study protocol. The Company has
access to several thousand investigators who have conducted
clinical trials for the Company. The Company will also
provide additional services at the clinical investigator site
to assist physicians and expedite the clinical research
process.
Patient Enrollment. The investigators, usually with the
assistance of CRO's, find and enroll patients suitable for
the study. The speed with which trials can be completed is
significantly affected by the rate at which patients are
enrolled. Prospective patients are required to review
information about the drug and its possible side effects, and
sign an informed consent form to record their knowledge and
acceptance of potential side effects. Patients also undergo
a medical examination to determine whether they meet the
requirements of the study protocol. Patients then receive
the drug and are examined by the investigator as specified by
the study protocol. Investigators are responsible for
administering drugs to patients, as well as examining
patients and conducting necessary tests.
Study Monitoring and Data Collection. As patients are
examined and tests are conducted in accordance with the study
protocol, data are recorded on CRFs. CRF's are collected
from study sites by specially trained persons known as
monitors. Monitors visit sites regularly to ensure that the
CRFs are completed correctly and that all data specified in
the protocol are collected. The monitors take completed CRFs
to the study coordinating site, where the CRFs are reviewed
for consistency and accuracy before their data is entered
into an electronic database. The Company believes remote
date entry ("RDE") and optical character recognition (OCR)
scanning technologies are significantly enhancing both the
quality and timeliness of clinical data collection with
significant efficiency savings. (See Advanced Technology
Group below.) The Company's study monitoring and data
collection services comply with the FDA's adverse events
reporting guidelines.
Clinical Data Management and Biostatistical Services.
(See below)
Report Writing. The findings of statistical analysis of
data collected during the trial together with other clinical
data are included in a final report generated for inclusion
in a regulatory document.
Medical Services. Throughout the course of a development
program, PAREXEL's physicians provide a wide range of medical
research and consulting services to improve the speed and
quality of clinical research, including medical supervision
of clinical trials, compliance with medical standards and
safety regulations, medical writing, medical imaging,
strategy development, and portfolio management.
Clinical Data Management and Biostatistical Services
PAREXEL's data management professionals assist in the design of
CRFs, as well as training manuals for investigators, to ensure
that data are collected in an organized and consistent format in
compliance with the study protocol. Databases are designed
according to the analytical specifications of the project and the
particular needs of the client. Prior to data entry, PAREXEL
personnel screen the data to detect errors, omissions and other
deficiencies in completed CRFs. The use of RDE and OCR
technologies, to gather and report clinical data, expedites data
exchange while minimizing data collection errors as a result of
more timely data integrity verification. The Company provides
clients with data abstraction, data review and coding, data
entry, database verification and editing and problem data
resolution.
The Company has extensive experience throughout the world in
the creation of scientific databases for all phases of the drug
development process, including the creation of customized
databases to meet client-specific formats, integrated databases
to support New Drug Application submissions and databases in
strict accordance with FDA and European specifications.
PAREXEL's biostatistics professionals assist clients with all
phases of drug development, including biostatistical consulting,
database design, data analysis and statistical reporting. These
professionals develop and review protocols, design appropriate
analysis plans and design report formats to address the
objectives of the study protocol as well as the client's
individual objectives. Working with the programming staff,
biostatisticians perform appropriate analyses and produce tables,
graphs, listings and other applicable displays of results
according to the analysis plan. Frequently, biostatisticians
represent clients during panel hearings at the FDA.
Advanced Technology Group
Information technology is integral to the clinical research
process. PAREXEL has technical experts which consult externally
with clients, as well as internally with Drug Development, on
ways to best utilize technology to expedite the development
process. The Company currently offers an impressive portfolio of
information technology tools including IRIS Electronic Data
Capture, Medical Imaging, Sitebase Remote Data Entry, IVRS,
Internet reporting, telemedicine applications, computer-based
training programs, and other similar products that can be
customized to our clients' needs. The Advanced Technology Group
continues to identify and support new technologies to benefit
clients as well as our internal process businesses.
Medical Marketing Services ("MMS")
During fiscal 1998, the Company significantly enhanced its
breadth of services in the medical marketing arena and added
managerial talent and depth through the acquisition of PPS. This
was an important step in the execution of PAREXEL's strategy to
assist clients in achieving optimal market penetration for their
products by providing customized, integrated and expertise-based
product development and product launch services around the world.
PPS, with its strong foothold in Europe, transforms our MMS
business into a global provider of product launch support
services to the international pharmaceutical industry. PPS has
nearly doubled the size of our MMS business to over $50 million
of annual revenue, making us one of the largest global medical
marketing services organizations in the world.
Various pressures on the pharmaceutical industry have
resulted in a greater focus on quickly moving more compounds from
clinical development into the marketplace in order to maximize
revenues and profits over limited patent lives. The move into
medical marketing services in response to client demand has been
a natural progression for PAREXEL, and one that draws upon the
Company's core competencies in clinical research.
The Company's experience indicates that clients need
assistance in creating awareness of products in the marketplace
and in addressing the technical aspects of launching their
products, especially managing the simultaneous launch of numerous
products. MMS provides comprehensive, value-added pre-and post-
launch services, including market development, product
management, and targeted communications support to leading
pharmaceutical and biotechnology companies throughout the U.S.
and Europe. It specializes in gathering, analyzing, and
interpreting scientific data for delivery of customized messages
to targeted audiences. Detailed services include market planning
and analysis, strategic consulting, product profiling and
positioning, branding, pricing and reimbursement consulting,
patient studies, health economics, scientific writing and
publishing of medical texts and journals, management of
international physician symposia, accredited continuing medical
education (CME) and training programs, promotional material
production, and multimedia communications including Intranet and
Internet development.
Consulting Group
The Company offers a number of consulting and advisory
services in support of the product development and product
marketing processes. This group brings together experts from
relevant disciplines focused on shaping meaningful solutions and
helping clients make the best business decisions with respect to
their product development and marketing strategies. This group
also serves as a valuable resource for the Company's internal
operations. PAREXEL's Consulting Group includes Regulatory
Affairs, Clinical Pharmacology and our Information Products
Division.
Regulatory Affairs
PAREXEL provides comprehensive regulatory product registration
services for pharmaceutical and biotechnology products in major
jurisdictions in North America, Europe, and Japan, including
regulatory strategy formulation, document preparation and review,
quality assurance, and liaison with the FDA and other regulatory
agencies. In addition, the Company provides the services of
qualified experts to assist with good manufacturing practices
("GMP") compliance in existing and new manufacturing plants,
including system validation services. PAREXEL's staff provides on-
site GCP and GMP training sessions and conducts internal and
external quality control and quality assurance audits.
PAREXEL works closely with clients to devise regulatory
strategies and comprehensive product development programs. The
Company's regulatory affairs experts review existing published
literature, assess the scientific background of a product, assess
the competitive and regulatory environment, identify deficiencies
and define the steps necessary to obtain registration in the most
expeditious manner. Through this service, the Company helps its
clients determine the feasibility of developing a particular
product or product line.
