Parexel International (PRXL) 8-K Parexel Reports Fourth Quarter and Fiscal 2004 Financial Results

CONTACTS:  James Winschel, Senior Vice-President and Chief Financial Officer
Jill Baker, Vice President of Investor Relations
(781) 434-4118

PAREXEL REPORTS FOURTH QUARTER AND FISCAL 2004 FINANCIAL RESULTS

- Company achieves Q4 operating margin of 7.3%, and EPS of $0.24 -

Boston, MA, August 3, 2004– PAREXEL International Corporation (Nasdaq: PRXL) today announced its financial results for the fourth quarter and fiscal year ended June 30, 2004.

For the three months ended June 30, 2004, PAREXEL’s consolidated service revenue grew 0.1% to $141.1 million compared with $140.9 million in the prior year period. Operating income was $10.2 million, or 7.3% of consolidated service revenue in the fourth quarter versus operating income of $3.6 million, or 2.5% in the comparable quarter of the prior year. Net income for the quarter was $6.5 million, or $0.24 per diluted share, compared with net income of $2.9 million, or $0.11 per diluted share for the quarter ended June 30, 2003.

For the fiscal year ended June 30, 2004, consolidated service revenue was $547.2 million versus $522.3 million in the prior year period, an increase of 4.8%. Operating income for Fiscal 2004 was $24.6 million, or 4.5% of consolidated service revenue, compared with $20.6 million, or 3.9% in the prior year. Net income for Fiscal 2004 was $13.8 million or $0.52 per diluted share, compared with net income of $10.7 million or $0.42 per diluted share for the fiscal year ended June 30, 2003.

On a proforma basis, excluding $11.6 million in restructuring and one-time charges taken in the third quarter of Fiscal 2004, operating income for Fiscal 2004 was $36.2 million or 6.6% of consolidated service revenue, net income was $21.9 million, and earnings per diluted share were $0.82.

On a segment basis, service revenue for the fourth quarter was $74.4 million in Clinical Research Services, $32.9 million in the PAREXEL Consulting Group, $23.8 million in Medical Marketing Services, and $10.0 million in Perceptive Informatics, Inc.(Perceptive). For the fiscal year, service revenue was $309.3 million in Clinical Research Services, $113.1 million in the PAREXEL Consulting Group, $88.8 million in Medical Marketing Services, and $36.0 million in Perceptive.

For the six-month period from January to June 2004, PAREXEL reported net new business (gross new business less cancellations) of $358.5 million. Net new business for this period increased 33.1% when compared with the six-month period from January to June of 2003, and increased 19.0% from the six-month period ended on December 31, 2003. Net new business for the full fiscal year was $659.8 million, an increase of 16.0% from Fiscal 2003. Backlog at June 30, 2004 was $699.2 million, an increase of 12.5% from the December 31, 2003 backlog, which

was $621.7 million, and an increase of 19.2% over the backlog reported at June 30, 2003, which was $586.6 million.

Mr. Josef H. von Rickenbach, PAREXEL’s Chairman and Chief Executive Officer stated, “During the fourth quarter, we continued to make progress in improving the Company’s overall operating margin despite the negative impact on revenue of fourth quarter signature delays. As we move into the new fiscal year, we will be primarily focused on re-accelerating revenue growth, and the continuing drive to expand operating margins. We are encouraged by our current backlog coverage and are confident that we will grow revenue in each of our businesses. The impact of ongoing productivity and quality programs, the continued progress of Perceptive Informatics, and better leverage from SG&A spending will also contribute significantly to improved operating results.”

The Company issued forward-looking guidance regarding revenue and earnings per share for the first quarter of Fiscal 2005 (ending September 30, 2004) and reconfirmed previously issued guidance for Fiscal 2005. For the first quarter of Fiscal 2005, the Company anticipates reporting consolidated service revenue in the range of $138 to $143 million and earnings per diluted share in the range of $0.20 to $0.21. For Fiscal 2005, the Company anticipates reporting consolidated service revenue in the range of $610 to $630 million and earnings per diluted share in the range of $0.98 to $1.08.

