Parexel International 10Q 2009 Q2 Quarterly report

Parexel International (PRXL) Inactive 10-Q2009 Q2 Quarterly report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 31, 2008

¨	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: 000-21244

PAREXEL INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Massachusetts

04-2776269

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

200 West Street

Waltham, Massachusetts

02451

(Address of principal executive offices)

(Zip Code)

(781) 487-9900

Registrant's telephone number, including area code

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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: As of February 2, 2009, there were 57,612,535 shares of common stock outstanding.

PAREXEL INTERNATIONAL CORPORATION

INDEX


PART I.	FINANCIAL INFORMATION	3

ITEM 1.	FINANCIAL STATEMENTS	3

	CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) – December 31, 2008 and June 30, 2008	3

	CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) – Three and Six Months Ended December 31, 2008 and 2007	4

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) – Six Months Ended December 31, 2008 and 2007	5

	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	23

ITEM 4.	CONTROLS AND PROCEDURES	25

PART II.	OTHER INFORMATION	25

ITEM 1.	LEGAL PROCEEDINGS	25

ITEM 1A.	RISK FACTORS	25

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	35

ITEM 6.	EXHIBITS	35

SIGNATURES		36

EXHIBIT INDEX		37

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

PAREXEL INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share data)


	December 31, 2008			June 30, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	63,678		$	51,918
Billed and unbilled accounts receivable, net		461,084			475,816
Prepaid expenses		17,544			16,789
Deferred tax assets		23,003			21,081
Income tax receivable		3,911			2,198
Other current assets		15,639			13,479

Total current assets		584,859			581,281
Property and equipment, net		150,264			137,133
Goodwill		239,937			147,664
Other intangible assets, net		95,657			34,608
Non-current deferred tax assets		2,639			3,393
Long-term income tax receivable		26,011			25,727
Other assets		23,764			18,265

Total assets	$	1,123,131		$	948,071


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current portion of long-term debt	$	50,424		$	66,474
Accounts payable		26,150			22,470
Deferred revenue		238,370			213,126
Accrued expenses		44,006			35,438
Accrued restructuring charges		1,576			2,834
Accrued employee benefits and withholdings		60,275			77,176
Current deferred tax liabilities		15,684			14,343
Other current liabilities		4,586			2,885

Total current liabilities		441,071			434,746
Long-term debt, net of current portion		226,871			3,465
Non-current deferred tax liabilities		23,885			23,069
Long-term accrued restructuring charges		1,473			2,410
Long-term tax liabilities		44,732			45,467
Other liabilities		7,829			7,833

Total liabilities		745,861			516,990
Minority interest in subsidiary		3,724			2,990
Stockholders’ equity:
Preferred stock—$.01 par value; shares authorized: 5,000,000; Series A junior participating preferred; Series A junior participating preferred stock—50,000 shares designated, none issued and outstanding		—			—
Common stock—$.01 par value; shares authorized: 75,000,000; shares issued and outstanding: 57,710,406 at December 31, 2008 and 56,772,274 at June 30, 2008.		572			567
Additional paid-in capital		216,424			209,410
Retained earnings		184,712			165,885
Accumulated other comprehensive (expense) income		(28,162	)		52,229

Total stockholders’ equity		373,546			428,091

Total liabilities and stockholders’ equity	$	1,123,131		$	948,071

See notes to condensed consolidated financial statements.

PAREXEL INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except per share data)


	Three Months Ended December 31						Six Months Ended December 31
	2008			2007			2008			2007
Service revenue	$	275,846		$	238,653		$	538,892		$	446,778
Reimbursement revenue		48,155			45,635			104,661			89,542

Total revenue		324,001			284,288			643,553			536,320

Direct costs		177,295			156,991			348,659			293,053
Reimbursable out-of-pocket expenses		48,155			45,635			104,661			89,542
Selling, general and administrative		62,062			51,406			119,787			98,546
Depreciation		11,305			8,392			21,234			15,888
Amortization		2,474			1,382			4,509			2,281
Other charge		15,000			—			15,000			—

Total costs and expenses		316,291			263,806			613,850			499,310

Income from operations		7,710			20,482			29,703			37,010

Interest income		4,305			6,037			7,011			10,758
Interest expense		(7,643	)		(6,669	)		(13,054	)		(11,523	)
Miscellaneous income		6,526			303			9,008			10

Other income (expense)		3,188			(329	)		2,965			(755	)

Income before income taxes		10,898			20,153			32,668			36,255

Provision for income taxes		5,144			8,326			12,840			10,563

Minority interest expense		546			296			1,001			276


Net income	$	5,208		$	11,531		$	18,827		$	25,416


Earnings per common share
Basic	$	0.09		$	0.21		$	0.33		$	0.46
Diluted	$	0.09		$	0.20		$	0.32		$	0.44

Shares used in computing earnings per common share
Basic		57,634			55,641			57,552			55,441
Diluted		57,634			57,297			58,171			57,189

See notes to condensed consolidated financial statements.

PAREXEL INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Six Months Ended December 31
	2008			2007
Cash flow from operating activities:
Net income	$	18,827		$	25,416

Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest expense, net of tax		1,001			276
Depreciation and amortization		25,743			18,169
Stock-based compensation		3,661			2,342
Changes in operating assets/liabilities		(9,640	)		(44,966	)

Net cash provided by operating activities		39,592			1,237

Cash flow from investing activities:
Purchases of marketable securities		—			(49,000	)
Proceeds from sale of marketable securities		—			49,000
Purchases of property and equipment		(40,551	)		(26,319	)
Acquisition of businesses		(189,042	)		(52,967	)
Proceeds from sale of assets		113			72

Net cash used in investing activities		(229,480	)		(79,214	)

Cash flow from financing activities:
Borrowing under lines of credit		324,961			70,000
Repayments under lines of credit		(117,726	)		(40,011	)
Proceeds from issuance of common stock		3,358			5,775
Borrowings (repayments) under long-term debt		121			(46	)

Net cash provided by financing activities		210,714			35,718

Effect of exchange rate changes on cash and cash equivalents		(9,066	)		8,508

Net increase (decrease) in cash and cash equivalents		11,760			(33,751	)

Cash and cash equivalents at beginning of period		51,918			96,677

Cash and cash equivalents at end of period	$	63,678		$	62,926


Supplemental disclosures of cash flow information
Net cash paid during the period for:
Interest	$	11,351		$	11,523
Income taxes, net of refunds		19,942			14,675

Supplemental disclosures of investing activities
Fair value of assets acquired and goodwill	$	230,888		$	64,782
Liabilities assumed		(41,846	)		(11,815	)

Cash paid for acquisitions	$	189,042		$	52,967

See notes to condensed consolidated financial statements.

PAREXEL INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of PAREXEL International Corporation (“PAREXEL”, “the Company”, “we”, “our” or “us”) have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (primarily consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended December 31, 2008 are not necessarily indicative of the results that may be expected for other quarters or the entire fiscal year. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2008 (the “2008 10-K”).

On February 11, 2008, our Board of Directors approved a two-for-one stock split. The record date for the stock split was February 22, 2008. The stock split was completed on March 3, 2008. All share and per share amounts for all periods presented have been adjusted to reflect the effect of this stock split.

NOTE 2 – EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares plus the dilutive effect of outstanding stock options and shares issuable under our employee stock purchase plan. From the calculation of diluted earnings per share, we excluded all unvested restricted stock and certain outstanding options to purchase 1,767,000 and 1,176,500 shares of common stock for the three and six months ended December 31, 2008, respectively, and we excluded all unvested restricted stock and certain outstanding options to purchase 800,000 shares of common stock for the three and six months ended December 31, 2007, because they were anti-dilutive. The following table outlines the basic and diluted earnings per common share computations:


(in thousands, except per share data)	Three Months Ended December 31				Six Months Ended December 31
	2008		2007		2008		2007
Net income	$	5,208	$	11,531	$	18,827	$	25,416


Weighted average number of shares outstanding used in computing basic earnings per share		57,634		55,641		57,552		55,441

Dilutive common stock equivalents		—		1,656		619		1,748


Weighted average number of shares outstanding used in computing diluted earnings per share		57,634		57,297		58,171		57,189


Basic earnings per share	$	0.09	$	0.21	$	0.33	$	0.46
Diluted earnings per share	$	0.09	$	0.20	$	0.32	$	0.44

NOTE 3 – COMPREHENSIVE INCOME (LOSS)

Comprehensive income has been calculated in accordance with Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 130, “Reporting Comprehensive Income.” Comprehensive income (loss) for the three and six months ended December 31, 2008 and 2007 was as follows:


(in thousands)	Three Months Ended December 31						Six Months Ended December 31
	2008			2007			2008			2007
Net income	$	5,208		$	11,531		$	18,827		$	25,416
Unrealized loss on available for sale securities and derivative instruments		(7,950	)		(590	)		(8,259	)		(976	)
Foreign currency translation		(31,484	)		4,155			(72,132	)		15,555


Comprehensive (loss) income	$	(34,226	)	$	15,096		$	(61,564	)	$	39,995

NOTE 4 – ACQUISITIONS

On August 14, 2008, we acquired all the outstanding shares of ClinPhone plc (“ClinPhone”), a company traded on the London Stock Exchange, for approximately $172 million in cash, and repaid approximately $20 million of ClinPhone debt. By combining ClinPhone with our Perceptive Informatics segment, Perceptive is now one of the industry’s largest providers of telecommunications and web-based (“eClinical”) technologies for clinical research. The combined company offers access to a broad array of eClinical technologies and resources, providing clients and service providers with the benefits of an extensive line of products and services throughout the entire clinical development lifecycle.

The acquisition was accounted for using the purchase method in accordance with SFAS No. 141, “Business Combinations,” and accordingly, the results of operations of ClinPhone have been included in the accompanying Condensed Consolidated Statements of Income as of the date of the acquisition.

We allocated the total purchase price to the tangible and intangible assets and liabilities acquired based on fair value, with any excess recorded as goodwill. Finalization of the estimates of the fair value of certain assets and liabilities will be completed before August 2009. The following table summarizes the purchase price allocation for ClinPhone (in thousands):


Purchase Price:
Cash paid, net of cash acquired	$	189,002

Total	$	189,002


Allocations:
Fair value of assets acquired
Accounts receivable	$	20,269
Other current assets		2,177
Property and equipment, net		10,719
Goodwill		110,649
Trade name and in-process research and development		25,471
Other intangible assets, net		61,563
Liabilities assumed
Accounts payable		(8,628	)
Current liabilities		(10,233	)
Deferred revenues		(10,764	)
Other liabilities		(12,221	)


Net assets acquired	$	189,002

The following table summarizes the details of our preliminary assessment of the intangible assets acquired in the ClinPhone transaction as of December 31, 2008 (in thousands):


Intangible Assets	Weighted Average Useful Life	Cost		Accumulated Amortization/FX Impact		Net
Customer relationships	13.6 years	$	29,560	$	7,472	$	22,088
Backlog	4 years		6,089		2,068		4,021
Technology	8 years		25,914		6,710		19,204

Total intangible assets		$	61,563	$	16,250	$	45,313

We will record the estimated amortization expense of intangible assets acquired in the ClinPhone transaction for the current fiscal year, including amounts amortized to date, and in future years on our Condensed Consolidated Statements of Income as follows (in thousands):


	2009		2010		2011		2012		2013
Amortization expense	$	5,014	$	5,345	$	5,345	$	5,345	$	4,321

The following (unaudited) pro forma consolidated results of operations have been prepared as if the acquisition of ClinPhone had occurred on July 1, 2007, the beginning of our fiscal year 2008 (in thousands, except per share data):


(in thousands)	Three Months Ended December 31		Six Months Ended December 31
	2007		2008		2007
Service revenue	$	262,841	$	550,454	$	496,828
Net income*	$	10,410	$	19,019	$	22,704

Basic EPS*	$	0.19	$	0.33	$	0.41
Diluted EPS*	$	0.18	$	0.33	$	0.40

Inclusive of interest expense that would have been incurred on the debt used to acquire ClinPhone at an annual interest rate of 5.0%, amortization expenses that would have been incurred in connection with acquired customer relationships, technology, and backlog, and elimination of non-recurring costs including ClinPhone interest expense and deal costs.