Clinical Pharmacology
PAREXEL's clinical pharmacology services primarily include
Phase I investigations and trial facilities, both for volunteers
and patients. The Company's Clinical Pharmacology Unit in Berlin
is one of the world's leading units for combined kinetic and
dynamic studies. It provides state-of-the-art in- and out-
patient facilities, and is staffed with a team of clinical
pharmacology experts with extensive experience in both
pharmacokinetics and pharmacodynamics. PAREXEL also maintains a
clinical pharmacology research collaboration with Georgetown
University Medical Center, referred to as the Georgetown/PAREXEL
Clinical Pharmacology Research Unit ("CPRU"). This relationship
provides PAREXEL exclusive access to the CPRU for purposes of
conducting clinical pharmacology research employing a more
flexible, variable-cost business model.
Information Products Group
The Company's Information Products Group ("IPG") offers a wide
range of specialized clinical consulting, training, and
publication services to the health care industry.
PAREXEL/Barnett is a leader in providing conferences, educational
materials, and management consulting services to the clinical
research community, with extensive experience in organizational
structure, curriculum design, and human resource management. The
publications group produces several publications recognized
throughout the industry covering regulatory and drug development
matters.
PAREXEL/Barnett is also a leader in management consulting in
the clinical research area, offering a wide range of solutions
that help pharmaceutical and biotechnology companies improve
their own in-house clinical performance. These services include
performance benchmarking, process improvement, clinical research
capacity analysis, and operational support services.
Information Systems
The Company is committed to investing in information technology
designed to help the Company provide high quality services in a
cost effective manner and to manage its internal resources. The
Company believes it is one of a few CROs that has an extensive
and effective global information technology network. The Company
has built on its network by developing a number of proprietary
information systems that address critical aspects of its
business, such as project proposals/budget generations, time
information management, revenue and resource forecasting,
clinical data entry and management, and project management.
The Company's information systems group has hundreds of
employees responsible for technology procurement, applications
development and management of the Company's worldwide computer
network. The wide area network links numerous local area
networks, interconnecting over 3,700 computers worldwide. The
Company's information systems are designed to work in support of
and reinforce the Company's standard operating procedures. The
Company's information technology system is open and flexible,
allowing it to be adapted to the multiple needs of different
clients and regulatory systems. This system also enables the
Company to respond quickly to client inquiries on the progress of
projects and, in some cases, to gain direct access to client data
on client systems.
During fiscal 1998, the Company has been focused on
strengthening its global information technology infrastructure
and has made significant progress in the following areas:
upgrading our global wide area network, particularly across
Europe and Japan; upgrading our core data center hardware in
North America to support increasing business volume;
standardizing all worldwide desktops in terms of hardware and
software; rolling out our new Oracle-based financial system and
Clintrial supplemental tools; and preparing for the Year 2000.
The Company feels that these initiatives will help prepare the
organization for future workload demands and maintain our high
standards of client service.
Year 2000
Information systems are an integral part of the services the
Company provides. As such, the Company recognizes that it must
ensure that its service and operations will not be adversely
affected by Year 2000 software and equipment failures (the "Year
2000 Issue"), which can arise from the use of date-dependent
systems that utilize only two digits to represent the year
applicable to a transaction; for example, "98" to represent
"1998" rather than the full four digits. Computer systems so
engineered may not operate properly when the last two digits of
the year become "00" as will occur on January 1, 2000.
The Company has initiated a four-phase program, led by its Chief
Information Officer and a global, cross-functional team, to
assess and remediate the effect of the Year 2000 Issue on the
Company's operations. As part of this program, the Company is
contacting its clients, principal suppliers, and other vendors to
assess whether their Year 2000 Issues, if any, will affect the
Company. This Company-wide effort began in 1997; and many Year
2000 dependencies have already been identified and addressed
through planned systems and infrastructure evolution,
replacement, or elimination. The continuing program described
below is to assure that the Company identifies and addresses all
remaining Year 2000 systems and dependencies well in advance of
the millennium change.
The first phase of the program, conducting an inventory of all
systems and dependencies that may be affected by the Year 2000
Issue, is substantially complete. The second phase of the
program, the assessment and categorization of all the inventoried
systems and dependencies by level of priority reflecting their
potential impact on business continuation, is underway. Based on
this prioritization, the third phase will be to develop detailed
plans to address each Year 2000 Issue and a general contingency
plan in the event that any noncompliant critical systems remain
by January 1, 2000.
While the Company has not yet completed its full assessment of
the scope of the Year 2000 Issue facing its systems and
dependencies, based on our analysis to date, we do not believe
that the costs to be incurred will be material. However, until
the full analysis is complete, the Company is unable to provide
assurance whether or not future costs will be material.
Furthermore, as noted above, the Company is contacting its
principal clients, suppliers, and other vendors concerning the
state of their Year 2000 compliance. Until that effort is
completed, the Company cannot be assured that those other systems
are or will be Year 2000 compliant and is unable to estimate at
this time the impact on the Company if one or more of those
systems is not Year 2000 compliant. For the foregoing reasons,
the Company is not able to provide assurance at this time whether
the Year 2000 Issues will materially affect its future financial
results or financial condition.
Sales and Marketing
PAREXEL's marketing strategy is to maintain excellent service-
oriented relationships with its large and loyal client base,
while expanding its base through strong global development
initiatives. The Company's client relations professionals,
senior executives and project team leaders all share
responsibility for the maintenance of key client relationships
and business development activities. The Company believes that
its emphasis on developing close relationships with its clients
leaves it well positioned to benefit from the trend among
pharmaceutical companies to concentrate their outsourcing among
fewer CROs.
The Company's marketing activities are coordinated by PAREXEL's
client service executives located near clients throughout the
world. In addition to significant selling experience, most of
the Company's business development personnel have technical or
scientific backgrounds in the pharmaceutical industry. The
Company coordinates its worldwide marketing efforts through a
computerized system that is integrated into each of the Company's
locations.
Clients
During fiscal 1998, the Company provided services to most of
the top 20 pharmaceutical and top 10 biotechnology companies.
The Company performed services for hundreds of clients on over
2,000 projects during the year.
The Company has in the past derived, and may in the future
derive, a significant portion of its net revenue from a core
group of major projects or clients. Concentrations of business
in the CRO industry are not uncommon and the Company is likely to
experience such concentration in future years. In fiscal 1998,
one client accounted for 12% of net revenue; in fiscal 1997 and
1996, no single customer accounted for more than 10% of net
revenue. In fiscal 1998, 1997, and 1996, the Company's top five
customers accounted for 34%, 36%, and 29%, respectively, of the
Company's net revenue. The loss of business from a significant
client could materially and adversely affect the Company's net
revenue and results of operations.
Backlog
Backlog represents anticipated net revenue from awarded
projects, including signed contracts, letter agreements, and
certain verbal commitments, and signifies work not yet completed.
Once work commences, revenue is generally recognized over the
life of the contract, which usually lasts for twelve months or
more. Backlog at June 30, 1998, was approximately $285 million.
The Company believes that its backlog as of any date is not
necessarily a meaningful predictor of future results. Clinical
studies under contracts included in backlog are subject to
termination or delay. Clients terminate or delay contracts for a
variety of reasons including, among others, the failure of
products being tested to satisfy safety requirements, unexpected
or undesirable clinical results of the product, the clients'
decision to forego a particular study, insufficient patient
enrollment or investigator recruitment or production problems
resulting in shortages of the drug. Most of the Company's
contracts are terminable upon 60 to 90 days' notice by the
client. The Company typically is entitled to receive certain
fees for winding down a study which is terminated or delayed and,
in some cases, a termination fee.