The Company believes that presenting the proforma information contained in this press release assists investors and others to gain a better understanding of its core operating results and future prospects, especially when comparing such results to previous periods or forecasts. Management uses this proforma information, in addition to the GAAP information, as the basis for measuring the Company’s core operating performance and comparing such performance to that of prior periods and to the performance of its competitors. Such measures are also used by management in its financial and operating decision-making. Proforma information is not meant to be considered superior to or a substitute for the Company’s results of operations prepared in accordance with GAAP. A reconciliation of Generally Accepted Accounting Principles (GAAP) results with proforma results may be found in the attached financial tables.

PAREXEL’s Fourth Quarter and Fiscal 2004 Earnings Conference Call will begin at 10 a.m. ET on Tuesday, August 3rd and will be broadcast live over the internet via webcast. The webcast may be accessed in the “Webcasts” portion of the Investor Relations section of the Company’s website at http://www.parexel.com. Users should follow the instructions provided to assure that the necessary audio applications are downloaded and installed. A replay of this webcast will be archived on the website approximately two hours after the call and will continue to be accessible for approximately one year following the live event. To participate via telephone, dial (612) 332-0637 and ask to join the PAREXEL quarterly conference call.

PAREXEL is one of the largest biopharmaceutical outsourcing organizations in the world, providing a broad range of knowledge-based contract research, medical marketing and consulting services to the worldwide pharmaceutical, biotechnology and medical device industries. With a commitment to providing solutions that expedite time-to-market and peak market penetration, PAREXEL has developed significant expertise in clinical trials management, data management, biostatistical analysis, medical marketing, clinical pharmacology, regulatory and medical consulting, industry training and publishing and other drug development consulting services. Its information technology subsidiary, Perceptive Informatics, Inc., develops and offers a portfolio of innovative technology-based products and services that facilitate clinical drug development

and are designed to decrease time to peak sales. The technology portfolio includes web-based portal solutions and tracking tools, Interactive Voice Response Systems (IVRS), Clinical Trial Management Systems (CTMS), electronic diary and investigator database solutions. Perceptive also offers advanced medical diagnostics services to assess rapidly and objectively the safety and efficacy of new drugs, biologics, and medical devices in clinical trials. PAREXEL’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. Headquartered near Boston, MA, PAREXEL operates in 51 locations throughout 35 countries around the world, and has 4,875 employees.

This release contains “forward-looking” statements regarding future results and events, including, without limitation, statements regarding expected financial results, future growth and customer demand, such as the guidance provided by the Company with respect to the first quarter of Fiscal Year 2005 and Fiscal Year 2005. For this purpose, any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. Without limiting the foregoing, the words “believes”, “anticipates”, “plans”, “expects”, “intends”, “appears”, “estimates”, “projects” and similar expressions are intended to identify forward-looking statements. These statements involve a number of risks and uncertainties. The Company’s actual future results may differ significantly from the results discussed in the forward-looking statements contained in this release. Important factors that might cause such a difference include, but are not limited to, risks associated with: actual operating performance; actual expense savings and other operating improvements resulting from recent restructurings; the loss, modification, or delay of contracts; the Company’s dependence on certain industries and clients; the Company’s ability to win new business, manage growth, and attract and retain employees; the Company’s ability to complete additional acquisitions and to integrate newly acquired businesses or enter into new lines of business; government regulation of the drug, medical device and biotechnology industry; consolidation within the pharmaceutical industry; competition within the biopharmaceutical services industry; the potential for significant liability to clients and third parties; the potential adverse impact of health care reform; and the effects of exchange rate fluctuations and other international economic, political, and other risks. Such factors and others are discussed more fully in the section entitled “Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 as filed with the SEC on May 13, 2004, which “Risk Factors” discussion is incorporated by reference in this press release. The forward-looking statements included in this press release represent the Company’s estimates as of the date of this release. The Company specifically disclaims any obligation to update these forward-looking statements in the future. These forward-looking statements should not be relied upon as representing the Company’s estimates or views as of any date subsequent to the date of this press release.