NOTE 5 – STOCK-BASED COMPENSATION

We account for stock-based compensation according to SFAS No. 123(R), “Share-Based Payment.” The compensation expense recognized in the three and six months ended December 31, 2008 and 2007 is presented in the following table.


(in thousands)	Three Months Ended December 31				Six Months Ended December 31
	2008		2007		2008		2007
Direct costs related	$	522	$	666	$	1,056	$	1,288
Selling, general and administrative related		1,536		524		2,605		1,054

Total stock-based compensation	$	2,058	$	1,190	$	3,661	$	2,342

NOTE 6 – SEGMENT INFORMATION

PAREXEL is managed through three business segments: Clinical Research Services (“CRS”), PAREXEL Consulting and Medical Communications Services (“PCMS”), and Perceptive Informatics, Inc. (“Perceptive”). CRS constitutes our core business and includes Early and Late Phase clinical trials management, biostatistics, data management, as well as related medical advisory and investigator site services. PCMS provides technical expertise and advice in such areas as drug development, regulatory affairs, and bio/pharmaceutical process and management consulting; and provides a full spectrum of market development, product development, and targeted communications services in support of product launch. PCMS consultants identify alternatives and propose solutions to address clients’ product development, registration, and commercialization issues. PCMS also provides health policy consulting and strategic reimbursement services. Perceptive provides information technology solutions designed to improve clients’ product development processes. Perceptive offers a portfolio of products and services that includes medical imaging services, IVRS, CTMS, web-based portals, systems integration, and patient diary applications.

We evaluate our segment performance and allocate resources based on service revenue and gross profit (service revenue less direct costs), while other operating costs are allocated and evaluated on a geographic basis. Accordingly, we do not include the impact of selling, general, and administrative expenses, depreciation and amortization expense, other charge, interest income (expense), other income (loss), and income tax expense (benefit) in segment profitability. We attribute revenue to individual countries based upon the number of hours of services performed in the respective countries and inter-segment transactions are not included in service revenue. Furthermore, we have a global infrastructure supporting our business segments and therefore, do not identify assets by reportable segment.


($ in thousands)	Three Months Ended December 31				Six Months Ended December 31
	2008		2007		2008		2007
Service revenue
Clinical Research Services	$	200,934	$	182,705	$	403,757	$	342,034
PAREXEL Consulting and MedCom Services		31,931		32,537		62,042		63,057
Perceptive Informatics, Inc.		42,981		23,411		73,093		41,687

Total service revenue	$	275,846	$	238,653	$	538,892	$	446,778


Direct costs
Clinical Research Services	$	130,727	$	122,642	$	262,629	$	226,809
PAREXEL Consulting and MedCom Services		20,767		21,395		40,930		42,334
Perceptive Informatics, Inc.		25,801		12,954		45,100		23,910

Total direct costs	$	177,295	$	156,991	$	348,659	$	293,053


Gross profit
Clinical Research Services	$	70,207	$	60,063	$	141,128	$	115,225
PAREXEL Consulting and MedCom Services		11,164		11,142		21,112		20,723
Perceptive Informatics, Inc.		17,180		10,457		27,993		17,777

Total gross profit	$	98,551	$	81,662	$	190,233	$	153,725

NOTE 7 – RESTRUCTURING CHARGES

Current activity charged against the restructuring accrual in the six months ended December 31, 2008 (which is included in “Current Liabilities—Accrued Restructuring Charges” and “Long-term Accrued Restructuring Charges” in the Condensed Consolidated Balance Sheet) was as follows:


($ in thousands)	Balance at June 30, 2008		Payments/Foreign Currency Exchange			Provision Adjustments	Balance at December 31, 2008
Facilities-related charges	$	5,244	$	(2,195	)	—	$	3,049

NOTE 8 – STOCKHOLDERS’ EQUITY

On September 9, 2004, our Board of Directors approved a stock repurchase program authorizing the purchase of up to $20.0 million of our common stock in the open market subject to market conditions. Unless terminated earlier by resolution of our Board of Directors, the program will expire when the entire amount authorized has been fully utilized. Through December 31, 2008, we had acquired 620,414 shares at a total cost of $14.0 million under this program.

NOTE 9 – RECENTLY ISSUED ACCOUNTING STANDARDS

In March 2008, the FASB issued SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS 161 amends FASB Statement 133 by enhancing disclosures about an entity’s derivative and hedging activities and thereby improving financial reporting transparency. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. We plan to adopt SFAS 161 in the third quarter of Fiscal Year 2009. We do not expect the adoption of this statement to have a material impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS 141(R), “Business Combinations—a replacement of FASB Statement No. 141,” which changes the principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) is effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS No. 141(R) amends SFAS No. 109 such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS No. 141(R) would also follow the provisions of SFAS No. 141(R). Early adoption of the provisions of SFAS No. 141(R) is not permitted. This statement will be effective for us beginning in Fiscal Year 2010.

In December 2007, the FASB issued SFAS 160, “Non-controlling Interests in Consolidated Financial Statements.” SFAS 160 clarifies that a non-controlling interest in a subsidiary should be reported at fair value as equity in the consolidated financial statements. Consolidated net income should include the net income for both the parent and the non-controlling interest with disclosure of both amounts on the consolidated statement of income. The calculation of earnings per share will continue to be based on income amounts attributable to the parent. SFAS 160 is effective for fiscal years beginning after December 15, 2008. This statement will be effective for us beginning in Fiscal Year 2010. We are currently evaluating the potential impact of SFAS 160 on our consolidated financial statements.

NOTE 10 – INCOME TAXES

We determine our global provision for corporate income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes”, which requires that deferred tax assets and liabilities be recognized for the effect of temporary differences between the book and tax basis of recorded assets and liabilities.

Effective July 1, 2007, we adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 prescribes a new methodology by which a company must identify, recognize, measure and disclose in its financial statements the effects of any uncertain tax return reporting positions that a company has taken or expects to take. FIN 48 requires financial statement reporting of the expected future tax consequences of uncertain tax return reporting positions on the presumption that all relevant tax authorities possess full knowledge of those tax reporting positions, as well as all of the pertinent facts and circumstances. In addition, FIN 48 mandates expanded financial statement disclosure about uncertainty in income tax reporting positions.

As of June 30, 2008, we had $63.2 million of gross unrecognized tax benefits of which $29.0 million would impact our effective tax rate if recognized. As of December 31, 2008, we had $61.9 million of gross unrecognized tax benefits of which $29.7 million would impact the effective tax rate if recognized. This reserve primarily relates to exposures for income tax matters such as changes in the jurisdiction in which income is taxable and taxation of certain investments. The $1.3 million net decrease in gross unrecognized tax benefits is composed of a $2.0 million gross decrease that will not impact the effective tax rate and a $0.7 million gross increase that will impact the effective tax rate, if recognized. The changes in the balance results primarily from a reduction in reserves established in conjunction with the acquisition of APEX International Clinical Research Co. Ltd. in FY 2008 net of reserves established related to the jurisdictions in which income is taxable in FY 2009.

As of December 31, 2008 we anticipate that the liability for unrecognized tax benefits for uncertain tax positions could change by up to $3.9 million in the next twelve months, as a result of the resolution of U.S state, federal and certain foreign tax audits.

Our historical practice has been, and continues to be, to recognize interest and penalties related to income tax matters in income tax expense. As of June 30, 2008, $7.7 million of interest and penalties were included in our liability for unrecognized tax benefits. Income tax expense recorded through December 31, 2008 includes approximately $1.3 million of gross interest. As of December 31, 2008, $9.0 million of gross interest and penalties were included in our liability for unrecognized tax benefits.

We are subject to U.S. federal income tax, as well as income tax in multiple state, local and foreign jurisdictions. All material U.S. state, local and federal income tax matters through 1998 have been concluded. Substantially all material foreign income tax matters have been concluded for all years through 1996.

For the three months ended December 31, 2008 and 2007, we had an effective income tax rate of 47.2% and 41.3% respectively. For the six months ended December 31, 2008 and 2007, we had an effective income tax rate of 39.3% and 29.1%, respectively. The increase in the tax rate for the three months ended December 31, 2008 compared with the same period in 2007, was primarily attributable to an increase in non-deductible expenses outside the United States, valuation reserves recorded for entities outside of the United States, and the impact of the current quarter’s $15 million charge. The low tax rate for the six months ended December 31, 2007 was primarily attributable to a reduction in deferred tax liabilities in 2007, due, in part, to a decrease in German tax rates.

NOTE 11 – LINES OF CREDIT

2008 Credit Facility

On June 13, 2008, PAREXEL, certain subsidiaries of PAREXEL, JPMorgan Chase Bank, N.A., as Administrative Agent, J.P. Morgan Europe Limited, as London Agent, and the lenders party thereto (the “Lenders”) entered into an agreement for a credit facility (as amended and restated as of August 14, 2008 and as further amended by the first amendment thereto dated as of December 19, 2008, the “2008 Credit Facility”) in the principal amount of up to $315 million (collectively, the “Loan Amount”). The 2008 Credit Facility consists of an unsecured term loan facility and an unsecured revolving credit facility. The principal amount of up to $150 million is made available through a term loan and the principal amount of up to $165 million is made available through a revolving credit facility. A portion of the revolving loan facility is available for swingline loans of up to $20 million to be made by JP Morgan Chase Bank, N.A. and for letters of credit. We may request the lenders to increase the 2008 Credit Facility by an additional amount of up to $50 million, and such increase may, but is not committed to, be provided.

Borrowings made under the 2008 Credit Facility bear interest, at our determination, at a rate based on the highest of prime, the federal funds rate plus .50% and the one-month Adjusted LIBOR Rate (as defined in the Credit Agreement) plus 1.00% (such highest rate, the “Alternate Base Rate”) plus a margin (not to exceed a per annum rate of .75%) based on the Leverage Ratio, in which case it is a floating interest rate, or based on LIBOR or EURIBOR plus a margin (not to exceed a per annum rate of 1.75%) based on the Leverage Ratio, in which case the interest rate is fixed at the beginning of each interest period for the balance of the interest period. An interest period is typically one, two, three, or six months. The “Leverage Ratio” is a ratio of the consolidated total debt to consolidated net income before interest, taxes, depreciation and amortization (EBITDA). Loans outstanding under the 2008 Credit Facility may be prepaid at any time in whole or in part without premium or penalty, other than customary breakage costs, if any. The 2008 Credit Facility terminates and any outstanding loans under it mature on June 13, 2013.

Repayment of the principal borrowed under the revolving credit facility (other than a swingline loan) is due on June 13, 2013. Repayment of principal borrowed under the term loan facility is payable as follows:

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5% of principal borrowed must be repaid by June 30, 2009;

•

20% of principal borrowed must be repaid during the one-year period from July 1, 2009 to June 30, 2010;

•

20% of principal borrowed must be repaid during the one-year period from July 1, 2010 to June 30, 2011;

•

25% of principal borrowed must be repaid during the one-year period from July 1, 2011 to June 30, 2012; and

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30% of principal borrowed must be repaid during the one-year period from July 1, 2012 to June 13, 2013.