Competition
The Company primarily competes against in-house departments of
pharmaceutical companies, full service CROs, and, to a lesser
extent, universities, teaching hospitals and other site
organizations. Some of these competitors have greater capital,
technical and other resources than the Company. CROs generally
compete on the basis of previous experience, medical and
scientific expertise in specific therapeutic areas, the quality
of services, the ability to organize and manage large-scale
trials on a global basis, the ability to manage large and complex
medical databases, the ability to provide statistical and
regulatory services, the ability to recruit investigators and
patients, the ability to integrate information technology with
systems to improve the efficiency of contract research, an
international presence with strategically located facilities,
financial viability and price. PAREXEL believes that it competes
favorably in these areas.
The CRO industry is fragmented, with participants ranging from
several hundred small, limited-service providers to several
large, full-service CROs with global operations. PAREXEL
believes that it is the third largest full-service CRO in the
world, based on annual net revenue. Other large CROs include
Quintiles Transnational Corporation, Covance Inc., and
Pharmaceutical Product Development, Inc. The trend toward CRO
industry consolidation, as well as pharmaceutical companies
outsourcing to a fewer number of preferred CRO's, has resulted
in heightened competition among the larger CROs for clients and
acquisition candidates.
Intellectual Property
The Company believes that factors such as its ability to
attract and retain highly-skilled professional and technical
employees and its project management skills and experience are
significantly more important to its business than are any
intellectual property rights developed by it. PAREXEL has
developed certain computer software and related methodologies
that the Company has sought to protect through a combination of
contracts, copyrights and trade secrets; however, the Company
does not consider the loss of exclusive rights to any of this
software or methodology to be material to the Company's business.
Employees
As of June 30, 1998, the Company had approximately 3,700
employees. Approximately 54% of the employees are located in
North America and 46% are located throughout Europe and the
Asia/Pacific region. The Company believes that its relations
with its employees are good.
The success of the Company's business depends on its ability to
attract and retain a qualified professional, scientific and
technical staff. The level of competition among employers for
skilled personnel, particularly those with Ph.D., M.D. or
equivalent degrees, is high. The Company believes that its
multinational presence, which allows for international transfers,
is an advantage in attracting employees. In addition, the
Company believes that the wide range of clinical trials in which
it participates allows the Company to offer a broad experience to
clinical researchers. While the Company has not experienced any
significant difficulties in attracting or retaining qualified
staff to date, there can be no assurance the Company will be able
to avoid such difficulties in the future.
Government Regulation
Before a new drug may be approved and marketed, the drug must
undergo extensive testing and regulatory review in order to
determine that the drug is safe and effective. The stages of
this development process are as follows:
Preclinical Research (1 to 3.5 years). In vitro ("test
tube") and animal studies to establish the relative toxicity
of the drug over a wide range of doses and to detect any
potential to cause birth defects or cancer. If results
warrant continuing development of the drug, the manufacturer
will file an IND (Investigational New Drug Application), upon
which the FDA may grant permission to begin human trials.
Clinical Trials (3.5 to 6 years)
Phase I (6 months to 1 year). Basic safety and pharmacology
testing in 20 to 80 human subjects, usually healthy
volunteers, includes studies to determine how the drug works,
how it is affected by other drugs, where it goes in the body,
how long it remains active, and how it is broken down and
eliminated from the body.
Phase II (1 to 2 years). Basic efficacy (effectiveness) and
dose-range testing in 100 to 200 afflicted volunteers to help
determine the best effective dose, confirm that the drug
works as expected, and provide additional safety data.
Phase III (2 to 3 years). Efficacy and safety studies in
hundreds or thousands of patients at many investigational
sites (hospitals and clinics) can be placebo-controlled
trials, in which the new drug is compared with a "sugar
pill," or studies comparing the new drug with one or more
drugs with established safety and efficacy profiles in the
same therapeutic category.
Treatment Investigational New Drug ("TIND") (may span late
Phase II, Phase III, and FDA review). When results from
Phase II or Phase III show special promise in the treatment
of a serious condition for which existing therapeutic options
are limited or of minimal value, the FDA may allow the
manufacturer to make the new drug available to a larger
number of patients through the regulated mechanism of a TIND.
Although less scientifically rigorous than a controlled
clinical trial, a TIND may enroll and collect a substantial
amount of data from tens of thousands of patients.
New Drug Application ("NDA") Preparation and Submission.
Upon completion of Phase III trials, the manufacturer
assembles the statistically analyzed data from all phases of
development into a single large document, the NDA, which
today comprises, on average, roughly 100,000 pages.
FDA Review & Approval (1 to 1.5 years). Careful scrutiny of
data from all phases of development (including a TIND) to
confirm that the manufacturer has complied with regulations
and that the drug is safe and effective for the specific use
(or "indication") under study.
Post-Marketing Surveillance and Phase IV Studies. Federal
regulation requires the manufacturer to collect and
periodically report to FDA additional safety and efficacy
data on the drug for as long as the manufacturer markets the
drug (post-marketing surveillance). If the drug is marketed
outside the U.S., these reports must include data from all
countries in which the drug is sold. Additional studies
(Phase IV) may be undertaken after initial approval to find
new uses for the drug, to test new dosage formulations, or to
confirm selected non-clinical benefits, e.g., increased cost-
effectiveness or improved quality of life.
The clinical investigation of new drugs is highly regulated by
government agencies. The standard for the conduct of clinical
research and development studies comprises GCP, which stipulates
procedures designed to ensure the quality and integrity of data
obtained from clinical testing and to protect the rights and
safety of clinical subjects. While GCP has not been formally
adopted by the FDA nor, with certain exceptions, by similar
regulatory authorities in other countries, some provisions of GCP
have been included in regulations adopted by the FDA.
Furthermore, in practice, the FDA and many other regulatory
authorities require that study results submitted to such
authorities be based on studies conducted in accordance with GCP.
The FDA's regulatory requirements have served as the model for
much of the regulation for new drug development worldwide. As a
result, similar regulatory requirements exist in the other
countries in which the Company operates. The Company's
regulatory capabilities include knowledge of the specific
regulatory requirements in various countries, and the Company has
managed simultaneous regulatory submissions in more than one
country for a number of drug sponsors. Beginning in 1991, the
FDA and corresponding regulatory agencies of Canada, Japan and
Western Europe commenced discussions to develop harmonized
standards for preclinical and clinical studies and the format and
content of applications for new drug approvals. Data from
multinational studies adhering to GCP are now generally
acceptable to the FDA, Canadian and Western European regulators.
Effective April 1, 1997, Japan officially adopted GCP and
legitimized the use of CROs in conducting clinical research.
The services provided by PAREXEL are ultimately subject to FDA
regulation in the U.S. and comparable agencies in other
countries. The Company is obligated to comply with FDA
requirements governing such activities as obtaining patient
informed consents, verifying qualifications of investigators,
reporting patients' adverse reactions to drugs and maintaining
thorough and accurate records. The Company must maintain source
documents for each study for specified periods, and such
documents may be reviewed by the study sponsor and the FDA during
audits. Non-compliance with GCP can result in the
disqualification of data collected during a clinical trial.