PAREXEL is a registered trademark of PAREXEL International Corporation, and Perceptive Informatics is a trademark of Perceptive Informatics, Inc. All other names or marks may be registered trademarks or trademarks of their respective business and are hereby acknowledged.

PAREXEL International Corporation
Consolidated Condensed Statement of Operations
(In thousands, except per share data)

	(Unaudited)
	For the three months ended June 30,
	2004		2003
			Restated						Restated
	As Reported		As Reported			Adjustments			Pro-Forma
Service revenue	$	141,106	$	140,949	(a)				$	140,949
Reimbursement revenue		34,194		23,509	(a)					23,509
Total revenue		175,300		164,458						164,458
Costs and expenses:
Direct costs		89,746		93,823	(a)					93,823
Reimbursable out-of-pocket expenses		34,194		23,509	(a)					23,509
Selling, general and administrative		34,143		34,549
Depreciation and amortization		6,971		5,501						5,501
Restructuring expense		—		3,488			(3,488	)(b)		—
Income from operations		10,246		3,588			3,488			7,076
Other income		310		1,004						1,004
Income before income taxes		10,556		4,592			3,488			8,080
Provision for income taxes		4,014		1,654			1,256			2,910
Minority interest expense		41		56						56
Net income	$	6,501	$	2,882		$	2,232		$	5,114
Earnings per common share:
Basic	$	0.25	$	0.11		$	0.09		$	0.20
Diluted	$	0.24	$	0.11		$	0.09		$	0.20
Shares used in computing earnings per common share:
Basic		26,039		25,695			25,695			25,695
Diluted		26,925		26,157			26,157			26,157

Balance Sheet Information	(Preliminary)
	June 30,			March 31,			June 30,
	2004			2004			2003
Billed accounts receivable, net	$	127,494		$	124,504		$	143,978
Unbilled accounts receivable, net		94,463			98,323			78,748
Deferred revenue		(145,409	)		(147,581	)		(130,650	)
Net receivables	$	76,548		$	75,246		$	92,076
Cash and marketable securities	$	95,607		$	83,977		$	82,724
Working capital	$	145,409		$	136,114		$	134,346
Total assets	$	501,162		$	486,935		$	464,237
Stockholders’ equity	$	246,760		$	241,766		$	227,100
Quarterly Supplemental Financial Data
Total revenue	$	175,300		$	168,249		$	164,458
Investigator fees		18,224			16,750			21,218
Gross revenue	$	193,524		$	184,999		$	185,676
DSO		36			37			45

(a)	Includes an accounting reclassification in the PAREXEL Consulting Group as discussed during the third quarter of FY 2004. The reclassification had no impact on Total Revenue, Costs and Expenses, Income from Operations, Net Income, or to the Balance Sheet.
(b)	Represents facilities-related restructuring charges resulting from changes in estimates with regard to certain previously abandoned leased facilities.

PAREXEL International
Corporation
Consolidated Condensed Statement of Operations
(In thousands, except per share data)