All payments of principal on the term loan facility made during each annual period described above are required to be made in equal quarterly installments and to be accompanied by accrued interest thereon. To the extent not previously paid, all borrowings under the term loan facility must be repaid on June 13, 2013. Swingline loans under the 2008 Credit Facility generally must be paid on the first date after such swingline loan is made that is the 15th or last day of a calendar month.

Interest due under the revolving credit facility (other than a swingline loan) and the term loan facility must be paid quarterly for borrowings with an interest rate determined at the Alternate Base Rate. Interest must be paid on the last day of the interest period selected by us for borrowings with an interest rate based on LIBOR or EURIBOR; provided that for interest periods of longer than three months, interest is required to be paid every three months. Interest under swingline loans is payable when principal is required to be repaid.

Our obligations under the 2008 Credit Facility may be accelerated upon the occurrence of an event of default under the 2008 Credit Facility, which includes customary events of default, including payment defaults, defaults in the performance of affirmative and negative covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults, cross defaults to other material indebtedness, defaults relating to such matters as ERISA and judgments, and a change of control default. Our obligations under the 2008 Credit Facility are guaranteed by certain of our U.S. domestic subsidiaries, and we have guaranteed any obligations of any co-borrowers under the 2008 Credit Facility.

In connection with the 2008 Credit Facility, we agreed to pay a commitment fee on the term loan commitment, payable quarterly calculated as a percentage of the unused amount of the term loan commitments at a per annum rate of 0.30%, and a commitment fee on the revolving loan commitment calculated as a percentage of the unused amount of the revolving loan commitments at a per annum rate of up to 0.375% (based on the Leverage Ratio). To the extent there are letters of credit outstanding under the 2008 Credit Facility, we will pay to the Administrative Agent, for the benefit of the lenders, and to the issuing bank certain letter of credit fees, a fronting fee and additional charges. We also agreed to pay various fees to JPMorgan Chase Bank, N.A. or KeyBank or both.

As of December 31, 2008, we had approximately $273.3 million in principal amount of debt outstanding under the 2008 Credit Facility, including $127.0 million of principal borrowed under the revolving credit facility and $146.3 million of principal under the term loan. As of December 31, 2008, we had remaining borrowing availability of approximately $38.0 million under the revolving credit facility. The debt under the credit facility carries an average interest rate of 2.3%. $150 million of principal under the credit facility has been hedged with an interest rate swap agreement and carries an interest rate of 4.8%.

The 2008 Credit Facility contains affirmative and negative covenants applicable to us and our subsidiaries, including financial covenants requiring us to comply with maximum leverage ratios, minimum interest coverage ratios, a minimum net worth test (which covenant allows for foreign translation adjustments of up to $50 million in connection with the calculations required under such covenant) and maximum capital expenditures requirements, as well as restrictions on liens, investments, indebtedness, fundamental changes, acquisitions, dispositions of property, making specified restricted payments (including stock repurchases exceeding an agreed to percentage of consolidated net income), and transactions with affiliates. As of December 31, 2008, we were in compliance with all covenants under the 2008 Credit Facility.

Additional Lines of Credit

We have a line of credit with ABN AMRO Bank, NV in the amount of Euro 12.0 million. This line of credit is not collateralized, is payable on demand, and bears interest at a rate ranging between 3% and 5%. The line of credit may be revoked or canceled by the bank at any time at its discretion. We primarily entered into this line of credit to facilitate business transactions with the bank. At December 31, 2008, we had Euro 12.0 million available under this line of credit.

We have a line of credit with HSBC UK in the amount of 2.0 million pounds sterling. This line of credit was established by ClinPhone and guaranteed by PAREXEL Holding BV. The line is not secured and bears interest at a rate ranging between 3% and 5%. At December 31, 2008, we had 2.0 million pounds sterling available under this line of credit.

We have other foreign lines of credit with banks totaling $2.0 million. These lines of credit are used as overdraft protection and bear interest at rates ranging from 3% to 5%. The lines of credit are payable on demand and are supported by PAREXEL International Corporation. At December 31, 2008, we had $2.0 million available under these arrangements.

We have a cash pooling arrangement with ABN AMRO Bank. Pooling occurs when debit balances are offset against credit balances and the net position is used as a basis by the bank for calculating interest. Each legal entity owned by PAREXEL and party to this arrangement remains the owner of either a credit or debit balance. Therefore, interest income is earned by legal entities with credit balances, while interest expense is charged to legal entities with debit balances. Based on the pool’s overall balance, the Bank then (1) recalculates the overall interest to be charged or earned, (2) compares this amount with the sum of previously charged/earned interest amounts per account and (3) additionally pays/charges the difference.

NOTE 12 – COMMITMENTS, CONTINGENCIES AND GUARANTEES

As of December 31, 2008, we had approximately $33.1 million in purchase obligations with various vendors for the purchase of computer software and other services.

Our unsecured senior credit facility consisting of a term loan facility for $150 million and a revolving credit facility for $165 million with a group of lenders (including and managed by JPMorgan Chase Bank, N.A.) is guaranteed by certain of the Company’s U.S. subsidiaries.

We have letter-of-credit agreements with banks totaling approximately $11.3 million guaranteeing performance under various operating leases and vendor agreements.

In March 2006, we conducted an early-phase clinical trial on behalf of TeGenero AG, a German pharmaceutical company. During the trial, six participants experienced adverse reactions to the TeGenero compound being tested. Through December 31, 2008, we have recorded approximately $1.8 million in legal fees and other incremental costs in connection with the incident. To date, none of the participants in the clinical trial have filed suit against us. We carry insurance to cover risks such as this, but our insurance is subject to deductibles and coverage limits and may not be adequate to cover claims against us. While we believe that TeGenero is responsible to indemnify us with respect to claims related to this matter, TeGenero filed for insolvency in July 2006, which likely will limit any recovery by us from them. In addition, while TeGenero carried insurance with respect to this type of matter, this insurance also is subject to deductibles and coverage limits.

We periodically become involved in various claims and lawsuits that are incidental to our business. We believe, after consultation with counsel, that no matters currently pending would, in the event of an adverse outcome, have a material impact on our consolidated financial position, results of operations, or liquidity.

NOTE 13 – SPECIAL CHARGE

In the second quarter of Fiscal Year 2009, one of our small biopharma clients informed us that it had encountered funding difficulties when one of its major investors defaulted on a contractual investment commitment. The client informed us that, following the default, it had substantive discussions with two potential commercialization partners and its remaining investors, but was unable to secure additional funding for the trial. The client has since filed for bankruptcy protection. As a result, PAREXEL recorded $15 million in reserves in the second quarter of Fiscal Year 2009 for anticipated wind-down costs and bad debt expense related to impaired accounts receivable (for service fees, pass-through costs, and investigator fees).

NOTE 14 – MISCELLANEOUS INCOME

The miscellaneous income recognized in the three and six months ended December 31, 2008 and 2007 is presented in the following table.


(in thousands)	Three Months Ended December 31					Six Months Ended December 31
	2008			2007		2008			2007
Foreign exchange gain (loss)	$	12,162		$	202	$	14,761		$	(1,145	)
Other (expense) income		(5,636	)		101		(5,753	)		1,155

Total miscellaneous income	$	6,526		$	303	$	9,008		$	10

Other expense for the three and six months ended December 31, 2008 included by a $3.0 million write-off related to a contract dispute and a $2.3 million write-off of certain impaired assets.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The financial information discussed below is derived from the Condensed Consolidated Financial Statements included in this quarterly report on Form 10-Q. The financial information set forth and discussed below is unaudited but, in the opinion of management, reflects all adjustments (primarily consisting of normal recurring adjustments) considered necessary for a fair presentation of such information. Our results of operations for a particular quarter may not be indicative of results expected during subsequent fiscal quarters or for the entire year.

This quarterly report on Form 10-Q includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. For this purpose, any statements contained in this report regarding our strategy, future operations, financial position, future revenue, projected costs, prospects, plans and objectives of management, other than statements of historical facts, are forward-looking statements. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” “targets,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guarantee that we actually will achieve the plans, intentions or expectations expressed or implied in our forward-looking statements. There are a number of important factors that could cause actual results, levels of activity, performance or events to differ materially from those expressed or implied in the forward-looking statements we make. These important factors are described under “Critical Accounting Policies and Estimates” included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2008, filed on August 28, 2008 (the “2008 10-K”) and under “Risk Factors” set forth in Part II, Item 1A below. Although we may elect to update forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our estimates change, and readers should not rely on those forward-looking statements as representing our views as of any date subsequent to the date of this quarterly report.

OVERVIEW

PAREXEL is a leading biopharmaceutical services company, providing a broad range of expertise in clinical research, medical communications services, consulting, and informatics and advanced technology products and services to the worldwide pharmaceutical, biotechnology, and medical device industries. Our primary objective is to provide solutions for managing the biopharmaceutical product lifecycle with the goal of reducing the time, risk, and cost associated with the development and commercialization of new therapies. Since our incorporation in 1983, we have developed significant expertise in processes and technologies supporting this strategy. Our product and service offerings include: Early and Late Phase clinical trials management, data management, biostatistical analysis, medical communications services, patient recruitment, regulatory and product development consulting, health policy and reimbursement, performance improvement, industry training and publishing, medical imaging services, interactive voice response systems (“IVRS”), clinical trial management systems (“CTMS”), web-based portals, systems integration, patient diary applications, and other drug development services. We believe that our comprehensive services, depth of therapeutic area expertise, global footprint and related access to patients, and sophisticated information technology, along with our experience in global drug development and product launch services, represent key competitive strengths.

We are managed through three business segments: CRS, PCMS and Perceptive.

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CRS constitutes our core business and includes Early and Late Phase clinical trials management, biostatistics and data management, as well as related medical advisory and investigator site services.

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PCMS provides technical expertise and advice in such areas as drug development, regulatory affairs, and bio/pharmaceutical process and management consulting, and PCMS provides a full spectrum of market development, product development, and targeted communications services in support of product launch. PCMS consultants identify alternatives and propose solutions to address clients’ product development, registration, and commercialization issues. PCMS also provides health policy consulting and strategic reimbursement services.

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Perceptive provides information technology solutions designed to improve clients’ product development processes. Perceptive offers a portfolio of products and services that includes medical imaging services, IVRS, CTMS, Electronic Data Capture, web-based portals, systems integration, and patient diary applications.

We conduct a significant portion of our operations in foreign countries. Our consolidated service revenue from non-U.S. operations was approximately 63.6% and 65.6% for the six months ended December 31, 2008 and 2007, respectively.

Because our financial statements are denominated in U.S. dollars, changes in foreign currency exchange rates can have a significant effect on our operating results. For the six months ended December 31, 2008 and 2007, approximately 25.7% and 28.3% of consolidated service revenue was denominated in Euros, respectively. Revenue, denominated in pounds sterling, was 14.1% and 13.5% for the same periods.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and other financial information. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates under different assumptions or conditions. Our most critical accounting policies involve: revenue recognition, billed accounts receivable, unbilled accounts receivable and deferred revenue, accounting for income taxes, and goodwill. For further information, please refer to the consolidated financial statements and footnotes thereto included in the 2008 10-K.