Potential Liability and Insurance
PAREXEL's clinical research services focus on the testing of
experimental drugs on human volunteers pursuant to a study
protocol. Clinical research involves a risk of liability for
personal injury or death to patients due, among other reasons, to
possible unforeseen adverse side effects or improper
administration of the new drug. PAREXEL does not provide
healthcare services directly to patients. Rather, physician
investigators are responsible for administrating drugs and
evaluating patients. Many of these patients are already
seriously ill and are at risk of further illness or death. The
Company has not experienced any patient claims to date arising
out of any clinical trial managed or monitored by it.
The Company believes that the risk of liability to patients in
clinical trials is mitigated by various regulatory requirements,
including the role of institutional review boards ("IRBs") and
the need to obtain each patient's informed consent. The FDA
requires each human clinical trial to be reviewed and approved by
the IRB at each study site. An IRB is an independent committee
that includes both medical and non-medical personnel and is
obligated to protect the interests of patients enrolled in the
trial. The IRB monitors the protocol and measures designed to
protect patients, such as the requirement to obtain informed
consent.
To reduce its potential liability, PAREXEL is generally
successful in incorporating indemnity provisions into its
contracts with clients and with investigators hired by the
Company on behalf of its clients. These indemnities generally do
not, however, protect PAREXEL against certain of its own actions,
such as those involving negligence. Moreover, these indemnities
are contractual arrangements that are subject to negotiation with
individual clients, and the terms and scope of such indemnities
can vary from client to client and from study to study. Finally,
the financial performance of these indemnities is not secured, so
that the Company bears the risk that an indemnifying party may
not have the financial ability to fulfill its indemnification
obligations. PAREXEL could be materially and adversely affected
if it were required to pay damages or incur defense costs in
connection with an uninsured claim that is outside the scope of
an indemnity or where the indemnity, although applicable, is not
performed in accordance with its terms.
The Company currently maintains an errors and omissions
professional liability insurance policy. There can be no
assurance that this insurance coverage will be adequate, or that
insurance coverage will continue to be available on terms
acceptable to the Company.
RISK FACTORS
In addition to the other information in this Registration
Statement, the following risk factors should be considered
carefully in evaluating the Company and its business. Information
provided by the Company from time to time may contain certain
"forward-looking" information, as that term is defined by (i) the
Private Securities Litigation Reform Act of 1995 (the "Act") and
(ii) in releases made by the Securities and Exchange Commission
(the "SEC"). These risk factors are being provided pursuant to
the provisions of the Act and with the intention of obtaining the
benefits of the "safe harbor" provisions of the Act.
Loss or Delay of Large Contracts. Most of the Company's
contracts are terminable upon 60 to 90 days' notice by the
client. Clients terminate or delay contracts for a variety of
reasons, including, among others, the failure of products being
tested to satisfy safety requirements, unexpected or undesired
clinical results of the product, the client's decision to forego
a particular study, such as for economic reasons, insufficient
patient enrollment or investigator recruitment or production
problems resulting in shortages of the drug. In addition, the
Company believes that cost-containment and competitive pressures
have caused pharmaceutical companies to apply more stringent
criteria to the decision to proceed with clinical trials and,
therefore, may result in a greater willingness of these companies
to cancel contracts with CROs. The loss or delay of a large
contract or the loss or delay of multiple contracts could have a
material adverse effect on the financial performance of the
Company.
Variability of Quarterly Operating Results. The Company's
quarterly operating results have been subject to variation, and
will continue to be subject to variation, depending upon factors
such as the initiation, progress, or cancellation of significant
projects, exchange rate fluctuations, the mix of services
offered, the opening of new offices and other internal expansion
costs, the costs associated with integrating acquisitions and the
startup costs incurred in connection with the introduction of new
products and services. Because a high percentage of the
Company's operating costs are relatively fixed, variations in the
initiation, completion, delay or loss of contracts, or in the
progress of client projects can cause material adverse variations
in quarterly operating results.
Dependence on Certain Industries and Clients. The Company's
revenues are highly dependent on research and development
expenditures by the pharmaceutical and biotechnology industries.
The Company's operations could be materially and adversely
affected by general economic downturns in its clients'
industries, the impact of the current trend toward consolidation
in these industries or any decrease in research and development
expenditures. Furthermore, the Company has benefited to date
from the increasing tendency of pharmaceutical companies to
outsource large clinical research projects. A reversal or
slowing of this trend would have a material adverse effect on the
Company. In fiscal 1998, 1997, and 1996, the Company's top five
clients accounted for 34% 36%, and 29%, respectively, of the
Company's consolidated net revenue. In fiscal 1998, one client
accounted for 12% of consolidated net revenue; however, in
fiscal 1997 and 1996, no single customer accounted for more than
10% of net revenue. The loss of business from a significant
client could have a material adverse effect on the Company.
Management of Business Expansion. The Company's business and
operations have experienced substantial expansion over the past
15 years. The Company believes that such expansion places a
strain on operational, human and financial resources. In order
to manage such expansion, the Company must continue to improve
its operating, administrative and information systems, accurately
predict its future personnel and resource needs to meet client
contract commitments, track the progress of ongoing client
projects, and attract and retain qualified management,
professional, scientific and technical operating personnel.
Expansion of foreign operations also may involve the additional
risks of assimilating differences in foreign business practices,
hiring and retaining qualified personnel, and overcoming language
barriers. In the event that the operation of an acquired
business does not live up to expectations, the Company may be
required to restructure the acquired business or write-off the
value of some or all of the assets of the acquired business.
Failure by the Company to meet the demands of and to manage
expansion of its business and operations could have a material
adverse effect on the Company's business.
Risks Associated with Acquisitions. The Company has made a
number of acquisitions and will continue to review future
acquisition opportunities. No assurances can be given that
acquisition candidates will continue to be available on terms and
conditions acceptable to the Company. Acquisitions involve
numerous risks, including, among other things, difficulties and
expenses incurred in connection with the acquisitions and the
subsequent assimilation of the operations and services or
products of the acquired companies, the diversion of management's
attention from other business concerns and the potential loss of
key employees of the acquired company. Acquisitions of foreign
companies also may involve the additional risks of assimilating
differences in foreign business practices and overcoming language
barriers. In the event that the operations of an acquired
business do not live up to expectations, the Company may be
required to restructure the acquired business or write-off the
value of some or all of the assets of the acquired business.
There can be no assurance that any acquisition will be
successfully integrated into the Company's operations.
Dependence on Government Regulation. The Company's business
depends on the comprehensive government regulation of the drug
development process. In the United States, the general trend has
been in the direction of continued or increased regulation,
although the FDA recently announced regulatory changes intended
to streamline the approval process for biotechnology products by
applying the same standards as are in effect for conventional
drugs. In Europe, the general trend has been toward coordination
of common standards for clinical testing of new drugs, leading to
changes in the various requirements currently imposed by each
country. Japan also legislated GCP and legitimatized the use of
CRO's in April 1997. Changes in regulation, including a
relaxation in regulatory requirements or the introduction of
simplified drug approval procedures, as well as anticipated
regulation, could materially and adversely affect the demand for
the services offered by the Company. In addition, failure on the
part of the Company to comply with applicable regulations could
result in the termination of ongoing research or the
disqualification of data, either of which could have a material
adverse effect on the Company.