	(Unaudited)
	For the year ended June 30,
	2004									2003
										Restated						Restated
	As Reported(d)			Adjustments			Pro-Forma			As Reported			Adjustments			Pro-Forma
Service revenue	$	547,216	(d)				$	547,216		$	522,313	(d)				$	522,313
Reimbursement revenue		111,387	(d)					111,387			96,902	(d)					96,902
Total revenue		658,603						658,603		��	619,215						619,215
Costs and expenses:
Direct costs		356,063	(d)					356,063			347,176	(d)					347,176
Reimbursable out-of-pocket expenses		111,387	(d)					111,387			96,902	(d)					96,902
Selling, general and administrative		129,989			(69	)(a)		129,920			124,502						124,502
Depreciation and amortization		25,762			(740	)(b)		25,022			20,656						20,656
Restructuring expense		10,796			(10,796	)(c)		—			9,374			(9,374	)(e)		—
Income from operations		24,606			11,605			36,211			20,605			9,374			29,979
Other income (loss)		(1,163	)		388	(a)		(775	)		(2,118	)					(2,118	)
Income before income taxes		23,443			11,993			35,436			18,487			9,374			27,861
Provision for income taxes		9,313			3,907			13,220			7,250			3,375			10,625
Minority interest		339						339			575						575
Net income	$	13,791		$	8,086		$	21,877		$	10,662		$	5,999		$	16,661
Earnings per common share:
Basic	$	0.53		$	0.31		$	0.84		$	0.42		$	0.24			0.66
Diluted	$	0.52		$	0.30		$	0.82		$	0.42		$	0.23			0.65
Shares used in computing earnings per common share:
Basic		26,010			26,010			26,010			25,371			25,371			25,371
Diluted		26,795			26,795			26,795			25,683			25,683			25,683

(a)	Represents $388 thousand of one-time charges associated with certain disputes and a $69 thousand loss on the disposition of certain obsolete assets.
(b)	Represents $740 thousand of impairment charges associated with abandoned leased facilities and other fixed assets.
(c)	Represents a restructuring charge of $10.8 million ($3.9 million for severance expense associated with the elimination of 157 managerial and staff positions, $5.6 million related to seven newly-abandoned leased facilities, and $1.3 million related to changes in assumptions for previously abandoned leased facilities).
(d)	Includes an accounting reclassification in the PAREXEL Consulting Group as discussed during the third quarter of FY 2004. The reclassification had no impact on Total Revenue, Costs and Expenses, Income from Operations, Net Income, or to the Balance Sheet.
(e)	Represents facilities-related restructuring charges resulting from changes in estimates with regard to certain previously abandoned leased facilities.

PAREXEL International Corporation
Segment Information
($ in thousands)

	Three months ended						For the year ended
	June 30,						June 30,
				Restated						Restated
	2004			2003			2004			2003
Clinical Research Services (CRS)
Service revenue	$	74,438		$	84,305		$	309,341		$	312,847
% of total service revenue		52.8	%		59.8	%		56.5	%		59.9	%
Gross profit	$	29,874		$	32,134		$	122,633		$	116,879
Gross margin % of service revenue		40.1	%		38.1	%		39.6	%		37.4	%
The PAREXEL Consulting Group (PCG)
Service revenue (a)	$	32,864		$	24,516		$	113,117		$	100,813
% of total service revenue		23.3	%		17.4	%		20.7	%		19.3	%
Gross profit	$	8,628		$	2,974		$	27,645		$	20,502
Gross margin % of service revenue		26.3	%		12.1	%		24.4	%		20.3	%
Medical Marketing Services (MMS)
Service revenue	$	23,757		$	24,290		$	88,785		$	83,853
% of total service revenue		16.8	%		17.2	%		16.2	%		16.1	%
Gross profit	$	8,035		$	8,348		$	23,872		$	28,112
Gross margin % of service revenue		33.8	%		34.4	%		26.9	%		33.5	%
Perceptive Informatics, Inc. (PII)
Service revenue	$	10,047		$	7,838		$	35,973		$	24,800
% of total service revenue		7.1	%		5.6	%		6.6	%		4.7	%
Gross profit	$	4,823		$	3,670		$	17,003		$	9,644
Gross margin % of service revenue		48.0	%		46.8	%		47.3	%		38.9	%
Total service revenue	$	141,106		$	140,949		$	547,216		$	522,313
Total gross profit	$	51,360		$	47,126		$	191,153		$	175,137
Gross margin % of service revenue		36.4	%		33.4	%		34.9	%		33.5	%

(a) Includes an accounting reclassification in the PAREXEL Consulting Group as discussed during the third quarter of FY 2004. The reclassification had no impact on Total Revenue, Costs and Expenses, Income from Operations, Net Income, or to the Balance Sheet.