RESULTS OF OPERATIONS

ANALYSIS BY SEGMENT


($ in thousands)	Three Months Ended				Increase (Decrease)			%
	December 31, 2008		December 31, 2007		Increase (Decrease)			%
Service revenue
Clinical Research Services	$	200,934	$	182,705	$	18,229		10.0	%
PAREXEL Consulting and MedCom Services		31,931		32,537		(606	)	-1.9	%
Perceptive Informatics, Inc.		42,981		23,411		19,570		83.6	%

Total service revenue	$	275,846	$	238,653	$	37,193		15.6	%


Direct costs
Clinical Research Services	$	130,727	$	122,642	$	8,085		6.6	%
PAREXEL Consulting and MedCom Services		20,767		21,395		(628	)	-2.9	%
Perceptive Informatics, Inc.		25,801		12,954		12,847		99.2	%

Total direct costs	$	177,295	$	156,991	$	20,304		12.9	%


Gross profit
Clinical Research Services	$	70,207	$	60,063	$	10,144		16.9	%
PAREXEL Consulting and MedCom Services		11,164		11,142		22		0.2	%
Perceptive Informatics, Inc.		17,180		10,457		6,723		64.3	%

Total gross profit	$	98,551	$	81,662	$	16,889		20.7	%


($ in thousands)	Six Months Ended				Increase (Decrease)			%
	December 31, 2008		December 31, 2007		Increase (Decrease)			%
Service revenue
Clinical Research Services	$	403,757	$	342,034	$	61,723		18.0	%
PAREXEL Consulting and MedCom Services		62,042		63,057		(1,015	)	-1.6	%
Perceptive Informatics, Inc.		73,093		41,687		31,406		75.3	%

Total service revenue	$	538,892	$	446,778	$	92,114		20.6	%


Direct costs
Clinical Research Services	$	262,629	$	226,809	$	35,820		15.8	%
PAREXEL Consulting and MedCom Services		40,930		42,334		(1,404	)	-3.3	%
Perceptive Informatics, Inc.		45,100		23,910		21,190		88.6	%

Total direct costs	$	348,659	$	293,053	$	55,606		19.0	%


Gross profit
Clinical Research Services	$	141,128	$	115,225	$	25,903		22.5	%
PAREXEL Consulting and MedCom Services		21,112		20,723		389		1.9	%
Perceptive Informatics, Inc.		27,993		17,777		10,216		57.5	%

Total gross profit	$	190,233	$	153,725	$	36,508		23.7	%

Three Months Ended December 31, 2008 Compared With Three Months Ended December 31, 2007:

For the three months ended December 31, 2008, PAREXEL had net income of $5.2 million compared with net income of $11.5 million for the three months ended December 31, 2007. This decrease was due primarily to factors that are described in the following paragraphs. On a fully diluted basis, earnings per share decreased to $0.09 from $0.20 for the corresponding prior year period.

Revenues

Service revenue increased by $37.1 million, or 15.6%, to $275.8 million for the three months ended December 31, 2008 from $238.7 million for the three months ended December 31, 2007. On a geographic basis, service revenue was distributed as follows (in millions):


	Three months ended December 31, 2008				Three months ended December 31, 2007
Region	Service Revenue		% of Total		Service Revenue		% of Total
The Americas	$	121.6	44.1	%	$	92.9	38.9	%
Europe, Middle East & Africa	$	131.5	47.7	%	$	128.1	53.7	%
Asia/Pacific	$	22.7	8.2	%	$	17.7	7.4	%

On a segment basis, CRS service revenue increased by $18.2 million, or 10.0%, to $200.9 million for the three months ended December 31, 2008 from $182.7 million for the three months ended December 31, 2007. The $18.2 million increase is comprised of $36.5 million attributable to strength in the Late Phase portion of the business, offset by approximately $18.3 million attributable to the negative impact of foreign currency fluctuations and by weakness in the Early Phase business.

PCMS service revenue decreased slightly to $31.9 million for the three months ended December 31, 2008 in comparison to $32.5 million for the same period in 2007. The current quarter’s results were impacted by the disposition of Barnett Educational Services and targeted withdrawals from certain other unprofitable service lines in the prior year in the Medical Communications business and the negative impact of approximately $3.8 million related to foreign currency fluctuations. The decline in Medical Communications was partly offset by growth in PAREXEL Consulting.

Perceptive service revenue increased by $19.6 million, or 83.6%, to $43.0 million for the three months ended December 31, 2008 from $23.4 million for the three months ended December 31, 2007. This increase was due primarily to ClinPhone, which contributed $20.5 million in revenue for the quarter, partly offset by $3.7 million related to the negative impact of foreign currency fluctuations.

Reimbursement revenue consists of reimbursable out-of-pocket expenses incurred on behalf of and reimbursable by clients. Reimbursement revenue does not yield any gross profit to us, nor does it have an impact on net income.

Direct Costs

Direct costs increased by $20.3 million, or 12.9%, to $177.3 million for the three months ended December 31, 2008 from $157.0 million for the three months ended December 31, 2007. As a percentage of total service revenue, direct costs decreased to 64.3% from 65.8% for the respective periods.

On a segment basis, CRS direct costs increased by $8.1 million, or 6.6%, to $130.7 million for the three months ended December 31, 2008 from $122.6 million for the three months ended December 31, 2007. The increase was due to $18 million attributable to increased labor costs to support revenue growth, offset by approximately $9.9 million related to positive foreign currency fluctuations. As a percentage of service revenue, CRS direct costs decreased to 65.1% for the three months ended December 31, 2008 from 67.1% for the three months ended December 31, 2007.

PCMS direct costs decreased to $20.8 million for the three months ended December 31, 2008 compared with $21.4 million the three months ended December 31, 2007. This $0.6 million decrease was due primarily to foreign currency fluctuations of approximately $2.0 million and the favorable impact of exiting certain service lines; offset by $1.4 million in increased labor costs. As a percentage of service revenue, PCMS direct costs decreased to 65.0% from 65.8% for the respective periods.

Perceptive direct costs increased by $12.8 million, or 99.2%, to $25.8 million for the three months ended December 31, 2008 from $13.0 million for the three months ended December 31, 2007. This increase was due to $8.1 million for the incremental direct costs of ClinPhone, a $3.0 million reserve for a customer dispute, and $3.2 million in incremental direct labor costs to support revenue growth; offset by approximately $1.5 million related to foreign currency fluctuations. As a percentage of service revenue, Perceptive direct costs increased to 60.0% for the three months ended December 31, 2008 from 55.3% for the three months ended December 31, 2007, due primarily to the impact of recording a reserve for a customer dispute.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expense increased by $10.6 million, or 20.7%, to $62.1 million for the three months ended December 31, 2008 from $51.4 million for the three months ended December 31, 2007. This increase was due primarily to $9.3 million of expenses from ClinPhone, $6.3 million in personnel costs and $3.1 million from rent and office expenses, including a $0.6 million charge to exit a leased facility; partially offset by $8.1 million attributable to foreign exchange fluctuations. As a percentage of service revenue, SG&A increased to 22.5% for the three months ended December 31, 2008 from 21.5% for the three months ended December 31, 2007.

Depreciation and Amortization

Depreciation and amortization (“D&A”) expense increased by $4.0 million, or 41.0%, to $13.8 million for the three months ended December 31, 2008 from $9.8 million for the three months ended December 31, 2007, primarily due to incremental D&A expense associated with ClinPhone, offset by approximately $1.5 million attributable to foreign exchange fluctuations. As a percentage of service revenue, D&A increased to 5.0% for the three months ended December 31, 2008 from 4.1% for the same period in 2007.

Other Charge

For the three months ended December 31, 2008, we recorded $15 million in reserves for anticipated wind-down costs and bad debt expense related to impaired accounts receivable (for service fees, pass-through costs, and investigator fees) from a small biopharma client that filed for bankruptcy protection.

Other Income and Expense

We recorded net other income of $3.2 million for the three months ended December 31, 2008 compared with net other expense of $0.3 million for the three months ended December 31, 2007. This $3.5 million increase was attributable to a $6.2 million increase in miscellaneous income, offset by a $2.7 million increase in interest expense, net of interest income.

The $6.2 million increase in miscellaneous income was due primarily to a positive swing in gains related to foreign currency exchange of $12.0 million, $6.8 million of which was related to ClinPhone, including certain intercompany loans that have since been restructured; offset by a $3.0 million write-off related to a contract dispute, a $2.3 million write-off of certain impaired assets, and $0.5 million related to other expenses.

Taxes

For the three months ended December 31, 2008 and 2007, we had an effective income tax rate of 47.2% and 41.3%, respectively. The increase in the tax rate was primarily attributable to an increase in non-deductible expenses outside of the United States, an increase in valuation reserves recorded for entities outside of the United States, and the impact of the $15 million reserve related to the contract termination. We expect our annual effective tax rate to be approximately 40%. Future adjustments may increase or decrease the effective tax rate.

Six Months Ended December 31, 2008 Compared With Six Months Ended December 31, 2007:

For the six months ended December 31, 2008, we had net income of $18.8 million compared to net income of $25.4 million for the six months ended December 31, 2007. This decrease was due primarily to factors that are described in the following paragraphs. On a fully diluted basis, earnings per share decreased to $0.32 from $0.44 for the corresponding periods. The prior year-to-date period included a tax benefit of $0.07 per share on a fully diluted basis, resulting from a decrease in German tax rates.

Revenues

Service revenue increased by $92.1 million, or 20.6%, to $538.9 million for the six months ended December 31, 2008 from $446.8 million for the six months ended December 31, 2007. On a geographic basis, service revenue was distributed as follows (in millions):


	Six months ended December 31, 2008				Six months ended December 31, 2007
Region	Service Revenue		% of Total		Service Revenue		% of Total
The Americas	$	223.9	41.5	%	$	172.9	38.7	%
Europe, Middle East & Africa	$	271.9	50.5	%	$	240.9	53.9	%
Asia/Pacific	$	43.1	8.0	%	$	33.0	7.4	%

On a segment basis, CRS service revenue increased by $61.8 million, or 18.0%, to $403.8 million for the six months ended December 31, 2008 from $342.0 million for the six months ended December 31, 2007. This increase was due primarily to a $62.7 million increase in the Late Phase portion of the business related to continuing strong demand for our services, particularly from the large pharmaceutical segment, and $6.7 million from APEX. These increases were partially offset by the negative impact of foreign currency fluctuations of approximately $7.6 million.

PCMS service revenue decreased to $62.0 million for the six months ended December 31, 2008 from $63.1 million for the same period in 2007. This decrease was attributable to the disposition of Barnett Educational Services and targeted withdrawals from certain other unprofitable service lines in the prior year in the Medical Communications business and $3.7 million related to foreign currency fluctuations; partly offset by growth in PAREXEL Consulting.

Perceptive service revenue increased by $31.4 million, or 75.3%, to $73.1 million for the six months ended December 31, 2008 from $41.7 million for the six months ended December 31, 2007. This increase was due primarily to the acquisition of ClinPhone, which contributed $32.7 million in revenue, and growth of $2.3 million in our other Perceptive units; partly offset by $3.6 million related to the negative impact of foreign currency fluctuations.

Direct Costs

Direct costs increased by $55.6 million, or 19.0%, to $348.7 million for the six months ended December 31, 2008 from $293.1 million for the six months ended December 31, 2007. As a percentage of total service revenue, direct costs decreased to 64.7% from 65.6% for the respective periods.

On a segment basis, CRS direct costs increased by $35.8 million, or 15.8%, to $262.6 million for the six months ended December 31, 2008 from $226.8 million for the six months ended December 31, 2007. This increase resulted from a $32.2 million increase in costs to support growth in the Late Phase portion of the business and $7.9 million related to APEX; partly offset by $4.3 million attributable to the positive impact of foreign currency fluctuations. As a percentage of service revenue, CRS direct costs decreased to 65.0% for the six months ended December 31, 2008 from 66.3% for the six months ended December 31, 2007.