Competition. The Company primarily competes against in-house
departments of pharmaceutical companies, full service CROs, and,
to a lesser extent, universities, teaching hospitals and other
site organizations. Some of these competitors have greater
capital, technical and other resources than the Company. CROs
generally compete on the basis of previous experience, medical
and scientific expertise in specific therapeutic areas, the
quality of services, the ability to organize and manage large-
scale trials on a global basis, the ability to manage large and
complex medical databases, the ability to provide statistical and
regulatory services, the ability to recruit investigators and
patients, the ability to integrate information technology with
systems to improve the efficiency of contract research, an
international presence with strategically located facilities,
financial viability and price. PAREXEL believes that it competes
favorably in these areas.
The CRO industry is fragmented, with participants ranging from
several hundred small, limited-service providers to several
large, full-service CROs with global operations. Large CROs
against whom PAREXEL competes include Quintiles Transnational
Corporation, Covance Inc., and Pharmaceutical Product
Development, Inc. The trend toward CRO industry consolidation has
resulted in heightened competition among the larger CROs for
clients and acquisition candidates. In addition, consolidation
within the pharmaceutical industry, as well as pharmaceutical
companies outsourcing to a fewer number of preferred CROs, has
led to heightened competition for CRO contracts.
Potential Volatility of Stock Price. The market price of the
Company's Common Stock could be subject to wide fluctuations in
response to quarter-to-quarter variations in operating results,
changes in earnings estimates by analysts, market conditions in
the industry, prospects of health care reform, changes in
government regulation and general economic conditions. In
addition, the stock market has from time to time experienced
significant price and volume fluctuations that have been
unrelated to the operating performance of particular companies.
These market fluctuations may adversely affect the market price
of the Company's Common Stock. Because the Company's Common
Stock currently trades at a relatively high price-earnings
multiple, due in part to analysts' expectations of continued
earnings growth, even a relatively small shortfall in earnings
from, or a change in, analysts' expectations may cause an
immediate and substantial decline in the Company's stock price.
Investors in the Company's Common Stock must be willing to bear
the risk of such fluctuations in earnings and stock price.
Potential Adverse Impact of Health Care Reform. Numerous
governments have undertaken efforts to control growing health
care costs through legislation, regulation and voluntary
agreements with medical care providers and pharmaceutical
companies. In the last several years, several comprehensive
health care reform proposals were introduced in the U.S.
Congress. The intent of the proposals was, generally, to expand
health care coverage for the uninsured and reduce the growth of
total health care expenditures. While none of the proposals were
adopted, health care reform may again be addressed by the U.S.
Congress. Implementation of government health care reform may
adversely affect research and development expenditures by
pharmaceutical and biotechnology companies, resulting in a
decrease of the business opportunities available to the Company.
Management is unable to predict the likelihood of health care
reform proposals being enacted into law or the effect such law
would have on the Company.
Many governments outside the U.S. have also reviewed or
undertaken health care reform. The Company cannot predict the
impact that any pending or future health care reform proposals
may have on the Company's business in other countries.
Dependence on Personnel; Ability to Attract and Retain Personnel.
The Company relies on a number of key executives, including Josef
H. von Rickenbach, its President, Chief Executive Officer and
Chairman, upon whom the Company maintains key man life insurance.
Although the Company has entered into agreements containing non-
competition restrictions with its senior officers, the Company
does not have employment agreements with certain of these persons
and the loss of the services of any of the Company's key
executives could have a material adverse effect on the Company.
The Company's performance also depends on its ability to attract
and retain qualified professional, scientific and technical
operating staff. The level of competition among employers for
skilled personnel, particularly those with M.D., Ph.D. or
equivalent degrees, is high. There can be no assurance the
Company will be able to continue to attract and retain qualified
staff.
Potential Liability; Possible Insufficiency of Insurance.
Clinical research services involve the testing of experimental
drugs on consenting human volunteers pursuant to a study
protocol. Such testing involves a risk of liability for personal
injury or death to patients due to, among other reasons, possible
unforeseen adverse side effects or improper administration of the
new drug by physicians. Many of these patients are already
seriously ill and are at risk of further illness or death. The
Company could be materially and adversely affected if it were
required to pay damages or incur defense costs in connection with
a claim that is outside the scope of an indemnity or insurance
coverage, or if the indemnity, although applicable, is not
performed in accordance with its terms or if the Company's
liability exceeds the amount of applicable insurance. In
addition, there can be no assurance that such insurance will
continue to be available on terms acceptable to the Company.
Adverse Effect of Exchange Rate Fluctuations. Approximately 41%
of the Company's net revenue for fiscal 1998, 42% for fiscal
1997, and 48% for fiscal 1996 were derived from the Company's
operations outside of North America. Since the revenue and
expenses of the Company's foreign operations are generally
denominated in local currencies, exchange rate fluctuations
between local currencies and the United States dollar will
subject the Company to currency translation risk with respect to
the results of its foreign operations. To the extent the Company
is unable to shift to its clients the effects of currency
fluctuations, these fluctuations could have a material adverse
effect on the Company's results of operations. The Company does
not currently hedge against the risk of exchange rate
fluctuations.
Anti-Takeover Provisions; Possible Issuance of Preferred Stock.
The Company's Restated Articles of Organization and Restated By-
Laws contain provisions that may make it more difficult for a
third party to acquire, or may discourage a third party from
acquiring, the Company. These provisions could limit the price
that certain investors might be willing to pay in the future for
shares of the Company's Common Stock. In addition, shares of the
Company's Preferred Stock may be issued in the future without
further stockholder approval and upon such terms and conditions,
and having such rights, privileges and preferences, as the Board
of Directors may determine. The rights of the holders of Common
Stock will be subject to, and may be adversely affected by, the
rights of any holders of Preferred Stock that may be issued in
the future. The issuance of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions
and other corporate purposes, could adversely affect the market
price of the Common Stock and could have the effect of making it
more difficult for a third party to acquire, or discouraging a
third party from acquiring, a majority of the outstanding voting
stock of the Company. The Company has no present plans to issue
any shares of Preferred Stock.
ITEM 2.PROPERTIES
PAREXEL leases all but one of its facilities. The Company's
principal executive offices are located in Waltham,
Massachusetts. The Company also leases space in Lowell,
Massachusetts, and maintains other North American offices in
Chicago, Philadelphia, Raleigh-Durham, San Diego, and Washington,
D. C. The Company's European subsidiaries maintain offices in
Berlin, Frankfurt, London, Sheffield, Milan, Paris, Madrid,
Stockholm, and Tel Aviv. The Company's Japanese subsidiary is
located in Kobe, with a branch office in Tokyo, and its
Australian subsidiary is located in Sydney. The Company
considers all of its properties to be suitable and adequate for
its present needs.
ITEM 3. LEGAL PROCEEDINGS
No material legal proceedings are pending to which the Company,
its subsidiaries, or any of their properties are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during
the fourth quarter of fiscal 1998.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
This information is incorporated by reference from page 31
"Quarterly Operating Results and Common Stock Information
(Unaudited)" of the Company's 1998 Annual Report to Stockholders
included as Exhibit 13.1.