PCMS direct costs decreased to $40.9 million for the six months ended December 31, 2008 from $42.3 million for the six months ended December 31, 2007. This $1.4 million decrease was caused by $2.0 million in foreign currency fluctuations; offset by a $0.6 million increase in labor costs. As a percentage of service revenue, PCMS direct costs decreased to 66.0% from 67.1% for the respective periods.

Perceptive direct costs increased by $21.2 million, or 88.6%, to $45.1 million for the six months ended December 31, 2008 from $23.9 million for the six months ended December 31, 2007. Of the total $21.2 million increase, $12.7 million was due to the incremental direct costs of ClinPhone, $3.0 million was attributed to a reserve for a customer dispute, $0.6 million was related to the termination of a pre-acquisition Perceptive supplier contract, and $5.9 million in incremental labor costs; offset by approximately $1.0 million related to foreign currency fluctuations. As a percentage of service revenue, Perceptive direct costs increased to 61.7% for the six months ended December 31, 2008 from 57.4% for the six months ended December 31, 2007, due primarily to the impact of recording a reserve for a customer dispute.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expense increased by $21.2 million, or 21.6%, to $119.8 million for the six months ended December 31, 2008 from $98.5 million for the six months ended December 31, 2007. This $21.2 million increase was due primarily to $17.3 million related to incremental expenses of ClinPhone and APEX and $9.3 million in costs required to support strong revenue growth, primarily in personnel, rent, and office expenses; offset by $5.4 million attributable to the positive impact of foreign exchange fluctuations. As a percentage of service revenue, SG&A remained relatively flat at 22.2% for the six months ended December 31, 2008 and 22.1% for the six months ended December 31, 2007.

Depreciation and Amortization

Depreciation and amortization (“D&A”) expense increased by $7.6 million, or 41.7%, to $25.7 million for the six months ended December 31, 2008 from $18.2 million for the six months ended December 31, 2007. The increase was due primarily to an $8.7 million increase in depreciation and amortization including the incremental D&A expense associated with ClinPhone, offset by approximately $1.1 million attributable to foreign exchange fluctuations. As a percentage of service revenue, D&A increased to 4.8% for the six months ended December 31, 2008 from 4.1% for the same period in 2007.

Other Charge

For the six months ended December 31, 2008, we recorded $15 million in reserves for anticipated wind-down costs and bad debt expense related to impaired accounts receivable (for service fees, pass-through costs, and investigator fees) from a small biopharma client that filed for bankruptcy protection.

Other Income and Expense

We recorded net other income of $3.0 million for the six months ended December 31, 2008 compared with net other expense of $0.8 million for the six months ended December 31, 2007. This $3.7 million increase was attributable to a $9.0 million increase in miscellaneous income, offset by a $5.3 million increase in interest expense, net of interest income.

The $9.0 million increase in miscellaneous income was due primarily to a positive swing in gains related to foreign currency exchange of approximately $15.9 million, $6.2 million of which was related to ClinPhone including certain intercompany loans that have since been restructured; offset by a $3.0 million write-off related to a contract dispute and a $2.3 million write-off of certain impaired assets, a $1.0 million gain on the sale of an investment that occurred in the 2007 period, and $0.6 million in other expenses.

Taxes

For the six months ended December 31, 2008 and 2007, we had an effective income tax rate of 39.3% and 29.1%, respectively. The low tax rate for the six months ended December 31, 2007 was primarily attributable to a reduction in deferred tax liabilities in 2007, due, in part, to a decrease in German tax rates. We expect our annual effective tax rate to be approximately 40%. Future adjustments may increase or decrease the effective tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have financed our operations and growth with cash flow from operations, proceeds from the sale of equity securities, and, more recently, credit facilities to fund business acquisitions. Investing activities primarily reflect acquisition costs and capital expenditures for information systems enhancements and leasehold improvements. As of December 31, 2008, we had cash and cash equivalents of approximately $63.7 million.

Approximately 90% of our contracts are fixed rate, with some variable components, and range in duration from a few months to several years. Cash flows from these contracts typically consist of a down payment required to be paid at the time of contract execution with the balance due in installments over the contract’s duration, usually based on the achievement of milestones. Revenue from these contracts is generally recognized as work is performed. As a result, cash receipts do not necessarily correspond to costs incurred and revenue recognized on contracts.

Generally, our clients can terminate their contracts with us upon thirty to sixty days’ notice or can delay execution of services. Clients may terminate or delay contracts for a variety of reasons, including merger or potential merger-related activities involving the client, the failure of products being tested to satisfy safety requirements or efficacy criteria, unexpected or undesired clinical results of the product, client cost reductions as a result of budgetary limits or changing priorities, the client’s decision to forego a particular study, insufficient patient enrollment or investigator recruitment, or clinical drug manufacturing problems resulting in shortages of the product.

In the second quarter of Fiscal Year 2009, one of our small biopharma clients informed us that it had encountered funding difficulties when one of its major investors defaulted on a contractual investment commitment. The client informed us that, following the default, it had substantive discussions with two potential commercialization partners and its remaining investors, but was unable to secure additional funding for the trial. The client has since filed for bankruptcy protection. As a result, we recorded $15 million in reserves for anticipated wind-down costs and bad debt expense related to impaired accounts receivable (for service fees, pass-through costs, and investigator fees). We have reviewed the projects and clients in our backlog and receivables and believe that we do not have significant exposures of a similar nature from other clients at this time. Additionally, we have reviewed and tightened our credit policies to minimize this type of risk in the future.

DAYS SALES OUTSTANDING

Our operating cash flow is heavily influenced by changes in the levels of billed and unbilled receivables and deferred revenue. These account balances as well as days sales outstanding (“DSO”) in accounts receivable, net of deferred revenue, can vary based on contractual milestones and the timing and size of cash receipts. DSO was 55 days at December 31, 2008, 63 days at June 30, 2008, and 52 days at December 31, 2007. The decrease in DSO from June 2008 was primarily due to stronger cash collections and a $12.3 million non-cash provision for bad debt related to the late-phase clinical trial for a small biopharma client described above. Accounts receivable, net of the provision for losses on receivables was $461.1 million ($259.1 million in billed accounts receivable and $202.0 million in unbilled accounts receivable) at December 31, 2008 and $475.8 million ($253.2 million in billed accounts receivable and $222.6 million in unbilled accounts receivable) at June 30, 2008. Deferred revenue was $238.4 million at December 31, 2008 and $213.1 million at June 30, 2008. We calculate DSO by adding the end-of-period balances of billed and unbilled account receivables, net of deferred revenue and the provision for losses on receivables, then dividing the resulting amount by the sum of total revenue plus investigator fees billed for the most recent quarter, and multiplying the resulting fraction by the number of days in the quarter.

CASH FLOWS

Net cash provided by operating activities for the six months ended December 31, 2008 totaled $39.6 million and was generated from net income of $18.8 million, non-cash charges for depreciation and amortization expense in the amount of $25.7 million, a $20.5 million decrease in net receivables (net of deferred revenue and allowances for doubtful accounts), $19.0 million related to changes in prepaid assets and other current assets, $3.7 million of non-cash charges for stock-based compensation, and $2.0 million from other sources. These sources of cash were offset by a $29.5 million increase in other assets, a $16.9 million decrease in other current liabilities (mainly related to the payment of management bonuses), and a $3.7 million decrease in accounts payable and other accrued expenses and other liabilities.

Net cash provided by operating activities for the six months ended December 31, 2007 totaled $1.2 million and was attributable to $25.4 million of net income, $18.2 million related to non-cash charges for depreciation and amortization expense, $5.1 million related to changes in other operating assets/liabilities, and $2.3 million in stock-based compensation expense. This was offset by a $27.3 million increase in accounts receivable (net of allowance for doubtful accounts and deferred revenue), a $16.7 million decrease in other current liabilities and a $5.8 million decrease in accounts payable, mainly related to the payment of management bonuses.

Net cash used in investing activities for the six months ended December 31, 2008 totaled $229.5 million and consisted of $189.0 million for the acquisition of ClinPhone and $40.5 million of capital expenditures, primarily leasehold improvements and computer software and hardware.

Net cash used in investing activities for the six months ended December 31, 2007 totaled $79.2 million and consisted of $52.9 million for the acquisition of APEX and $26.3 million of capital expenditures (primarily leasehold improvements related to the expansion of our facilities, as well as computer software and hardware).

Net cash provided by financing activities for the six months ended December 31, 2008 totaled $210.7 million and consisted of $207.3 million of net borrowings under a line of credit and $3.4 million in proceeds related to the issuance of common stock in conjunction with our stock option plan. The increase in net borrowings was due primarily to the acquisition of ClinPhone.

Net cash provided by financing activities for the six months ended December 31, 2007 totaled $35.7 million and consisted of $30 million of net borrowings under a line of credit and $5.7 million in proceeds related to the issuance of common stock in conjunction with the Company’s stock option plan.

LINES OF CREDIT

2008 Credit Facility

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5% of principal borrowed must be repaid by June 30, 2009;

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20% of principal borrowed must be repaid during the one-year period from July 1, 2009 to June 30, 2010;

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20% of principal borrowed must be repaid during the one-year period from July 1, 2010 to June 30, 2011;

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25% of principal borrowed must be repaid during the one-year period from July 1, 2011 to June 30, 2012; and

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30% of principal borrowed must be repaid during the one-year period from July 1, 2012 to June 13, 2013.

Additional Lines of Credit

FINANCING NEEDS

Our primary cash needs are for operating expenses, such as salaries and fringe benefits, hiring and recruiting, business development and facilities, and for business acquisitions, capital expenditures and repayment of principal and interest on our borrowings. Our requirements for cash to pay principal and interest on our borrowings will increase significantly in future periods because we borrowed approximately $192 million under the 2008 Credit Facility in August 2008 to finance the acquisition of ClinPhone. Our only committed external source of funds is under our 2008 Credit Facility described above. Our principal source of cash is from the performance of services under contracts with our clients. If we were unable to generate new contracts with existing and new clients or if the level of contract cancellations increased, our revenue and cash flow would be adversely affected (see “Part II, Item 1A—Risk Factors” for further detail). Absent a material adverse change in the level of our new business bookings or contract cancellations, we believe that our existing capital resources together with cash flow from operations and borrowing capacity under existing lines of credit will be sufficient to meet our foreseeable cash needs over the next twelve months and on a longer term basis. Depending upon our revenue and cash flow from operations, it is possible that we will require external funds to repay amounts outstanding under our 2008 Credit Facility upon maturity in 2013.

We expect to continue to acquire businesses to enhance our service and product offerings, expand our therapeutic expertise, and/or increase our global presence; however, we are currently focused on integrating our recent acquisitions. Depending on their size, any such acquisitions may require additional external financing, and we may from time to time seek to obtain funds from public or private issuances of equity or debt securities. We may be unable to secure such financing on terms acceptable to us or at all.

On August 14, 2008, we acquired all the issued shares of ClinPhone for approximately $192 million, comprised of $172 million in cash for the stock of ClinPhone and approximately $20 million as repayment of ClinPhone’s existing debt. We funded the acquisition and costs related to this acquisition with borrowings made under the 2008 Credit Facility, as discussed in “Lines of Credit” above.

We expect capital expenditures to total approximately $30 to $40 million in the remainder of Fiscal Year 2009, primarily for computer software and hardware and leasehold improvements. We made capital expenditures of approximately $40.6 million during the six months ended December 31, 2008, primarily for leasehold improvements and computer software and hardware.