ITEM 6. SELECTED FINANCIAL DATA
This information is incorporated by reference from page 31
"Selected Financial Data," of the Company's 1998 Annual Report to
Stockholders included as Exhibit 13.1.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This information is incorporated by reference from pages 13-17,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," of the Company's 1998 Annual Report to
Stockholders included as Exhibit 13.1.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary financial
information are incorporated by reference from pages 18-30 of the
Company's 1998 Annual Report to Stockholders included as Exhibit
13.1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to this item may be found under the
captions "Elections of Directors" and "Executive Officers" in the
Proxy Statement for the Company's 1998 Annual Meeting of
Stockholders. Such information is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item may be found under the
captions "Directors' Compensation" and "Executive Compensation"
in the Proxy Statement for the Company's 1998 Annual Meeting of
Stockholders. Such information is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information with respect to this item may be found under the
caption "Security Ownership of Certain Beneficial Owners and
Management" in the Proxy Statement for the Company's 1998 Annual
Meeting of Stockholders. Such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to this item may be found under the
caption "Certain Relationships and Related Transactions" in the
Proxy Statement for the Company's 1998 Annual Meeting of
Stockholders. Such information is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(A) The following documents are filed as part of this report:
(1)Financial Statements. The following financial statements
and supplementary data included in the 1998 Annual Report to
Stockholders, filed as Exhibit 13.1 to this report, are
incorporated by reference into Item 8 of this report.
Annual
Financial Statements Form 10-K Report to
Page Stockholders
Page
Report of Independent Accountants 26 30
Consolidated Balance Sheets at 26 19
June 30, 1998 and 1997
Consolidated Statements of
Operations for each of the 26 18
Three years ended June 30, 1998
Consolidated Statements of
Stockholders' Equity for 26 20
Each of the three years ended
June 30, 1998
Consolidated Statements of Cash
Flows for each of the 26 21
Three years ended June 30, 1998
Notes to Consolidated Financial 26 22-29
Statements
Financial Statement Schedules:
(2)
For the three years ended June 30, 1998:
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not
applicable or the required information is shown in the
Consolidated Financial Statements or Notes thereto.
Exhibits
(3)
Exhibit Description
No.
(3) Exhibits
Exhibit Description
No.
3.1 -- Amended and Restated Articles of Organization of the
Company, as amended (filed as Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended December 31, 1996 and incorporated herein
by this reference).
3.2 -- Amended and Restated By-laws of the Company (filed as
Exhibit 3.2 to the Registrant's Registration Statement
on Form S-1 (File No. 333-1188) and incorporated herein
by this reference).
4.1 -- Specimen certificate representing the Common Stock of
the Company (filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form S-1 (File No. 33- 97406)
and incorporated herein by this reference).
4.2 -- Purchase Agreement dated as of August 22, 1996 between
the Company and State and Federal Associates, Inc.,
S&FA of Alexandria Partnership, Martin J. Miller,
Howard Tag, Peter Malamis and Laurie Hughes (filed as
Exhibit 4.2 to the Registrant's Registration Statement
on Form S-3 (File No. 333-19751) and incorporated
herein by this reference).
4.3 -- Registration Rights Agreement dated as of August 22,
1996 between the Company and S&FA of Alexandria
Partnership, Martin J. Miller, Howard Tag, Peter
Malamis and Laurie Hughes (filed as Exhibit 4.3 the
Registrant's Registration Statement on Form S-3 (File
No. 333-19751) and incorporated herein by this
reference).
4.4 -- Agreement and Plan of Reorganization and Merger dated
as of February 28, 1997 among the Company, Rescon,
Inc., Rescon Acquisition Corporation, Walter Leroy
Hill, as Trustee of the Walter L. Hill Revocable Trust
and Walter Leroy Hill (filed as Exhibit 4.2 the
Registrant's Registration Statement on Form S-3 (File
No. 333-27487) and incorporated herein by this
reference).
4.5 -- Registration Rights Agreement dated as of February 28,
1997 among the Company, Walter Leroy Hill, and Walter
Leroy Hill as Trustee of the Walter L. Hill Revocable
Trust (filed as Exhibit 4.3 the Registrant's
Registration Statement on Form S-3 (File No. 333-27487)
and incorporated herein by this reference).
4.6 -- Share Purchase Agreement dated as of February 28, 1997
among the Company, Dr. Richard Kay and Janet Kay
(filed as Exhibit 4.4 the Registrant's Registration
Statement on Form S-3 (File No. 333-27487) and
incorporated herein by this reference).
4.7 -- Registration Rights Agreement dated as of February 28,
1997 among the Company, Dr. Richard Kay and Janet Kay
(filed as Exhibit 4.5 the Registrant's Registration
Statement on Form S-3 (File No. 333-27487) and
incorporated herein by this reference).
4.8 -- Share Purchase Agreement dated as of February 28, 1997
among the Company, Dr. Afron Lloyd Jones and Dr. Diana
Smith (filed as Exhibit 4.6 the Registrant's
Registration Statement on Form S-3 (File No. 333-27487)
and incorporated herein by this reference).
4.9 -- Registration Right Agreement dated as of February 28,
1997 among the Company, Dr. Afron Lloyd Jones and Dr.
Diana Smith (filed as Exhibit 4.7 the Registrant's
Registration Statement on Form S-3 (File No. 333-27487)
and incorporated herein by this reference).
4.10 -- Agreement and Plan of Reorganization and Merger dated
as of October 22, 1997 by and among the Company, Kemper-
Masterson, Inc., KMI Acquisition Corporation, Clarence
A. Kemper, P. Michael Masterson, Mark A. Lester, Ronald
F. Tetzlaff, Alan R. Parenteau, Jon Voss, Warren
Handren and David Hyde (filed as Exhibit 4.2 to
Registrant's Registration Statement on Form S-3 (File
No. 333-44541) and incorporated herein by reference).
4.11 -- Registration Rights Agreement dated as of December 1,
1997 by and among the Company and each of Clarence A.
Kemper, P. Michael Masterson, Mark A. Lester, Ronald F.
Tetzlaff, Alan R. Parenteau, Jon Voss, Warren Handren
and David Hyde (filed as Exhibit 4.3 to Registrant's
Registration Statement on Form S-3 (File No. 333-44541)
and incorporated herein by reference).
4.12 -- Share Acquisition Agreement dated as of March 1, 1998
by and among the Company and the former stockholders of
PPS Europe Ltd. (filed as Exhibit 4.5 to the Company's
Current Report on Form 8-K/A dated March 1, 1998 and
incorporated herein by reference).
4.13 -- Share Acquisition Agreement dated as of March 1, 1998
by and among the Company and the former stockholders of
Creative Communications Solutions Limited (filed as
exhibit 4.3 to the Registrant's Registration Statement
on Form S-3 (File No. 333-53941) and incorporated
herein by reference).
4.14 -- Share Acquisition Agreement dated as of March 1, 1998
by and among the Company and the former stockholders of
Genesis Pharma Strategies Ltd. (filed as exhibit 4.4 to
the Registrant's Registration Statement on Form S-3
(File No. 333-53941) and incorporated herein by
reference).