On September 9, 2004, our Board of Directors approved a stock repurchase program authorizing the purchase of up to $20.0 million of our common stock to be repurchased in the open market subject to market conditions. As of June 30, 2008, we had acquired 1,240,828 shares at a total cost of $14.0 million under this program. There were no repurchases made during the six months ended December 31, 2008.

COMMITMENTS, CONTINGENCIES AND GUARANTEES

As of December 31, 2008, we had approximately $33.1 million in purchase obligations with various vendors for the purchase of computer software and other services.

We have letter-of-credit agreements with banks totaling approximately $11.3 million guaranteeing performance under various operating leases and vendor agreements.

We periodically become involved in various claims and lawsuits that are incidental to its business. We believe, after consultation with counsel, that no matters currently pending would, in the event of an adverse outcome, have a material impact on our consolidated financial position, results of operations, or liquidity.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our investors.

INFLATION

We believe the effects of inflation generally do not have a material adverse impact on our operations or financial condition.

RECENTLY ISSUED ACCOUNTING STANDARDS

For a discussion of new accounting pronouncements, see Note 9 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

MARKET RISK

Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency rates, interest rates, and other relevant market rates or price changes. In the ordinary course of business, we are exposed to market risk resulting from changes in foreign currency exchange rates, and we regularly evaluate our exposure to such changes. Our overall risk management strategy seeks to balance the magnitude of the exposure and the costs and availability of appropriate financial instruments.

FOREIGN CURRENCY EXCHANGE RATES AND INTEREST RATES

We derived approximately 63.6% of our consolidated service revenue for the six months ended December 31, 2008 from operations outside of the U.S., of which 25.7% was denominated in Euros and 14.1% was denominated in pounds sterling. We derived approximately 65.6% of our consolidated service revenue for the six months ended December 31, 2007 from operations outside of the U.S., of which 28.3% was denominated in Euros and 13.5% was denominated in pounds sterling. We do not have significant operations in countries in which the economy is considered to be highly inflationary. Our financial statements are denominated in U.S. dollars. Accordingly, changes in exchange rates between foreign currencies and the U.S. dollar will affect the translation of financial results into U.S. dollars for purposes of reporting our consolidated financial results.

It is our policy to mitigate the risks associated with fluctuations in foreign exchange rates and in market rates of interest. Accordingly, we have instituted foreign currency hedging programs and an interest rate swap program.

Our foreign denominated intercompany debt and accounts receivable hedging program is a cash flow hedge program designed to minimize foreign currency volatility. The objective of the program is to reduce variability of cash flows with respect to forecasted billing for services provided and the foreign exchange exposure related to payment of invoices.

Under our interest rate hedging program, we swap the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. The objective of this program is to reduce the variability of cash flows related to fluctuations in market rates of interest.

Under these policies, derivatives are accounted for in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”). The notional contract amount of these outstanding foreign currency exchange and interest swap contracts totaled approximately $446.2 million at December 31, 2008.

Occasionally, we enter into other foreign currency exchange contracts to offset the impact of currency fluctuations for other currencies and intercompany billings. These foreign currency exchange contracts are entered into as economic hedges, but are not designated as hedges for accounting purposes as defined under SFAS 133. These hedges include cash flow hedges similar to those described above but may involve other denominations and counterparties. The notional contract amount of these outstanding foreign currency exchange contracts was approximately $134.4 million at December 31, 2008. The potential change in the fair value of these foreign currency exchange contracts that would result from a hypothetical change of 10% in exchange rates would be approximately $13.3 million. During the six months ended December 31, 2008 and 2007, we recorded foreign exchange gains of $14.8 million and losses of $1.1 million, respectively. We acknowledge our exposure to additional foreign exchange risk as it relates to assets and liabilities that are not part of the economic hedge program, but quantification of this risk is difficult to assess at any given point in time.

Our exposure to interest rate changes relates primarily to the amount of our short-term and long-term debt. Short-term debt was $50.4 million at December 31, 2008 and $66.5 million at June 30, 2008. Long-term debt was $226.9 million at December 31, 2008 and $0.3 million at June 30, 2008.

In connection with the borrowings under our credit facilities as described in Note 11 to the consolidated financial statements included in Item 1 of this quarterly report, we entered into interest rate exchange agreements to swap, at specified intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount. The mark-to-market values of both the hedge instrument and underlying debt obligations are recorded as equal and offsetting amounts in other comprehensive income. We had interest rate exchange agreements with a notional amount of $150 million at December 31, 2008 and $35 million at June 30, 2008.

ITEM 4.

CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2008. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2008, our chief executive officer and chief financial officer concluded that, as of such date, PAREXEL’s disclosure controls and procedures were effective at the reasonable assurance level.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended December 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

ITEM 1A.

RISK FACTORS

In addition to other information in this report, the following risk factors should be considered carefully in evaluating our Company and our business. These risk factors could cause our actual results to differ from those indicated by forward-looking statements made in this report, including in the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other forward-looking statements that we may make from time to time. If any of the following risks occur, our business, financial condition, or results of operations would likely suffer.

The following discussion includes five new or revised risk factors(“Certain clients may default on contractual obligations, which may negatively impact our financial performance;” “We depend on the pharmaceutical and biotechnology industries, either or both of which may suffer in the short- or long-term;” “If our Perceptive business is unable to maintain continuous, effective, reliable and secure operation of its computer hardware, software and internet applications and related tools and functions, its business will be harmed;” “Our revenue and earnings are exposed to exchange rate fluctuations;” and “Our operating results have fluctuated between quarters and years and may continue to fluctuate in the future, which could affect the price of our common stock.”) that reflect material developments subsequent to the discussion of risk factors included in the 2008 10-K.

Additional risks not currently known to us or other factors not perceived by us to present significant risk to our business at this time also may impair our business operations.

The loss, modification, or delay of large or multiple contracts may negatively impact our financial performance.

Our clients generally can terminate their contracts with us upon 30 to 60 days’ notice or can delay the execution of services. The loss or delay of a large contract or the loss or delay of multiple contracts could adversely affect our operating results, possibly materially. We have in the past experienced contract cancellations, which have adversely affected our operating results, including cancellations of a late-phase contract during the first quarter of Fiscal Year 2008 and a late-phase contract during the second quarter of Fiscal Year 2007.

Clients terminate or delay their contracts for a variety of reasons, including:

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failure of products being tested to satisfy safety requirements;

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failure of products being tested to satisfy efficacy criteria;

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products having unexpected or undesired clinical results;

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client cost reductions as a result of budgetary limit or changing priorities;

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client decisions to forego a particular study, perhaps for economic reasons;

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merger or potential merger related activities involving the client;

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insufficient patient enrollment in a study;

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insufficient investigator recruitment;

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clinical drug manufacturing problems resulting in shortages of the product;

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product withdrawal following market launch; and

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shut down of manufacturing facilities.

Certain clients may default on contractual obligations, which may negatively impact our financial performance.

Some of our clients do not generate revenue and rely upon venture capital and private equity investment to meet their capital needs. Due to the poor condition of the current global economy and other factors outside of our control, these clients may lack the funds necessary to meet outstanding liabilities to us, despite contractual obligations. In the second quarter of Fiscal Year 2009, one of our small biopharma clients informed us that it had encountered funding difficulties when one of its major investors defaulted on a contractual investment commitment. As a result, we recorded approximately $15.0 million in reserves related to this late-stage trial, including $12.3 million in bad debt reserves. Although we have reviewed the projects and clients in our backlog and receivables and believe that we do not have significant exposures of a similar nature from other clients, it is possible that a similar situation could arise in the future.

We face intense competition in many areas of our business; if we do not compete effectively, our business will be harmed.

The biopharmaceutical services industry is highly competitive and we face numerous competitors in many areas of our business. If we fail to compete effectively, we may lose clients, which would cause our business to suffer.

We primarily compete against in-house departments of pharmaceutical companies, other full service clinical research organizations (“CROs”), small specialty CROs, and to a lesser extent, universities, teaching hospitals, and other site organizations. Some of the larger CROs against which we compete include Quintiles Transnational Corporation, Covance, Inc., Pharmaceutical Product Development Inc., and Icon plc. In addition, our PCMS business competes with a large and fragmented group of specialty service providers, including advertising/promotional companies, major consulting firms with pharmaceutical industry groups and smaller companies with pharmaceutical industry focus. Perceptive competes primarily with CROs, information technology companies and other software companies. Some of these competitors, including the in-house departments of pharmaceutical companies, have greater capital, technical and other resources than we have. In addition, our competitors that are smaller specialized companies may compete effectively against us because of their concentrated size and focus.

The fixed rate nature of our contracts could hurt our operating results.

Approximately 90% of our contracts are fixed rate. If we fail to accurately price our contracts or if we experience significant cost overruns, our gross margins on the contracts would be reduced and we could lose money on contracts. In the past, we have had to commit unanticipated resources to complete projects, resulting in lower gross margins on those projects. We might experience similar situations in the future.

If governmental regulation of the drug, medical device and biotechnology industry changes, the need for our services could decrease.

Governmental regulation of the drug, medical device and biotechnology product development process is complicated, extensive, and demanding. A large part of our business involves assisting pharmaceutical and biotechnology and medical device companies through the regulatory approval process. Changes in regulations, that, for example, streamline procedures or relax approval standards, could eliminate or reduce the need for our services. If companies regulated by the United States Food and Drug Administration (the “FDA”) or similar foreign regulatory authorities needed fewer of our services, we would have fewer business opportunities and our revenues would decrease, possibly materially.

In the United States, the FDA and the Congress have attempted to streamline the regulatory process by providing for industry user fees that fund the hiring of additional reviewers and better management of the regulatory review process. In Europe, governmental authorities have approved common standards for clinical testing of new drugs throughout the European Union by adopting standards for Good Clinical Practices (“GCP”) and by making the clinical trial application and approval process more uniform across member states. The FDA has had GCP in place as a regulatory standard and requirement for new drug approval for many years and Japan adopted GCP in 1998.

The United States, Europe and Japan have also collaborated for over 15 years on the International Conference on Harmonisation (“ICH”), the purpose of which is to eliminate duplicative or conflicting regulations in the three regions. The ICH partners have agreed upon a common format (the Common Technical Document) for new drug marketing applications that reduces the need to tailor the format to each region. Such efforts and similar efforts in the future that streamline the regulatory process may reduce the demand for our services.

Parts of our PCMS business advise clients on how to satisfy regulatory standards for manufacturing and clinical processes and on other matters related to the enforcement of government regulations by the FDA and other regulatory bodies. Any reduction in levels of review of manufacturing or clinical processes or levels of regulatory enforcement, generally, would result in fewer business opportunities for our business in this area.

If we fail to comply with existing regulations, our reputation and operating results would be harmed.

Our business is subject to numerous governmental regulations, primarily relating to worldwide pharmaceutical and medical device product development and regulatory approval and the conduct of clinical trials. If we fail to comply with these governmental regulations, it could result in the termination of our ongoing research, development or sales and marketing projects, or the disqualification of data for submission to regulatory authorities. We also could be barred from providing clinical trial services in the future or could be subjected to fines. Any of these consequences would harm our reputation, our prospects for future work and our operating results. In addition, we may have to repeat research or redo trials. If we are required to repeat research or redo trials, we may be contractually required to do so at no further cost to our clients, but at substantial cost to us.

We may lose business opportunities as a result of health care reform and the expansion of managed-care organizations.

Numerous governments, including the U.S. government, have undertaken efforts to control growing health care costs through legislation, regulation and voluntary agreements with medical care providers and drug companies. In recent years, the U.S. Congress has reviewed several comprehensive health care reform proposals. The proposals are intended to expand health care coverage for the uninsured and reduce the growth of total health care expenditures. The U.S. Congress has also considered and may adopt legislation that could have the effect of putting downward pressure on the prices that pharmaceutical and biotechnology companies can charge for prescription drugs.

If these efforts are successful, drug, medical device and biotechnology companies may react by spending less on research and development. If this were to occur, we would have fewer business opportunities and our revenue could decrease, possibly materially. In addition, new laws or regulations may create a risk of liability, increase our costs or limit our service offerings.

In addition to health care reform proposals, the expansion of managed-care organizations in the health care market and managed-care organizations’ efforts to cut costs by limiting expenditures on pharmaceuticals and medical devices could result in pharmaceutical, biotechnology and medical device companies spending less on research and development. If this were to occur, we would have fewer business opportunities and our revenue could decrease, possibly materially.

We depend on the pharmaceutical and biotechnology industries, either or both of which may suffer in the short- or long-term.

Our revenues depend greatly on the expenditures made by the pharmaceutical and biotechnology industries in research and development. In some instances, companies in these industries are reliant on their ability to raise capital in order to fund their research and development projects. Accordingly, economic factors and industry trends that affect our clients in these industries also affect our business. If companies in these industries were to reduce the number of research and development projects they conduct or outsource, our business could be materially adversely affected.

In addition, we are dependent upon the ability and willingness of pharmaceutical and biotechnology companies to continue to spend on research and development and to outsource the services that we provide. We are therefore subject to risks, uncertainties and trends that affect companies in these industries. We have benefited to date from the tendency of pharmaceutical and biotechnology companies to outsource clinical research projects, but any downturn in these industries or reduction in spending or outsourcing could adversely affect our business. For example, if these companies expanded upon their in-house clinical or development capabilities, they would be less likely to utilize our services.

Because we depend on a small number of industries and clients for all of our business, the loss of business from a significant client could harm our business, revenue and financial condition.

The loss of, or a material reduction in the business of, a significant client could cause a substantial decrease in our revenue and adversely affect our business and financial condition, possibly materially. In Fiscal Years 2008, 2007, and 2006, our five largest clients accounted for approximately 31%, 28%, and 25% of our consolidated service revenue, respectively. We expect that a small number of clients will continue to represent a significant part of our consolidated revenue. Our contracts with these clients generally can be terminated on short notice. We have in the past experienced contract cancellations with significant clients.

If we do not keep pace with rapid technological changes, our products and services may become less competitive or obsolete, especially in our Perceptive business.

The biotechnology, pharmaceutical and medical device industries generally, and clinical research specifically, are subject to increasingly rapid technological changes. Our competitors or others might develop technologies, products or services that are more effective or commercially attractive than our current or future technologies, products or services, or render our technologies, products or services less competitive or obsolete. If our competitors introduce superior technologies, products or services and we cannot make enhancements to our technologies, products and services necessary to remain competitive, our competitive position would be harmed. If we are unable to compete successfully, we may lose clients or be unable to attract new clients, which could lead to a decrease in our revenue.

If our Perceptive business is unable to maintain continuous, effective, reliable and secure operation of its computer hardware, software and internet applications and related tools and functions, its business will be harmed.

Our Perceptive business involves collecting, managing, manipulating and analyzing large amounts of data, and communicating data via the Internet. In our Perceptive business, we depend on the continuous, effective, reliable and secure operation of computer hardware, software, networks, telecommunication networks, Internet servers and related infrastructure. If the hardware or software malfunctions or access to data by internal research personnel or customers through the Internet is interrupted, our Perceptive business could suffer. In addition, any sustained disruption in Internet access provided by third parties could adversely impact our Perceptive business.

Although the computer and communications hardware used in our Perceptive business is protected through physical and software safeguards, it is still vulnerable to fire, storm, flood, power loss, earthquakes, telecommunications failures, physical or software break-ins, and similar events. And while certain of our operations have appropriate disaster recovery plans in place, we currently do not have redundant facilities everywhere in the world to provide IT capacity in the event of a system failure. In addition, the Perceptive software products are complex and sophisticated, and could contain data, design or software errors that could be difficult to detect and correct. If Perceptive fails to maintain and further develop the necessary computer capacity and data to support the needs of our Perceptive customers, it could result in a loss of or a delay in revenue and market acceptance. Additionally, significant delays in the planned delivery of system enhancements or inadequate performance of the systems once they are completed could damage our reputation and harm our business.

Finally, long-term disruptions in the infrastructure caused by events such as natural disasters, the outbreak of war, the escalation of hostilities, and acts of terrorism (particularly in areas where we have offices) could adversely affect our businesses. Although we carry property and business interruption insurance, our coverage may not be adequate to compensate us for all losses that may occur.

If we cannot retain our highly qualified management and technical personnel, our business would be harmed.

We rely on the expertise of our Chairman and Chief Executive Officer, Josef H. von Rickenbach, and it would be difficult and expensive to find a qualified replacement with the level of specialized knowledge of our products and services and the biopharmaceutical services industry. While we are a party to an employment agreement with Mr. von Rickenbach, it may be terminated by us or Mr. von Rickenbach upon notice to the other party.

In addition, in order to compete effectively, we must attract and retain qualified sales, professional, scientific, and technical operating personnel. Competition for these skilled personnel, particularly those with a medical degree, a Ph.D. or equivalent degrees, is intense. We may not be successful in attracting or retaining key personnel.

If we are unable to attract suitable willing investigators and volunteers for our clinical trials, our clinical development business might suffer.

The clinical research studies we run in our CRS segment rely upon the ready accessibility and willing participation of physician investigators and volunteer subjects. Investigators are typically located at hospitals, clinics or other sites and supervise administration of the study drug to patients during the course of a clinical trial. Volunteer subjects generally include people from the communities in which the studies are conducted. Our clinical research development business could be adversely affected if we were unable to attract suitable and willing investigators or volunteers on a consistent basis.

We may have substantial exposure to payment of personal injury claims and may not have adequate insurance to cover such claims.

Our CRS business primarily involves the testing of experimental drugs and medical devices on consenting human volunteers pursuant to a study protocol. Clinical research involves a risk of liability for personal injury or death to patients who participate in the study or who use a product approved by regulatory authorities after the clinical research has concluded, due to, among other reasons, possible unforeseen adverse side effects or improper administration of the drug or device by physicians. In some cases, these patients are already seriously ill and are at risk of further illness or death.

In order to mitigate the risk of liability, we seek to include indemnity provisions in our CRS contracts with clients and with investigators. However, we are not able to include indemnity provisions in all of our contracts. In addition, even if we are able to include an indemnity provision in our contracts, the indemnity provisions may not cover our exposure if:

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we had to pay damages or incur defense costs in connection with a claim that is outside the scope of an indemnity agreement; or

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a client failed to indemnify us in accordance with the terms of an indemnity agreement because it did not have the financial ability to fulfill its indemnification obligation or for any other reason.

In addition, contractual indemnifications generally do not protect us against liability arising from certain of our own actions, such as negligence or misconduct.

We also carry insurance to cover our risk of liability. However, our insurance is subject to deductibles and coverage limits and may not be adequate to cover claims. In addition, liability coverage is expensive. In the future, we may not be able to maintain or obtain liability insurance on reasonable terms, at a reasonable cost, or in sufficient amounts to protect us against losses due to claims.

In March 2006, we conducted an early-phase clinical trial on behalf of TeGenero AG, a German pharmaceutical company. During the trial, six participants experienced adverse reactions to the TeGenero compound being tested. Through December 31, 2008, we have recorded approximately $1.8 million in legal fees and other incremental costs in connection with the incident. To date, none of the participants in the clinical trial have filed suit against us. We carry insurance to cover risks such as this, but our insurance is subject to deductibles and coverage limits and may not be adequate to cover claims against us. While we believe that TeGenero is responsible to indemnify us with respect to claims related to this matter, TeGenero filed for insolvency in July 2006, which likely will limit any recovery of our legal fees and costs from them. In addition, while TeGenero carried insurance with respect to this type of matter, this insurance also is subject to deductibles and coverage limits.

Our business is subject to international economic, political, and other risks that could negatively affect our results of operations or financial position.

We provide most of our services on a worldwide basis. Our service revenue from non-U.S. operations represented approximately 63.6% and 65.6% of total consolidated service revenue for the six months ended December 31, 2008 and 2007, respectively. More specifically, our service revenue from operations in Europe, Middle East and Africa represented 50.5% and 53.9% of total consolidated service revenue for the corresponding periods. Our service revenue from operations in the Asia/Pacific region represented 8.0% and 7.4% of total consolidated service revenue for the respective periods. Accordingly, our business is subject to risks associated with doing business internationally, including:

•

changes in a specific country’s or region’s political or economic conditions, including Western Europe, in particular;

•

potential negative consequences from changes in tax laws affecting our ability to repatriate profits;

•

difficulty in staffing and managing widespread operations;

•

unfavorable labor regulations applicable to our European or other international operations;

•

changes in foreign currency exchange rates; and

•

longer payment cycles of foreign customers and difficulty of collecting receivables in foreign jurisdictions.

Our operating results are impacted by the health of the North American, European and Asian economies. Our business and financial performance may be adversely affected by current and future economic conditions that cause a decline in business and consumer spending, including a reduction in the availability of credit, rising interest rates, financial market volatility and recession

Our revenue and earnings are exposed to exchange rate fluctuations.

We conduct a significant portion of our operations in foreign countries. Because our financial statements are denominated in U.S. dollars, changes in foreign currency exchange rates could have and have had a significant effect on our operating results. For example, as a result of year-over-year foreign currency fluctuation, service revenue for the six months ended December 31, 2008 was negatively impacted by approximately $14.9 million as compared with the same period in the previous year. Exchange rate fluctuations between local currencies and the U.S. dollar create risk in several ways, including:

•

Foreign Currency Translation Risk. The revenue and expenses of our foreign operations are generally denominated in local currencies, primarily the pound sterling and the Euro, and are translated into U.S. dollars for financial reporting purposes. For the six months ended December 31, 2008 and 2007, approximately 25.7% and 28.3% of consolidated service revenue was denominated in Euros, respectively. Revenue, denominated in pounds sterling, was 14.1% and 13.5% for the same periods. Accordingly, changes in exchange rates between foreign currencies and the U.S. dollar will affect the translation of foreign results into U.S. dollars for purposes of reporting our consolidated results.

•

Foreign Currency Transaction Risk. We may be subjected to foreign currency transaction risk when our foreign subsidiaries enter into contracts or incur liabilities denominated in a currency other than the foreign subsidiaries functional (local) currency. To the extent we are unable to shift the effects of currency fluctuations to the clients, foreign exchange fluctuations as a result of foreign currency exchange losses could have a material adverse effect on our results of operations.

Although we try to limit these risks through exchange rate fluctuation provisions stated in our service contracts, or by hedging transaction risk with foreign currency exchange contracts, we may still experience fluctuations in financial results from our operations outside of the U.S., and may not be able to favorably reduce the currency transaction risk associated with our service contracts.

Our operating results have fluctuated between quarters and years and may continue to fluctuate in the future, which could affect the price of our common stock.

Our quarterly and annual operating results have varied and will continue to vary in the future as a result of a variety of factors. For example, our income from operations totaled $7.7 million for the fiscal quarter ended December 31, 2008, and $22.0 million, $26.9 million, and $22.7 million for three preceding quarters. Factors that cause these variations include:

•

the level of new business authorizations in a particular quarter or year;

•

the timing of the initiation, progress, or cancellation of significant projects;

•

exchange rate fluctuations between quarters or years;

•

restructuring charges;

•

seasonality;

•

the mix of services offered in a particular quarter or year;

•

the timing of the opening of new offices;

•

timing, costs and the related financial impact of acquisitions;

•

the timing of internal expansion;

•

the timing and amount of costs associated with integrating acquisitions;

•

the timing and amount of startup costs incurred in connection with the introduction of new products, services or subsidiaries

•

the dollar amount of changes in contract scope finalized during a particular period; and

•

the amount of any reserves we are required to record.