4.15 -- Sale and Purchase Agreement dated as of February 18,
1998 by and among the Company and the former
stockholders of MIRAI, B.V. (filed as exhibit 4.5 to
the Registrant's Registration Statement on Form S-3
(File No. 333-53941) and incorporated herein by
reference).
4.16 -- Registration Rights Agreement dated as of February 27,
1998 by and among the Company and the former
stockholders of PPS Europe Ltd. (filed as Exhibit 4.4
to the Company's Current Report on Form 8-K/A dated
March 1, 1998 and incorporated herein by reference).
4.17 -- Registration Rights Agreement dated as of February 27,
1998 by and among the Company and the former
stockholders of Creative Communications Solutions
Limited (filed as exhibit 4.8 to the Registrant's
Registration Statement on Form S-3 (File No. 333-53941)
and incorporated herein by reference).
4.18 -- Registration Rights Agreement dated as of February 27,
1998 by and among the Company and the former
stockholders of Genesis Pharma Strategies Ltd. (filed
as exhibit 4.9 to the Registrant's Registration
Statement on Form S-3 (File No. 333-53941) and
incorporated herein by reference).
4.19 -- Registration Rights Agreement dated as of February 27,
1998 by and among the Company and the former
stockholders of MIRAI, B.V. (filed as exhibit 4.10 to
the Registrant's Registration Statement on Form S-3
(File No. 333-53941) and incorporated herein by
reference).
4.20 Registration Rights Agreement by and among the Company
and the former stockholder of LOGOS GmbH (filed as
exhibit 4.11 to the Registrant's Registration Statement
on Form S-3 (File No. 333-53941) and incorporated
herein by reference).
10.1 -- Employment Agreement dated December 30, 1996 between
James M. Karis and the Company (filed as Exhibit 10.1
to the Registrant's Quarterly Report on Form 10-Q for
the Quarter Ended December 31, 1996 and incorporated
herein by this reference).
10.2 -- Agreement dated June 30, 1993 between Prof. Dr. med.
Werner M. Herrmann and PAREXEL GmbH Independent
Pharmaceutical Research Organization, as amended,as of
April 1, 1998 (filed as Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended March 31, 1998 and incorporated herein by
this reference).
10.3 -- Letter Agreement effective as of July 1, 1997 between
Prof. Dr. med. Werner M. Herrmann and the Company, as
amended as of April 1, 1998 (filed as Exhibit 10.2 to
the Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended March 31, 1998 and incorporated herein by
this reference).
-- Letter Agreement between A. Joseph Eagle and PPS Europe
10.4 Limited dated as of April 17, 1997, as amended. (filed
as Exhibit 10.3. to the Registrant's Quarterly Report
on Form 10-Q for the Quarter Ended March 31, 1998 and
incorporated herein by this reference).
10.5 -- Form of Stock Option Agreement of the Company (filed as
Exhibit 10.9 to the Registrant's Registration Statement
on Form S-1 (File No. 333-1188) and incorporated herein
by this reference).
10.6 -- 1986 Incentive Stock Option Plan of the Company (filed
as Exhibit 10.10 to the Registrant's Registration
Statement on Form S-1 (File No. 33-97406) and
incorporated herein by this reference).
10.7 -- 1987 Stock Plan of the Company (filed as Exhibit 10.11
to the Registrant's Registration Statement on Form S-1
(File No. 33-97406) and incorporated herein by this
reference).
10.8 -- 1989 Stock Plan of the Company (filed as Exhibit 10.12
to the Registrant's Registration Statement on Form S-1
(File No. 33-97406) and incorporated herein by this
reference).
10.9 -- Second Amended and Restated 1995 Stock Plan of the
Company.
10.10-- 1995 Non-Employee Director Stock Option Plan of the
Company (filed as Exhibit 10.14 to the Registrant's
Registration Statement on Form S-1 (File No. 33-97406)
and incorporated herein by this reference).
10.11-- 1995 Employee Stock Purchase Plan of the Company (filed
as Exhibit 10.15 to the Registrant's Registration
Statement on Form S-1 (File No. 33-97406) and
incorporated herein by this reference).
10.12-- Corporate Plan for Retirement of the Company (filed as
Exhibit 10.16 to the Registrant's Registration
Statement on Form S-1 (File No. 33-97406) and
incorporated herein by this reference).
10.13-- Loan and Security Agreement dated as of July 31, 1992
between the Company, Barnett International Corporation
and The First National Bank of Boston, as amended
(filed as Exhibit 10.17 to the Registrant's
Registration Statement on Form S-1(File No. 333-06953)
and incorporated herein by this reference).
10.14-- Line of Credit Agreement between PAREXEL GmbH and
Deutsche Bank Berlin, dated January 23, 1995 (filed as
Exhibit 10.24 to the Registrant's Registration
Statement on Form S-1 (File No. 33-97406) and
incorporated herein by this reference).
10.15-- First Amendment dated as of January 3, 1992 to the
Lease dated June 14, 1991 between 200 West Street
Limited Partnership and the Company (filed as Exhibit
10.25 to the Registrant's Registration Statement on
Form S-1 (File No. 33-97406) and incorporated herein by
this reference).
10.16-- Second Amendment dated as of June 28, 1993 to the lease
dated June 14, 1991 between 200 West Street Limited
Partnership and the Company (filed as Exhibit 10.28 to
the Registrant's Registration Statement on Form S-1
(File No. 33-97406) and incorporated herein by this
reference).
10.17-- Letter of employment dated July 6, 1993 between Barry
R. Philpott and the Company (filed as Exhibit 10.29 to
the Registrant's Registration Statement on Form S-1
(File No. 33-97406) and incorporated herein by this
reference).
10.18-- Credit Agreement dated December 30, 1994 between
PAREXEL GmbH and The First National Bank of Boston
(filed as Exhibit 10.30 to the Registrant's
Registration Statement on Form S-1(File No. 33-97406)
and incorporated herein by this reference).
10.19-- Collateral Agreement dated December 30, 1994 between
PAREXEL GmbH and The First National Bank of Boston
(filed as Exhibit 10.31 to the Registrant's
Registration Statement on Form S-1 (File No. 33-97406)
and incorporated herein by this reference).
10.20-- 1998 Non-Qualified, Non-Officer Stock Option Plan
(filed as Exhibit 4.4 to the Registrant's Registration
Statement on Form S-8 (File No. 33-47033) and
incorporated herein by this reference).
11.1 -- Statement re computation of per share earnings.
13.1 -- Specified portions of the Registrant's 1998 Annual
Report to Stockholders.
21.1 -- List of subsidiaries of the Company.
23.1 -- Consent of PricewaterhouseCoopers L.L.P.
23.2 -- Consent of Grant Thornton
27.1 -- Financial Data Schedule.
(B) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K dated
August 7, 1997 reporting financial results for the
quarter ended June 30, 1997.
The Company filed a Current Report on Form 8-K dated
October 23, 1997 reporting first quarter results and
agreement to acquire Kemper-Masterson, Inc.
The Company filed a Current Report on Form 8-K dated
January 27, 1998 reporting financial results for the
quarter ended December 31, 1997.