Many of these factors, such as the timing of cancellations of significant projects and exchange rate fluctuations between quarters or years, are beyond our control.

If our operating results do not match the expectations of securities analysts and investors, the trading price of our common stock will likely decrease.

Our indebtedness may limit cash flow available to invest in the ongoing needs of our business.

As of December 31, 2008, we had approximately $273.3 million principal amount of debt outstanding and remaining borrowing availability of approximately $38.0 million under our revolving line of credit (subject to certain increases as provided in the facility agreement). We may incur additional debt in the future. Our leverage could have significant adverse consequences, including:

•

requiring us to dedicate a substantial portion of any cash flow from operations to the payment of interest on, and principal of, our debt, which will reduce the amounts available to fund working capital and capital expenditures, and for other general corporate purposes;

•

increasing our vulnerability to general adverse economic and industry conditions;

•

limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and

•

placing us at a competitive disadvantage compared to our competitors that have less debt.

Under the terms of the credit facility we entered into in June 2008, interest rates are fixed based on market indices at the time of borrowing and, depending upon the interest mechanism selected by us, may float thereafter. Some of our other smaller credit facilities also bear interest at floating rates. As a result, the amount of interest payable by us on our borrowings may increase if market interest rates change.

We may not have sufficient funds or may be unable to arrange for additional financing to pay the amounts due under our existing or any future debt. In addition, a failure to comply with the covenants under our existing debt instruments could result in an event of default under those instruments. In the event of an acceleration of amounts due under our debt instruments as a result of an event of default, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness or to make any accelerated payments. The covenants under our existing debt instruments limit our ability to obtain additional debt financing.

In addition, the terms of the credit facility we entered into in June 2008 provide that upon the occurrence of a change in control, as defined in the credit facility agreement, all outstanding indebtedness under the facility would become due. This provision may delay or prevent a change in control that stockholders may consider desirable.

Moreover, the United States credit markets are currently experiencing an unprecedented contraction. As a result of the tightening credit markets, we may not be able to obtain additional financing on favorable terms, or at all. If one or more of the financial institutions that supports our $165 million revolving credit facility fails, we may not be able to find a replacement, which would negatively impact our ability to borrow the remaining funds available under the facility.

Our effective income tax rate may fluctuate from quarter-to-quarter, which may affect our earnings and earnings per share.

Our quarterly effective income tax rate is influenced by our projected profitability in the various taxing jurisdictions in which we operate. Changes in the distribution of profits and losses among taxing jurisdictions may have a significant impact on our effective income tax rate, which in turn could have a material adverse effect on our net income and earnings per share. Factors that affect the effective income tax rate include, but are not limited to:

•

the requirement to exclude from our quarterly worldwide effective income tax calculations losses in jurisdictions where no tax benefit can be recognized;

•

actual and projected full year pretax income;

•

changes in tax laws in various taxing jurisdictions;

•

audits by taxing authorities; and

•

the establishment of valuation allowances against deferred tax assets if it is determined that it is more likely than not that future tax benefits will not be realized.

Fluctuations in our effective income tax rate could cause fluctuations in our earnings and earnings per share, which can affect our stock price.

Our results of operations may be adversely affected if we fail to realize the full value of our goodwill and intangible assets.

As of December 31, 2008, our total assets included $335.6 million of goodwill and net intangible assets. We assess the realizability of our net intangible assets and goodwill annually as well as whenever events or changes in circumstances indicate that these assets may be impaired. These events or circumstances generally include operating losses or a significant decline in earnings associated with the acquired business or asset. Our ability to realize the value of the goodwill and indefinite-lived intangible assets will depend on the future cash flows of these businesses. These cash flows in turn depend in part on how well we have integrated these businesses. If we are not able to realize the value of the goodwill and indefinite-lived intangible assets, we may be required to incur material charges relating to the impairment of those assets.

Our business has experienced substantial expansion in the past and such expansion and any future expansion could strain our resources if not properly managed.

We have expanded our business substantially in the past. For example, in August 2008, we completed the acquisition of ClinPhone, a leading clinical technology organization, for a purchase price of approximately $192 million, comprised of $172 million for the stock of ClinPhone and $20 million for repayment of ClinPhone’s existing debt. Future rapid expansion could strain our operational, human and financial resources. In order to manage expansion, we must:

•

continue to improve operating, administrative, and information systems;

•

accurately predict future personnel and resource needs to meet client contract commitments;

•

track the progress of ongoing client projects; and

•

attract and retain qualified management, sales, professional, scientific and technical operating personnel.

If we do not take these actions and are not able to manage the expanded business, the expanded business may be less successful than anticipated, and we may be required to allocate additional resources to the expanded business, which we would have otherwise allocated to another part of our business.

We may face additional risks in expanding our foreign operations. Specifically, we may find it difficult to:

•

assimilate differences in foreign business practices, exchange rates and regulatory requirements;

•

operate amid political and economic instability;

•

hire and retain qualified personnel; and

•

overcome language, tariff and other barriers.

We may make acquisitions in the future, which may lead to disruptions to our ongoing business.

We have made a number of acquisitions, including the recent acquisitions of APEX International Clinical Research Co., Ltd. in November 2007 and ClinPhone plc in August 2008, and we will continue to review new acquisition opportunities. If we are unable to successfully integrate an acquired company, the acquisition could lead to disruptions to our business. The success of an acquisition will depend upon, among other things, our ability to:

•

assimilate the operations and services or products of the acquired company;

•

integrate acquired personnel;

•

retain and motivate key employees;

•

retain customers;

•

identify and manage risks facing the acquired company; and

•

minimize the diversion of management’s attention from other business concerns.

Acquisitions of foreign companies may also involve additional risks, including assimilating differences in foreign business practices and overcoming language and cultural barriers.

In the event that the operations of an acquired business do not meet our performance expectations, we may have to restructure the acquired business or write-off the value of some or all of the assets of the acquired business.

Our corporate governance structure, including provisions of our articles of organization, by-laws, shareholder rights plan, as well as Massachusetts law, may delay or prevent a change in control or management that stockholders may consider desirable.

Provisions of our articles of organization, by-laws and our shareholder rights plan, as well as provisions of Massachusetts law, may enable our management to resist acquisition of us by a third party, or may discourage a third party from acquiring us. These provisions include the following:

•

we have divided our board of directors into three classes that serve staggered three-year terms;

•

we are subject to Section 8.06 of the Massachusetts Business Corporation Law, which provides that directors may only be removed by stockholders for cause, vacancies in our board of directors may only be filled by a vote of our board of directors, and the number of directors may be fixed only by our board of directors;

•

we are subject to Chapter 110F of the Massachusetts General Laws, which may limit the ability of some interested stockholders to engage in business combinations with us;

•

our stockholders are limited in their ability to call or introduce proposals at stockholder meetings; and

•

our shareholder rights plan would cause a proposed acquirer of 20% or more of our outstanding shares of common stock to suffer significant dilution.

These provisions could have the effect of delaying, deferring, or preventing a change in control of us or a change in our management that stockholders may consider favorable or beneficial. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors and take other corporate actions. These provisions could also limit the price that investors might be willing to pay in the future for shares of our stock.

In addition, our board of directors may issue preferred stock in the future without stockholder approval. If our board of directors issues preferred stock, the rights of the holders of common stock would be subordinate to the rights of the holders of preferred stock. Our board of directors’ ability to issue the preferred stock could make it more difficult for a third party to acquire, or discourage a third party from acquiring, a majority of our stock.

Our stock price has been, and may in the future be volatile, which could lead to losses by investors.

The market price of our common stock has fluctuated widely in the past and may continue to do so in the future. On January 26, 2009, the closing sales price of our common stock on the Nasdaq Global Select Market was $7.36 per share. During the period from January 26, 2006 to January 26, 2009, our common stock closed at split adjusted prices ranging from a high of $35.81 per share to a low of $6.57 per share. Investors in our common stock must be willing to bear the risk of such fluctuations in stock price and the risk that the value of an investment in our stock could decline.

Our stock price can be affected by quarter-to-quarter variations in a number of factors including, but not limited to:

•

operating results;

•

earnings estimates by analysts;

•

market conditions in our industry;

•

prospects of health care reform;

•

changes in government regulations;

•

general economic conditions, and

•

our effective income tax rate.

In addition, the stock market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may adversely affect the market price of our common stock. Although our common stock has traded in the past at a relatively high price-earnings multiple, due in part to analysts’ expectations of earnings growth, the price of the stock could quickly and substantially decline as a result of even a relatively small shortfall in earnings from, or a change in, analysts’ expectations.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)

On December 11, 2008, the we held our 2008 annual meeting of shareholders.

(b)

Not applicable.

(c)

At our 2008 annual meeting of shareholders, our shareholders approved the following proposals by the votes specified below:

to elect the following persons to serve as directors for a three-year term continuing until the annual meeting of shareholders in 2011 and until their successors are elected and qualified:


Director Nominees	Class	Term Expires	For	Withheld
Patrick J. Fortune	I	2011	50,751,549	4,636,664
Ellen M. Zane	I	2011	53,095,310	2,292,903

to ratify of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2009:


For	Against	Abstain	Broker Non-Votes
52,464,278	763,833	2,160,102	-0-

(d)

Not applicable.

ITEM 6.

EXHIBITS

See the Exhibit Index on the page immediately preceding the exhibits for a list of exhibits filed as part of this quarterly report, which Exhibit Index is incorporated by this reference.

SIGNATURES

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


	PAREXEL International Corporation

Date: February 9, 2009	By:	/s/ Josef H. von Rickenbach
		Josef H. von Rickenbach
		Chairman of the Board and Chief Executive Officer

Date: February 9, 2009	By:	/s/ James F. Winschel, Jr.
		James F. Winschel, Jr.
		Senior Vice President and Chief Financial Officer

EXHIBIT INDEX


Exhibit Number		Description
10.1		First Amendment dated as of December 19, 2008 to the Credit Agreement dated as of June 13, 2008, as amended and restated as of August 14, 2008 (as amended, restated or otherwise modified from time to time, the “Credit Agreement”), among the Company, PAREXEL INTERNATIONAL HOLDING B.V., a subsidiary of the Company that is a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) (the “Dutch Borrower”), PAREXEL INTERNATIONAL HOLDING UK LIMITED, a subsidiary of the Company that is a company incorporated in England and Wales (“Bidco”; and together with the Company, the Dutch Borrower and other Persons who are or hereafter are designated as Borrowers pursuant to Section 2.21 of the Credit Agreement, the “Borrowers”), the Subsidiaries of the Borrowers party thereto, the lenders party thereto (the “Lenders”), JPMORGAN CHASE BANK, N.A., as Administrative Agent, J.P. MORGAN EUROPE LIMITED, as London Agent, and KEYBANK NATIONAL ASSOCIATION, as Syndication Agent (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 24, 2008 and incorporated herein by reference).

10.2		Amended and Restated Change of Control/Severance Agreement, dated as of October 31, 2008, by and between the Company and Mark A. Goldberg (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 31, 2008 and incorporated herein by reference).

31.1		Principal executive officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Principal financial officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Principal executive officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Principal financial officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. sophomore Avg

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

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Smaller Reporting Company