The Company filed a Current Report on Form 8-K dated
March 1, 1998 reporting the acquisition of all of the
outstanding shares of PPS Europe Ltd.
The Company filed a Current Report on Form 8-K dated
March 2, 1998 reporting the acquisition of PPS Europe
Limited and Genesis Pharma Strategies Limited
(collectively referred to as PPS).
The Company filed a Current Report on Form 8-K dated
April 27, 1998 reporting financial results for the
quarter ended March 31, 1998.
The Company filed a Amendment No. 1 to Current Report
on Form 8-K on Form 8-K/A dated March 1, 1998
regarding "shelf" resale registration rights with
respect to the shares of the Company's Common Stock
issued in connection with the acquisition
The Company filed a Current Report on Form 8-K dated
August 12, 1998 reporting financial results for the
quarter ended June 30, 1998
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 in the city of Waltham, Massachusetts,
on the xx day of September, 1998.
PAREXEL INTERNATIONAL CORPORATION
By:Josef H. von Rickenbach
President, Chief
Executive Officer
and Chairman
Signatures Title(s) Date
/s/Josef H. von
Rickenbach
Josef H. von Rickenbach President, Chief September 25, 1998
Executive Officer
and Chairman
(principal executive
officer)
/s/William T. Sobo, Jr.
William T. Sobo, Jr. Senior Vice September 25, 1998
President, Chief
Financial Officer,
Treasurer and Clerk
(principal financial
and accounting
officer)
/s/A. Dana Callow, Jr.
A. Dana Callow, Jr. Director September 25, 1998
Patrick J. Fortune Director September __, 1998
/s/Werner M. Herrmann
Werner M. Herrmann Director September 25, 1998
/s/James A. Saalfield
James A. Saalfield Director September 25, 1998
/s/Serge Okun
Serge Okun Director September 25, 1998
/s/A. Joseph Eagle
A. Joseph Eagle Director September 25, 1998
Schedule II
PAREXEL INTERNATIONAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
($ in thousands)
Balance Charge Balanc
at d to Charged Deductio e at
Description beginning costs to other ns and end of
of year and accounts write- year
expens offs
es
ALLOWANCE FOR DOUBTFUL
ACCOUNTS:
Year ended June 30, $1,737 $593 -- $(310) $2,020
1996
Year ended June 30, 2,020 1,718 329 (683) 3,384
1997
Year ended June 30, 3,384 1,924 -- (246) 5,062
1998
DEFERRED TAX ASSET
VALUATION ALLOWANCE:
Year ended June 30, $7,491 $147 -- $(1,565) $6,073
1996
Year ended June 30, 6,073 -- -- (2,569) 3,504
1997
Year ended June 30, 3,504 -- -- (891) 2,613
1998
EXHIBIT 21.1
PAREXEL INTERNATIONAL CORPORATION
LIST OF SUBSIDIARIES OF THE COMPANY
PAREXEL
OWNERSHIP(1)
Barnett International Corporation, a 100%
Massachusetts corporation
PAREXEL International Holding Corporation, a 100%
Delaware corporation
PAREXEL International Securities 100%
Corporation, a Massachusetts corporation
PAREXEL International Inc., a Delaware 100%
corporation
PAREXEL Government Services, Inc., a 100%
Delaware corporation
PAREXEL Unternehmens beteiligung GmbH, a 100%
corporation organized under the laws of
Germany
PAREXEL GmbH Independent Pharmaceutical 100%
Research Organization, a Corporation
organized under the laws of Germany
PAREXEL International Limited, a corporation 100%
organized under the laws of the United
Kingdom
AFB CLINLAB Laborleistungs - 100%
Organisationgesellschaft GmbH, a corporation
organized under the laws of Germany
PAREXEL International SARL, a corporation 100%
organized under the laws of France
PAREXEL International SRL, a corporation 100%
organized under the laws of Italy
PAREXEL International Pty Ltd., a 100%
corporation organized under the laws of
Australia
PAREXEL International S.L., a corporation 100%
organized under the laws of Spain
PAREXEL International Medical Marketing 100%
Services, Inc., a Virginia corporation
PAREXEL International (Lansal) Limited, a 100%
corporation organized under the laws of
Israel
Caspard Consultants, a corporation organized 100%
under the laws of France
Sitebase Clinical Systems, Inc., a 100%
Massachusetts corporation
PAREXEL S-Cubed Limited, a corporation 100%
organized under the laws of the United
Kingdom
PAREXEL ClinNet Limited, a corporation 100%
organized under the laws of the United
Kingdom
Pharmon, Ltd., a corporation organized under 100%
the laws of Liechentenstein
Rescon, Inc., a Virginia corporation 100%
PAREXEL ETT, S.L., a corporation organized 100%
under the laws of Spain
PAREXEL International KK, a corporation 100%
organized under the laws of Japan
KMI/PAREXEL, Inc., a corporation organized 100%
under the laws of Delaware
PAREXEL International Holding BV, a 100%
corporation organized under the law of the
Netherlands
PAREXEL International sp. z.o.o., a 100%
corporation organized under the laws of
Poland
PAREXEL MMS Europe Limited (and affiliates), 100%
a corporation organized under the laws of
the United Kingdom
Genesis Pharma Strategies Ltd., a 100%
corporation organized under the laws of the
United Kingdom
Creative Communication Solutions, Ltd., a 100%
corporation organized under the laws of the
United Kingdom
PPS International Communcations Ltd., a 100%
corporation organized under the laws of the
United Kingdom
Pharos Healthcare Communications Ltd., a 100%
corporation organized under the laws of the
United Kingdom
Pharos Healthcare Communications Inc., a 100%
Connecticut corporation
Centre for Bio-Medical Communications Inc., 100%
a New Jersey corporation
Cambridge Medical Publications Ltd., a 100%
corporation organized under the laws of the
United Kingdom
Mirai B.V. (and its twelve foreign 100%
subsidiaries), a corporation organized under
the laws of The Netherlands
Logos GmbH, a corporation organized under 100%
the laws of Germany
(1) Direct and indirect
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of the Registration Statements on
Form S-3 (File Nos. 333-19751, 333-27487, 333-44541, 333-53941
and 333-60005) and the Registration Statements on Form S-8 (File
Nos. 33-80301, 333-16205 and 333-47033) of PAREXEL International
Corporation and its subsidiaries of our report dated August 11,
1998, appearing on page 30 of PAREXEL International Corporation's
Annual Report to stockholders, which is incorporated by reference
in this Annual Report on Form 10-K. We also consent to the
application of such report to the Financial Statement Schedule
for the three years ended June 30, 1998 listed under Item 14(a)
of this Annual Report on Form 10-K when such schedule is read in
conjunction with the financial statements referred to in our
report. The audits referred to in such report included this
Financial Statement Schedule.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
September 25, 1998
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement on Form S-3 (File Nos. 333-19751, 333-27487, 333-44541,
333-53941 and 333-60005) and Form S-8 (File Nos. 33-80301, 333-
16205 and 333-47033) of our report dated February 6, 1998 on the
financial statements of PPS Europe Limited and Subsidiaries
included in this Form 10-K of PAREXEL International Corporation.
GRANT THORNTON
London, United Kingdom
September 24, 1998